Filing Chapter 7 bankruptcy in Maryland is the right debt relief solution for many people—but how do you know if it’s right for you?
By understanding what sets Chapter 7 bankruptcy apart from other types of debt relief, you can make a decision that meets your needs and helps you get out from under a mountain of debt.
Common Questions About Chapter 7 Bankruptcy in Maryland
When you file for Chapter 7 bankruptcy, you’ll do so through the U.S. Bankruptcy Court in the District of Maryland. This type of debt relief clears out what you owe to creditors, but unlike Chapter 13 bankruptcy, you must liquidate—sell off—your assets in order to qualify.
What Assets Do You Need to Liquidate in Chapter 7?
When you file for this type of debt relief, the court will require you to liquidate all non-exempt assets in order to pay off your creditors. Some assets are exempt, such as disability or health benefits you receive, the tools of your trade, and some pension payments. You may also keep up to $1,000 in personal property, like furnishings, household goods, pets, and clothing. Finally, you can also keep $6,000 in cash or property of any kind and $5,000 of real or personal property. If you’re not sure what assets you’ll have to liquidate, talk to a Chapter 7 bankruptcy attorney who can help.
Who Sells Your Assets?
A trustee from the U.S. Bankruptcy Court will be in charge of liquidating your assets. When the trustee sells your assets, he or she will use the proceeds to pay off your creditors.
What Debts Cannot Be Discharged Under Chapter 7?
Not all debts can be discharged under Chapter 7 bankruptcy. You can’t discharge:
- Money you owe for child support, alimony, fines, and some taxes
- Debts you don’t list on your bankruptcy petition
- Loans you got by providing false information to a creditor
- Debts that resulted from “willful and malicious” harm
- Stop interest from building on your tax debt
- Student loans (unless the court determines the payment would be an undue hardship)
- Mortgages and other liens that aren’t paid in the bankruptcy case
Can Creditors and Collection Agencies Bother You After You File for Chapter 7?
Filing Chapter 7 in Maryland triggers an automatic stay. The automatic stay prevents creditors from calling you, sending bills or letters to attempt to collect debts, garnishing your wages, and foreclosing on or repossessing your property. The idea is to stop creditors from trying to collect debts that are tied up in your bankruptcy case.
How Long Will a Bankruptcy Stay on My Credit Report?
Under the Fair Credit Reporting Act, a Chapter 7 bankruptcy can stay on your credit report for up to 10 years. (With a Chapter 13, the timeline stops at 7 years, like it does for foreclosures, collections, late payments, and matters of public record such as tax liens.)
That doesn’t mean that nobody will give you credit, though. Many people have successfully applied for secured credit cards shortly after a bankruptcy, and some experts say that’s the best way to rebuild credit in this type of situation.
Do You Need to Talk to a Lawyer About Chapter 7 Bankruptcy in Maryland?
If you’d like to talk to a Chapter 7 bankruptcy attorney who understands Maryland law and how it affects your case, call us immediately at 301-933-2595 for a free consultation.