Why file for bankruptcy?

When most people think of bankruptcy they think of discharging their debts and getting a fresh start. The better way of understanding bankruptcy is to think about what you are keeping. After all, if you lived on a desert island with no phone, no property and no job you would have no reason to file for bankruptcy. Anyone the files for bankruptcy is looking to protect something of value to them.  It can be a business, wages, your home, your car or simply keeping your sanity creditors harassing you. Together we will develop a bankruptcy purpose and help you figure out the best possible solution.

What is the difference between chapter 7 and chapter 13 bankruptcy?

Simply stated, chapter 7 is the liquidation of assets and debts while chapter 13 is the reorganization of an individual’s financial affairs.  Chapter 7 is fast and usually cheap.  If you are looking to simply walk away from it all and start over chapter 7 is a great solution.  On the other hand, Chapter 13 gives you the chance to catch up on mortgage arrears, pay tax debt back over five years and potentially reduce your total mortgage payment. Either way you are benefiting from debt relief.

Do I qualify for chapter 7?

If you are above the median income in Maryland or D.C. then bankruptcy law requires that you complete a “means test.”  The means test is a method of determining whether a debtor has disposable income to repay creditors in chapter 13.  If you are above the median income for Maryland there is only one way to find out if can pass the means test— go see a Maryland bankruptcy attorney.

Why would anyone want to file for Chapter 13?

Typically, consumers file for chapter 13 bankruptcy for one of three reasons. First, they want to take advantage of the chapter 13 process to catch up on a home that is facing a pending foreclosure. Second, they may be ineligible to file for Chapter 7 either because they make too much money to qualify or their filed a chapter 7 case in the last eight years. Third, they wish to keep property that they would otherwise lose a chapter 7.

Chapter 13 bankruptcy is appropriate for individuals that have homes, cars, businesses, or whose income is too high to qualify for chapter 7. In a chapter 13 plan, the debtor makes monthly payments to a bankruptcy trustee.  The trustee disburses these payments to the creditors.  In a chapter 13 plan, the court-appointed Chapter 13 trustee pays off mortgage arrears, back taxes, and domestic support obligations.  The funds can also be used to pay off some or all of the debtor’s credit card debt.  Chapter 13 will give you the opportunity and breathing space to pay off your debt within 3 to 5 years.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy discharges most unsecured and secured debt – personal loans, credit card balances and medical bills.  However, child support payments, student loans and recent taxes cannot be dismissed in a chapter 7 bankruptcy and you must continue to pay home mortgage or car loans to keep them.  To qualify for a chapter 7 your household income must be below a certain threshold, dictated by the Means Test.  Chapter 7 is suitable for individuals who don’t have a large amount of equity in a home or personal belongings.  Typically a chapter 7 bankruptcy is discharged within four months of filing.

What is the 341 Meeting of Creditors?

When you file a chapter 7 or a chapter 13 bankruptcy, you and your attorney will attend a 314 hearing, or Meeting of Creditors.   This is an opportunity for the Trustee and your creditors to review the details of your bankruptcy filing. Some people feel intimidated when faced with this meeting but our attorneys will ensure you are prepared and will be present with you at the meeting.

Do I have to give up all my property?

Congress designed bankruptcy to help honest individuals start over and for creditors to receive an equitable share of any liquidated assets. Bankruptcy is not intended to take away the belongings you need to earn a living or keep your family safe. The bankruptcy code incorporates something called “exemptions”.  Exemptions are apply to a reasonable amount of personal property that stays outside of the bankruptcy and in your possession.  Generally exemptions allow you to retain certain amounts of equity in a home and vehicles, as well as cash, money in bank accounts, household belongings, jewelry, retirement accounts and personal property. This is where the expertise of an experienced bankruptcy attorney who can apply exemptions correctly is so important in allowing you to retain enough of your personal belongings to get a fresh start.

Does bankruptcy stop a foreclosure sale?

Yes – the filing of a case, triggers the “automatic stay” either temporarily in a chapter 7 or completely in a chapter 13. Generally, if you’ve fallen behind with your mortgage payments and you want to keep your home a chapter 13 will allow you to pay back the past due mortgage balance over 3 to 5 years.  Be aware, that doesn’t mean you get a free house! You will stay need to keep up with the monthly mortgage payments going forward.


The moment a debtor files for bankruptcy, the automatic stay goes into effect. The automatic stay stops most types of debt collection efforts immediately, including wage garnishment.  It is often possible to recover garnishments levied in the ninety days before you file.

Do I Have to File Bankruptcy with My Spouse?

Simply answered – no.  One of the advantages of only one spouse filing is that the bankruptcy will only be reported on that person’s credit report.  So the non-filer’s credit won’t be affected. This can be useful if one person has all, or most of the debt. But if you are both responsible for a significant amount of debt it makes sense for you both to file. An individual bankruptcy filing by one spouse may not stop collection attempts – harassing calls, lawsuits and garnishments – against the non- filing spouse. If only one of you files, the non-filing spouse will still be liable for their debt, plus your joint debts. A joint petition can save you money and time over two individual cases.  A joint bankruptcy is more convenient and efficient, because it allows married couples to complete only one petition, attend mandatory hearings together, and discharge all of their debts through a single bankruptcy.

What is a reaffirmation agreement?

A reaffirmation agreement is a contract between a debtor and a creditor to keep the creditor’s debt out of bankruptcy. This means the debt will not be discharged in the bankruptcy, and the debtor will have to repay it after the bankruptcy. By signing you are basically putting yourself back on the hook for the debt. Many times you are not required to sign reaffirmation agreements and since the whole reason for filing bankruptcy is to get rid of debts, you should be very cautious about signing a reaffirmation. An experienced bankruptcy attorney can guide you through the pros and cons of reaffirmation agreements.

How does filing for bankruptcy affect my credit?

Bankruptcy dramatically affects your credit.  On one hand, bankruptcy stays on your credit for ten years and lenders will certainly perceive you as a credit risk.  Alternatively, most individuals emerge from bankruptcy with very little debt making them attractive credit risks.

How do I get started? 

Call or e-mail our office to set up a free consultation. At the consultation we’ll analyze your case for the best result, answer any questions you have and give you a quote for attorney’s fees.


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