Chapter 7 Bankruptcy Maine: 3 Things You Need to Know

If you’ve been dealing with debt, it may be confusing to understand your options. To make things easier, we’ve written this article to explore Chapter 7 bankruptcy for those who live in Maine. Before getting started, here a few key things to consider:
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.
  1. What are the qualifications for bankruptcy and how much can you expect to pay?
  2. Are there any alternatives that may better your specific situation?
  3. Lastly, are you aware of the specifics of Chapter 7 bankruptcy in Maine?

In the following article, we’ll answer all these questions and more. We also have a calculator below if you would like to jump straight into things. The calculator will allow you to estimate your qualifications and what you can expect to pay.

1) How Chapter 7 Bankruptcy Works in Maine

How Fast Do You Get Relief in A Chapter 7 Bankruptcy in Maine

It usually takes around 120 days to wrap up a no-asset Chapter 7 case in the state from start to finish. A "no-asset" bankruptcy means that you don't own any fancy houses or other valuable assets that might exceed the Maine bankruptcy exemptions. So, if you're in a situation where you don't have an excess of assets, you could be looking at a relatively speedy resolution to your bankruptcy case.

How Much Does It Cost To File Chapter 7 Bankruptcy in Maine

The price of Chapter 7 bankruptcy typically ranges between $500 and $3,000 nationwide. However, factors such as location, lawyer expertise, and complexity of your case can greatly affect the cost..

Even in Maine, for example, the price can vary from city to city. In Waterville, you could expect to pay $2,838, whereas in South Portland, that could jump up to $4,833.

Regardless of attorney or case, there are certain situations where the cost to file could be reduced. This would be possible through the use of a filing fee waiver. If you’d like to read up on it, click here: Maine filing fee waiver.

How Do I Qualify For Chapter 7 Bankruptcy in Maine?

When reviewing whether you qualify for Chapter 7, you may want to check the Chapter 7 Bankruptcy Maine Income Limits. This test determines if you're eligible for a bankruptcy discharge (another way of saying your debts will be forgiven). If you pass the means test (you can estimate it below), Chapter 7 will cover most of your unsecured debts. Unsecured debts don't have any collateral, such as medical bills, personal loans, certain old income tax debts, old utility bills, credit card debts, and most personal judgments.

What about secured debts in Chapter 7?

If you want to wipe out secured debts such as car loans and mortgages, Chapter 7 bankruptcy might still be the answer. But the catch is that you'll have to give up the asset to the creditor, and the creditor will consider it as full payment for what you owe.

IMPORTANT: Chapter 7 Qualification via Maine Means Test

A tool to help you determine your eligibility for Chapter 7 bankruptcy in Maine is the Bankruptcy Means Test. This form will help calculate your average annual income based on your last six months of gross income. It will then compare that number to the median income of other households in Maine. If your median income turns out to be below the Maine median income, you might qualify for a Chapter 7 bankruptcy discharge.

Feel free to use the calculator below:

My Income Exceeded The Chapter 7 Means Test Allowable in Maine

If your income is higher than the median income in your state, you might need to dive into part 2 of the means test or explore an alternative option. We encourage you to check out this helpful resource: passing the Chapter 7 means test when income exceeds the median.

Chapter 7 Bankruptcy Maine Income Limits

If you're filing for bankruptcy in Maine on or after November 1, 2023, here are the limitations for income based on household size:

# of PeopleAnnual Income
1$63,745
2$76,495
3$99,855
4$110,060
5$119,960
6$129,860
7$139,760
8$149,660
9$159,560

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Maine bankruptcy exemptions.

Bankruptcy exemptions are important to consider as they help shield assets from possibly being possessed by creditors. Typically, the homestead exemption is most important. In Maine, individuals are exempt up to $80,000 if they are single and up to $160,000 if they are filing jointly.

Another exemption to keep in kind is the motor vehicle exemption. This exemption can shield up to $10,000 of equity for one vehicle. Debtors are also allowed to protect up to $500 worth of personal items. Lastly, there is an exemption for funds in retirement accounts. This exemption will shield up to $1,054,550.

Regardless of age or marital status, you can shield up to $150,000 of your home's equity value in a Chapter 7 bankruptcy in Maine. If you sell your home, the proceeds from the sale are also exempt for up to 18 months or until you buy a new home, whichever comes first.

One last thing to take into account is that Maine only allows for the use of federal under very specific cases as add-ons. Therefore, you will mainly be applying state-wide exemptions for your case.

Chapter 7 Bankruptcy Maine Pros and Cons

Pros

  • The speed at which you can receive a discharge: In just about 120 days, you could be debt-free and on your way to building a fresh start.
  • Property exemptions: If you meet the threshold for exemptions, filing for Chapter 7 bankruptcy may allow you to keep a good percentage of your personal property.
  • Stopping debt collection lawsuits: Once you file, the court will issue an automatic stay, preventing legal action against you, including calls and letters from collectors.
  • Loan deficiency: When you owe more on a loan than the collateral is worth, you may be stuck with a deficiency. But with bankruptcy, that burden could be lifted.

