Relief From Debt And Creditors Through Bankruptcy
When a person finds they are in serious financial distress, the law provides a legal remedy under Chapter 7 of the Bankruptcy Code. A Chapter 7 bankruptcy filing results in a full discharge and dismissal of certain debts and immediately halts any further efforts by creditors and collection agencies to collect those debts.
Hochberg, Costello & Baron can help you secure bankruptcy relief, whether you experienced a sudden financial hardship or gradually got deeper and deeper into debt. Our Towson firm represents individuals and couples in Baltimore and throughout Central Maryland. Explore your options in a free consultation.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy wipes out unsecured debts such as credit card debt, medical bills, utility bills and personal loans that are not guaranteed by any collateral. Bankruptcy cannot discharge child support, alimony, government fines, student loans or secured debts such as a home mortgage or car loan. Taxes are generally not discharged, with some exceptions. Recent large purchases within 90 days of filing would not be discharged and could disqualify your petition.
On the day your Chapter 7 petition is filed, an automatic stay is invoked. This means that creditors and third-party bill collectors can no longer call, harass or threaten you. The bankruptcy stay also stops wage garnishment and can temporarily halt a foreclosure (if you are later able to pay the mortgage arrears).
Will I Have To Surrender My Assets To File For Bankruptcy?
Technically, the bankruptcy trustee is allowed to sell the debtor’s property to repay the creditors. However, Maryland bankruptcy laws allow debtors to exempt a substantial amount of assets from this process. In oversimplified terms, the Maryland exemptions allow you to keep:
- Up to $25,000 of equity in your home
- Up to $5,000 in personal property and furnishings (jewelry, guns, clothing, furniture, cash, etc).
- Up to $6,000 in “wildcard” property (including vehicles)
- All retirement savings and pension benefits
- Any money from a personal injury settlement
For a married couple, the personal property exemptions are doubled.
As part of our bankruptcy services, we help clients take full advantage of the exemptions. We have an unmatched success rate in this area. We also identify any assets that might be forfeited to the trustee for liquidation so that you can make an informed decision about whether to pursue Chapter 7 relief.
Who Qualifies For Chapter 7 Bankruptcy?
Bankruptcy was designed to give the honest debtor a fresh start. The amount of debt is not the deciding factor, but rather your ability to repay. To qualify for Chapter 7 discharge of debts, you must pass the financial means test, based on your income, employment and equity stake in real estate.
After your bankruptcy is filed with the court, a hearing is scheduled with the trustee to review the case and ask any questions about your financial situation. Technically, creditors can attend this meeting, but almost never do. The trustee takes your case under advisement and, if there are no issues or objections, grants the discharge in 60 to 90 days.