There are so many different reasons why you may be struggling financially. All that really matters is making the right decision so that you can have a fresh start and look to a brighter future.
In the end, bankruptcy may be your best solution.
Let’s define bankruptcy here so that you understand exactly what you may be choosing to help your situation. Bankruptcy laws are from the federal government and they are designed to assist people and businesses who are deeper in debt than they can manage. When a person or a business declares bankruptcy, they either liquidate their assets or go on some version of a repayment plan until their debts are paid.
How do I initiate the bankruptcy process?
If you are in the process of declaring bankruptcy, the case will be filed in bankruptcy court. Bankruptcy cases are heard in federal courts. They are not allowed to be tried in state courts. Most personal bankruptcy cases are either Chapter 7 or Chapter 13.
The main objectives of bankruptcy law are to allow the debtor to be able to start over in life or in business by making most or all of the debts go away and to allow the debtor to pay their creditors so that the debtor acquires assets that can be used to pay off the debts.
What are the steps in the bankruptcy process?
There are steps that the debtor should follow throughout the bankruptcy process:
- The debtor files a petition in bankruptcy court: The debtor may file the petition as a sole debtor, together with a spouse, or as an entity or corporation. The debtor must include in the petition a list of assets, liabilities, income and names and addresses of all creditors and the exact amount of the debt. Merely filing the petition means that all debts “stay.” That means that the creditor(s) are not allowed to go after the money until the case has been finalized. Also, the creditors are not allowed to sue the debtor, garnish their wages or make phone calls asking for payment during that time.
- Creditors will receive notice from the court clerk that the debtor has filed the bankruptcy petition: In a large portion of the bankruptcy cases, the debtor has little or any money to pay the creditor. Because of that, there is really no arguing so the debt is dissolved without any pushback. If that happens, the debtor will never have to pay back the debt to the creditor.
- In the presence of disputes: In other instances, there may be some disagreement, which can result in the case going to litigation. Some of the sources of disputes are about the owner of the property, how the asset should be used, how much the property is worth, how much is the debt, the question of whether the debtor should no longer be obligated to pay the debt, and what is owed to the lawyers and other professionals connected to the case.
What can I expect if my case is litigated?
If your case ends up being litigated, the case will probably be very similar to a civil case. There may be a discovery phase, proceedings before the trial, an attempt to settle the case and a trial.
Getting legal support
If you are heavily in debt, the help of a bankruptcy lawyer may help your case. Whether a Chapter 7 or Chapter 13 bankruptcy is right for your situation, the experienced advice of a Maryland bankruptcy attorney can help you to go through the process smoothly and to protect your rights at the same time so that you can get a new lease on life and start again.