Cons

  • Income requirements for qualification: To be eligible for Chapter 7 bankruptcy, you must meet specific income requirements.
  • Potential loss of home and belongings: If your assets exceed the exemption limit, there is a chance that you may have to part ways with some of your property.
  • Negative impact on credit report: Filing for Chapter 7 bankruptcy can have a lasting effect on your credit report. It stays on record for a decade, making it challenging to secure future loans or favorable interest rates.
  • Non-dischargeable debt: It's important to note that not all debts may be discharged through Chapter 7 bankruptcy. Specific obligations, such as student loans and child support payments, are typically not eligible for discharge.

2) Alternatives to Chapter 7 Bankruptcy in Maine

a) Chapter 13 Bankruptcy in Maine

If you earn more than the income limit for Chapter 7 bankruptcy, there's still a way to get some debt relief through Chapter 13 bankruptcy. A Chapter 13 Bankruptcy in Maine allows you to restructure your debts into a more manageable monthly plan. This restructuring can help you keep your home and vehicles, help stop foreclosure, and prevent repossession of your belongings. Furthermore, you might be able to reduce any unpaid child support, alimony, and car loan payments.

Can you afford Chapter 13 bankruptcy?

If you are considering a Chapter 13 bankruptcy, you can use this calculator to help estimate whether you can manage the monthly payment.

b) Debt Settlement/Relief

Debt settlement may also be another option aside from Chapter 7 and Chapter 13 bankruptcy. Once you pursue this option, the debt settlement company negotiates a lower amount on your total debt, saving you money in the long run. However, consider its impact on your credit score and do proper research to choose a well-reputable and transparent debt settlement company.

c) Debt Management

Another option is debt management. Whereas debt settlement companies work to lower the total amount of debt you owe, debt management companies work to lower your interest rates. These programs usually last 3 to 5 years and are typically a bit pricier than debt settlement. Not all creditors may be willing to work with a debt management company.

However, if you're dealing with a bunch of high-interest credit card debt, this option may reduce that interest by around 10-20%. This could translate to an eventual 30-50% savings on the debt you currently owe and allow you to pay off these debts more efficiently. Considering your situation and determining which option makes the most sense financially is essential.

d) Debt Payoff Planning

The last alternative we'll mention is debt payoff planning. This strategy does take some effort and will require you to cut your expenses and save excess income to pay down as much debt as possible. However, you can make tangible progress every month by choosing the appropriate debt payoff plan. Another thing to remember is that as you begin to pay off your debts, you will be able to compound those payments towards the remaining debts, allowing you to pay things off faster and faster.

3) Specific Maine Chapter 7 Bankruptcy Information:

So, you've gone through the two steps mentioned earlier, and now you're pondering whether Chapter 7 bankruptcy is the way to go. Well, let's dive into some key aspects of filing Chapter 7 bankruptcy in Maine that you should definitely take into account. Trust me, it'll be helpful!

Maine Chapter 7 Bankruptcy Credit Counseling and Debtor Education Courses

If you're considering filing for bankruptcy under Chapter 7, there are a couple of courses you'll need to complete to get that bankruptcy discharge. First up is a credit counseling course that you'll need to take before you file your bankruptcy case. Then, after you've filed, you'll need to complete a debtor education course. These courses are super important, and they're designed to help you understand the ins and outs of bankruptcy and manage your finances better. Now, if you're in Maine, you'll be happy to know that there are approved courses available for you. The United States Trustee's office has given the thumbs up to certain companies in Maine that offer bankruptcy courses. You can find a list of these companies on the UST website. Just head on over there and you'll be able to see all the options available to you. And here's the cherry on top: both of these courses are available online! So you can complete them from the comfort of your own home. Of course, there is a small fee involved, but it's a small price to pay for the knowledge and support you'll gain from these courses. So go ahead and take that first step towards financial freedom!

Maine Chapter 7 bankruptcy Court Locations

So, let's talk about meetings of creditors. These meetings have been quite different lately, due to the pandemic. A lot of them have been happening over the phone or through Zoom. If you're in Maine and you've got a meeting that needs to happen in person, you might want to know where the courthouse is. It all depends on the bankruptcy district you're in. Now, I know this might not be the most exciting topic, but it's important to know where to go when you need to take care of legal stuff. So, let's dive in and find out where you need to be if you're dealing with bankruptcy in Maine.

District of Maine

Edward T. Gignoux U.S. Courthouse in Portland.

156 Federal Street, Portland, ME 04101

Margaret Chase Smith Federal Building & Courthouse in Bangor 2

02 Harlow Street, Bangor, ME 04401

Chapter 7 Bankruptcy Trustees Maine

NamePhone
Nathaniel R. Hull(207) 774-4000
Anthony J. Manhart(207) 791-3000
Jeffrey T. Piampiano(207) 772-1941

Conclusion

Hopefully, after reading this article, you feel more informed about the requirements of Chapter 7 bankruptcy and other alternatives. Ultimately, it’s important to take everything into consideration and choose what best fits your plan. If you would like a rough estimate of your chapter 7 eligibility and its possible cost, we encourage you to use the means test calculator below.

On another note, if you would like more information about the process of Chapter 7 bankruptcy, we have also written an article on that as well. You can check out our article for a more detailed overview of what you might expect when filing.

Lastly, if you have the time and capability of filing Chapter 7 bankruptcy on your own, this might be a feasible option to look into. In many cases, it allows you to save a considerable amount on the filling costs. You can read more about that process here: filing bankruptcy without an attorney.

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