Chapter 7 Bankruptcy Maryland: 3 Things You Need to Know

So you're financially burdensome and considering filing bankruptcy in Maryland, specifically Chapter 7 bankruptcy. There are a few key things you need to know before diving into it:
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. First, do you qualify for Chapter 7 bankruptcy? What are the costs of filing for bankruptcy in Maryland?
  2. Next, have you considered any alternatives to Chapter 7 bankruptcy?
  3. Lastly, what specific info do you need about Chapter 7 bankruptcy in Maryland?

If you're more of a visual person, you can check out the Maryland Chapter 7 Calculator below to get an estimate of your qualifications and cost.

1) How Chapter 7 Bankruptcy Works in Maryland

Two top-of-mind questions most people ask in their debt freedom journey are;

  1. How quickly can I handle my debt?
  2. How much will this cost?

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

You can be discharged from your unsecured debt in Maryland in just a few months. That's the typical time to complete a no-asset Chapter 7 case. Now, what does "no-asset" mean, you ask? When you don't own a home or other assets, it may be above the Maryland bankruptcy exemptions. So, if you're in a tight spot and looking for a fresh start, Chapter 7 bankruptcy discharge might be the answer you've been searching for.

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

Let's talk about the cost. Nationwide, it typically ranges from $500 to $3000. The cost can vary depending on where in Maryland you're filing and your case's complexity.

You may wonder if there are ways to get this lowered or waived. You can refer to the Maryland filing fee waiver page for more info on how you might be able to. You can check to see if you qualify.

So, How Do I Qualify For Chapter 7 Bankruptcy in Maryland?

Chapter 7 is designed for those who cannot repay their debts. But before you can file for a Ch. 7, you must pass an income evaluation. This test is to determine if you're eligible.

Passing the means test can wipe away most of your unsecured debts through Chapter 7. What are unsecured debts, you ask? They're the kind of debts with no collateral backing them up, such as medical bills, personal loans, old income tax debt, old utility bills, credit card debts, and most personal judgments. So, if you're feeling suffocated by these kinds of debts, Chapter 7 might be able to help.

What about secured debts in Chapter 7?

Your secured debts, such as your home or vehicles, cannot be discharged while you still have them. If you want to include an asset in your filing that is over the exemption for your state, you'll probably have to hand over the asset to the creditor. The debt could then be discharged if you no longer have the collateral.

IMPORTANT: Chapter 7 Qualification via Maryland Means Test

As mentioned, you may qualify for a bankruptcy discharge under Chapter 7 if your income is below the Maryland median income. To understand whether you're eligible for Chapter 7 bankruptcy, try the Maryland Chapter 7 Bankruptcy Means Test Calculator below. It's free!

My Income Exceeded The Chapter 7 Means Test Allowable in Maryland

If your income is higher than the average income in your state, there's a chance you might need to go through part 2 of the means test or explore an alternative option. This test is not as simple as a pass or fail situation. It's a two-part test.

Even if you "fail" the first section, you may still be able to "pass" the second section and potentially qualify.

Chapter 7 Bankruptcy Maryland Income Limits

# of PeopleAnnual Income
1$78,079
2$100,435
3$122,350
4$145,162
5$155,062
6$164,962
7$174,862
8$184,762
9$194,662

For each additional member you have over a HH size of 4 add $9,900 per member.

When calculating the Means Test, you can double-check the US Trustees website for the most up-to-date information.

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Maryland Bankruptcy Exemptions

Bankruptcy exemptions are put in place for each state to protect your assets through bankruptcy. On the other hand, if you're in a Chapter 13 case, any non-exempt equity in your property might affect the amount you have to pay in your bankruptcy plan.

For most folks, their home is the asset they want to protect the most. In Maryland, there is something called the Maryland Bankruptcy Homestead Exemption. In other words, they have rules about how much of your home's value you can keep. Some states' exemptions may vary depending on age and marital status. For the state of Maryland, we estimate that regardless, the homestead exemption may protect up to $25,150 of your home's equity.

It also says you can protect up to $15,000 of real property or $5,000 of a mobile home. If you're joint owners, you can't double the exemption. It's important to review all the options and choose the ones that give your assets the best protection.

Maryland doesn't allow you to use federal exemptions. Always ensure you're looking at the most up-to-date information when figuring out your bankruptcy exemptions.

Chapter 7 Bankruptcy Maryland Pros and Cons

Let's break down the pros and cons of Chapter 7 bankruptcy in Maryland.

Pros

  • Debt can feel like a never-ending cycle of stress and anxiety. One of the most significant advantages of bankruptcy is that it can give youth a start in as little as 3-4 months.
  • Bankruptcy can also help you keep your home and belongings.
  • It may put a stop to debt collection lawsuits.
  • Another perk is that bankruptcy can put an end to deficiency. What does that mean? If you've had to surrender a property or a car due to financial difficulties, you might still owe money on the remaining balance. That's called a deficiency.
  • Bankruptcy can help you clean the slate and give you a chance to rebuild your financial future.

