Bankruptcy Process in Maryland
Since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in October 2005, the process for filing bankruptcy in Maryland changed. There are new steps and requirements. A qualified bankruptcy attorney can help guide you through the new laws.
Credit Counseling – Anyone considering filing for either Chapter 7 or Chapter 13 bankruptcy must now complete credit counseling within 6 months before filing for bankruptcy. Once filed, you must also complete a financial management class.
Gathering Documentation - Bankruptcy cases require extensive documentation. Many bankruptcy attorneys ask clients filing for bankruptcy to provide this documentation beforehand.
Documentation required for bankruptcy cases include:
• Itemized statements of all income sources
• Copies of tax returns for the previous 2 years
• Proof of monthly expenses
• Proof of all secured and unsecured debt – mortgage, car loan, credit cards, student loans
• Proof all property – all assets, real estate, and property
• Proof of major financial transactions for the previous 2 years
• Deeds to property and motor vehicle titles
• Loan documents
A bankruptcy attorney can assist you in telling you exactly what documentation you might need to present to the courts. Your lawyer can help you speak with creditors and sort through your expenses to put together all the information the court and trustee may need.
Determining Chapter 7 Bankruptcy – or “simple bankruptcy” means you will be scheduled for a Chapter 7 Means Test which determines if you qualify for debt discharge. Your bankruptcy lawyer can tell you if your income falls above or below Maryland’s median income, and help you fill out the forms necessary to file with the courts.
To qualify for Chapter 7 bankruptcy in Maryland, your income must be below the median income for the area as determined by the U.S. Census Bureau for 6 months prior to the filing.
As of March 17, 2008, Maryland Median Income is:
• $52,597 – single wage earner
• $68,075 – two person household
• $80,344 – three person household
• $96,695 – four person household
• $6,900 – for each additional person over four
However, if your income exceeds Maryland Median Income, you might still qualify for Chapter 7 bankruptcy if, after deducting acceptable expenses from your income, you are unable to pay $6,000 ($100/month) to your unsecured creditors over 5 years.
If your budget allows for payments of $6,000 ($100/month) or more in a 5 year period, you will be denied Chapter 7 bankruptcy.
A qualified attorney can assist you with all the calculations to see if you qualify for Chapter 7 debt relief.
Determining Chapter 13 Bankruptcy – is a debt restructuring plan that allows for repayment of your debts over a 3-5 year period, giving you time to pay off your debts. In Chapter 13, the petitioner must propose a payment plan for which provides for full payment of priority debts like taxes, child support, and student loans, but allows for partial payment of unsecured, or consumer, debt.
To file Chapter 13 bankruptcy your repayment plan must past three tests:
• Must be delivered in good faith
• Must pay creditors at least as much as they would get in a Chapter 7 settlement – generally the value of all non-exempt property
• All disposable income must be paid into the plan for at least 3 years and up to 5 years and must meet the Chapter 7 requirement.
If you decide you wish to pay off your debts, or do not qualify for Chapter 7, a bankruptcy attorney can help you determine what kind of monthly payment you can afford and help you file your payment plan with the courts.
Automatic Stays and Trustees – once bankruptcy has been filed with the courts, the petitioner is granted an immediate Automatic Stay. Automatic stays prohibits creditors from staking any claim to any of your property or from making any direct contact with you. It also stops foreclosure proceedings.
You will be assigned a trustee by the court who takes control of all debts and property and arranges for your payments under Chapter 13. Many times these payments can be taken out of your wages. The trustee manages creditor payments, evaluates assets, and can challenge any part of the bankruptcy case.
341 Hearings – occur about a month after filing Chapter 7 bankruptcy. This is a meeting called by the trustee and is a meeting between you and your creditors. You are required to attend this “first meeting of creditors”. Creditors have 60 days to challenge your right to debt discharge.
341 Hearings – occur about a month after filing Chapter 7 bankruptcy. This is a meeting called by the trustee and is a meeting between you and your creditors. You are required to attend this “first meeting of creditors”. Creditors have 60 days to challenge your right to debt discharge.
