Facing overwhelming debt can feel isolating and daunting. In Maryland, as in other states, Chapter 13 bankruptcy offers a pathway to financial recovery for individuals and families struggling to manage their debts. This guide provides a comprehensive overview of Chapter 13 bankruptcy in Maryland, explaining the process, eligibility requirements, and what you can expect.
Understanding Chapter 13 Bankruptcy
Chapter 13 bankruptcy, unlike Chapter 7, is a reorganization bankruptcy. It allows debtors with regular income to create and submit a repayment plan to the bankruptcy court over a period of three to five years. This plan outlines how they will repay a portion of their debts to their creditors. Successfully completing this plan results in the discharge of remaining eligible debts.
Key Differences from Chapter 7:
- Repayment Plan: Chapter 13 requires a repayment plan, whereas Chapter 7 involves liquidation of non-exempt assets.
- Eligibility: Chapter 13 generally requires a regular income stream.
- Debt Limits: There are income and debt limits for Chapter 13; those exceeding the limits may be ineligible.
- Secured Debts: Chapter 13 often allows for the continued payment of secured debts, like mortgages and car loans, preventing foreclosure or repossession.
Eligibility for Chapter 13 Bankruptcy in Maryland
To be eligible for Chapter 13 bankruptcy in Maryland, you must meet specific criteria:
- Regular Income: You must have a stable source of income.
- Debt Limits: Your debts must fall within specific limits set by federal law. These limits are adjusted periodically.
- Secured and Unsecured Debts: You can include both secured and unsecured debts in your repayment plan.
- Credit Counseling: You must complete a credit counseling course before filing. This requirement is mandated by federal bankruptcy law.
The Chapter 13 Bankruptcy Process in Maryland
The process generally involves these steps:
- Credit Counseling: Complete a government-approved credit counseling course.
- Filing the Petition: File a petition with the U.S. Bankruptcy Court for the District of Maryland, including a detailed repayment plan.
- Meeting of Creditors: Attend a meeting with your creditors and the bankruptcy trustee. This meeting allows creditors to ask questions about your finances and the proposed repayment plan.
- Confirmation Hearing: The bankruptcy court will review your repayment plan. If it's deemed feasible and in the best interests of creditors, it will be confirmed.
- Repayment Period: You'll make regular payments according to your confirmed repayment plan for three to five years.
- Discharge: Upon successful completion of your repayment plan, remaining eligible debts will be discharged.
What Debts Can Be Included in a Chapter 13 Plan?
A Chapter 13 repayment plan can include various debts, such as:
- Medical Bills: Unpaid medical expenses can significantly burden individuals. Chapter 13 can help manage these debts.
- Credit Card Debt: High-interest credit card debt is often a primary reason for filing bankruptcy.
- Personal Loans: Unsecured personal loans can be included in a repayment plan.
- Back Taxes: Certain tax debts may be included, though this depends on specific circumstances. Consult with a bankruptcy attorney for clarification.
- Mortgages and Auto Loans: Secured debts like mortgages and auto loans can be addressed through a Chapter 13 plan, potentially preventing foreclosure or repossession.
Finding a Maryland Chapter 13 Bankruptcy Attorney
Navigating the complexities of Chapter 13 bankruptcy requires expert legal guidance. A qualified Maryland bankruptcy attorney can help you understand your options, determine your eligibility, and guide you through the entire process. They can help you create a feasible repayment plan and represent your interests in court.
Disclaimer:
This information is for educational purposes only and does not constitute legal advice. The bankruptcy laws are complex and can vary based on individual circumstances. It's crucial to consult with a qualified Maryland bankruptcy attorney to discuss your specific situation and receive personalized advice.