Cons

  • You must meet specific income guidelines to be eligible for Chapter 7 bankruptcy. This helps determine if you have the financial need to file for bankruptcy.
  • There's the potential risk of losing your home and other belongings. If the value of your assets exceeds the exemption limit, they may be sold to repay your creditors. It's essential to assess this risk and understand the potential consequences.
  • Filing may take an initial enormous hit to your credit. Another factor to consider is the impact on your credit report.
  • It can hurt your credit report for up to 10 years. This can make it challenging to secure loans or credit in the future.
  • It's worth noting that Chapter 7 bankruptcy has non-dischargeable debt. This means that certain types of debt, such as student loans and child support payments, may not be eliminated through bankruptcy.
  • Lastly, preventing foreclosure can be challenging when filing for Chapter 7 bankruptcy. While it can provide temporary relief, it may not permanently solve the issue. It's crucial to explore all available options and seek professional advice.

2) Alternatives to Chapter 7 Bankruptcy in Maryland

If you don't qualify for Chapter 7 bankruptcy, have too many assets, or don't want to go down that road, there are alternatives you could consider.

a) Chapter 13 Bankruptcy in Maryland

If you're earning more than the income limit for Chapter 7 bankruptcy, you could look into Chapter 13.

This alternative allows you to restructure your debts into a manageable monthly plan based on what you can afford. By doing so, many folks can hold onto their homes and vehicles. Aside from debt restructuring, it can stop foreclosures, repossessions, and even wage garnishments in Maryland. Plus, it lets you catch up on mortgage and past-due car payments and even tackle tax debt.

It's important to note that you must continue making your payments to stay in the program.

Some additional perks of a Chapter 13 plan are that specific debtors can lower their car loan payments and even eliminate second mortgages. Of course, specific requirements need to be met, but it may be worth exploring.

b) Debt Relief/Debt Settlement

Debt relief, also known as debt settlement, may also be able to help. This is where you work with a company to negotiate with your creditors to lower the total debt you owe.

Now, if you're considering debt settlement, you should keep a few things in mind. First off, it can have a medium to high impact on your credit score. You also may risk your creditors coming after you in a lawsuit.

Make sure you proceed with caution when chatting with debt settlement companies. Not all have transparent processes and fair fees. It is essential to understand what you are signing up for.

c) Maryland Debt Management

Debt management companies focus on negotiating lower interest rates. These programs usually last 3 or 5 years, giving you time to breathe. It can be a bit pricier than debt settlement. Not all creditors are willing to work with debt management companies; credit card accounts are generally eligible for enrollment in this program.

Although debt management is a proactive option, it still may have a low to medium impact on your credit score. It can be a good option for folks drowning in high-interest credit card debt. For example, if you face about 22-30% in interest, the credit counseling agency could get it down to 10% or lower.

d) Maryland Debt Payoff Planning

Debt Payoff Planning is about finding that perfect balance between cutting expenses and throwing some extra cash at your debts to avoid paying additional interest and chipping away at the principal quicker.

Sometimes, the size of your financial hardship can make it feel impossible.

The Savvy app is designed to help you prioritize your debts and create a plan that works best for you. Using the savvy debt payoff method, you could save an average of $2,000 in interest. It is a mix of both the snowball and the avalanche method.

3) Specific Maryland Chapter 7 Bankruptcy Information:

Maryland Chapter 7 Bankruptcy Credit Counseling and Debtor Education Courses

You'll need to complete a couple of courses to get the bankruptcy discharge. First, you must take a credit counseling course before filing your bankruptcy case. After you've filed, you'll need to take a debtor education course.

The United States Trustee's office has a list of approved courses for credit counseling right here. You can find the approved providers in Maryland for debtor education courses here. These courses may come with a fee. They are also available online as well versus in person.

Maryland Chapter 7 Bankruptcy Court Locations

Let's talk about 341 creditors' meetings and how the pandemic has affected them. Due to the current situation, many meetings have been conducted over the phone or through Zoom. It's a convenient way to ensure everyone's safety while still getting things done. However, if you're in Maryland and meetings require in-person attendance, it's good to know where the courthouse is. So, here are the court locations in Maryland for filing bankruptcy, depending on the bankruptcy district.

District of Maryland

Are you looking for some addresses and contact numbers in Maryland? Well, you're in luck! Here are a few  places you might want to jot down:

  • 101 West Lombard Street in Baltimore (phone: (410) 962-2600)
  • 6500 Cherrywood Lane in Greenbelt (telephone: (301) 344-0660)
  • 129 E. Main Street, Rm. 104 in Salisbury (telephone: (410) 962-2600)
NamePhone
Monique D. Almy(202) 624-2935
Marc H. Baer(443) 712-2529
Merrill Cohen(301) 881-8300
Morgan W. Fisher(410) 626-6111
Charles R. Goldstein(410) 783-6385
Steven H. Greenfeld(301) 881-8300
Zvi Guttman(410) 580-0500
Patricia B. Jefferson(410) 385-3406
Craig B. Leavers(443) 318-4526
Sean C. Logan(443) 569-0752
Laura J. Margulies(301) 816-1600
Janet M. Nesse(301) 441-2420
Cheryl E. Rose(301) 527-7789
Gary A. Rosen(301) 251-0202
Roger Schlossberg(301) 739-8610
Michael G. Wolff(301) 250-7232

Conclusion

If you're curious about whether you qualify and how much it might cost you, you can try the Chapter 7 bankruptcy means test calculator.

Most folks tend to hire a bankruptcy attorney when they're dealing with Chapter 7 or Chapter 13. There is a way to have the option to file without one.

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