Bankruptcy

Financial difficulties can feel overwhelming, but bankruptcy laws in Maryland offer individuals and businesses a pathway to debt relief and a fresh financial start. Whether you’re facing insurmountable personal debt or challenges with business obligations, our experienced bankruptcy team can guide you through your options and help you rebuild your financial future.

Understanding Bankruptcy Options in Maryland

Bankruptcy in Maryland is governed by federal law, but it must be filed through the U.S. Bankruptcy Court for the District of Maryland. The most common types of bankruptcy for individuals and businesses are Chapter 7 and Chapter 13 for individuals and Chapter 11 for businesses.

1. Chapter 7 Bankruptcy – Liquidation

Chapter 7 bankruptcy, or “liquidation bankruptcy,” is often the most straightforward option for individuals and businesses with limited assets:

• Debt Discharge: Chapter 7 allows eligible filers to eliminate most unsecured debts, such as credit cards, medical bills, and personal loans.
• Asset Exemptions: Maryland bankruptcy law provides exemptions to protect certain assets, like primary residences, personal property, and retirement accounts, from liquidation.
• Quick Process: Chapter 7 cases typically take 3-6 months to complete, offering relatively fast debt relief.

Chapter 7 is generally available to individuals who meet certain income criteria, as determined by the Means Test. If your income exceeds the allowable limit, Chapter 13 may be a better option.

2. Chapter 13 Bankruptcy – Repayment Plan

Chapter 13 bankruptcy, known as “reorganization bankruptcy,” is designed for individuals who have a steady income and want to keep their property while repaying debts over time:

• 3- to 5-Year Repayment Plan: Chapter 13 allows filers to create an affordable repayment plan to pay off priority debts and catch up on missed mortgage or car payments.
• Debt Reduction: Unsecured debts may be reduced or even eliminated, depending on income and expenses.
• Asset Protection: Chapter 13 lets you keep valuable assets while making structured payments to creditors.

Chapter 13 is ideal for individuals who are behind on mortgage payments or facing foreclosure, as it allows them to reorganize their finances and retain their home.

3. Chapter 11 Bankruptcy – Business Reorganization

Chapter 11 bankruptcy is a reorganization option primarily for businesses, though it is available to individuals with substantial debts and assets:

• Debt Restructuring: Chapter 11 provides businesses with a structured plan to reorganize and repay their debts while continuing operations.
• Flexible Repayment Terms: Businesses can negotiate new terms with creditors to manage debts over time, often keeping assets that are essential to operations.
• Debtor-in-Possession (DIP) Control: In most cases, the business owner remains in control of operations as a “debtor-in-possession” during the restructuring process.

Chapter 11 is commonly used by corporations, partnerships, and even some high-income individuals who want to restructure substantial debt and maintain business operations.

The Maryland Bankruptcy Process

1. Credit Counseling: Maryland requires individuals to complete credit counseling with an approved provider before filing for bankruptcy.
2. Filing the Petition: The bankruptcy process begins by filing a petition with the U.S. Bankruptcy Court for the District of Maryland. This includes a full disclosure of assets, liabilities, income, and expenses.
3. Automatic Stay: Once filed, an automatic stay goes into effect, stopping collection activities, foreclosures, and wage garnishments while the case is ongoing.
4. Meeting of Creditors: Filers are required to attend a “341 meeting,” where creditors may ask questions about the bankruptcy petition.
5. Discharge or Repayment: Depending on the type of bankruptcy filed, debts are either discharged (in Chapter 7) or repaid according to a structured plan (in Chapter 13 or Chapter 11).

Bankruptcy Exemptions in Maryland

Maryland law provides specific bankruptcy exemptions to help protect essential assets during the bankruptcy process:

• Homestead Exemption: Protects a portion of equity in a primary residence.
• Personal Property Exemptions: Covers items such as clothing, furniture, and certain personal items.
• Retirement Accounts: Most retirement savings are fully exempt, allowing you to preserve future financial security.

Exemptions can vary, so consulting with a knowledgeable bankruptcy attorney can ensure you maximize your protections.

Why Work with Us?

Bankruptcy law is complex, but you don’t have to face it alone. Our experienced Maryland bankruptcy attorneys provide personalized guidance to help you determine the best path forward, whether it’s Chapter 7, Chapter 13, or Chapter 11. We’ll work with you at every step, from initial consultations to post-bankruptcy credit rebuilding strategies.

Contact Us for a Fresh Start

If you’re facing unmanageable debt, contact us today to discuss your bankruptcy options and take control of your financial future. Our dedicated team is here to help you get a fresh start and achieve lasting financial stability.