Maryland Bankruptcy Laws

How to File Bankruptcy in Maryland

Bankruptcy is broken into two categories in the state of Maryland: Chapter Thirteen bankruptcy and Chapter Seven bankruptcy. These are the only two forms of bankruptcy that can be petitioned for personal purposes. Individuals may petition on their own or in a joint filing with a husband or wife. Chapter Thirteen bankruptcy allows individuals the opportunity to pay off their own debts using their own income through a set up payment plan. This payment plan is specific to each individual case and sets out how much is required to be paid each month for a maximum of five years or a normal minimum of three years.

Chapter Seven Bankruptcy

Chapter Seven bankruptcy allows individuals to become free from debts anywhere between three to six months. Chapter Seven bankruptcy allows individuals to sell their property and use the acquired funds to pay off their debts. In these cases a trustee is assigned to the specific case. He or she will then determine which kinds of property are exempt through the state of Maryland and which are necessary to sell.

The maximum value of the property will obtain the needed funds. The trustee will then use the compensation to pay off the creditors. Before all the creditors are paid, the trustee will take his or her payment from the compensation.

Property Exemptions Laws

Upon bankruptcy filing, individuals have the right to choose whether they want to follow Maryland state exemptions or the federal exemptions for liquidating property. Some forms of property can be deemed exempt from bankruptcy. Maryland classifies which kinds of property are allowed to be exempt and by a particular dollar amount.

If a piece of property does not fall into the exemption categories, the owner may only keep the property if he or she pays the property’s value to the trustee. Certain debts are not allowed to be exempt from bankruptcy. These include student loans, alimony, and child support.

Exemption is determined by the property’s equity. Equity can be defined as the value difference of the owned property and how much is still owed towards the property. Equity can be quite high depending on the property. Equity can at times be listed under exemptions for Chapter Seven bankruptcy if the payments are being made on time and the loan is secured.

All property that does not come under the categories of Maryland exemptions will be liquidated according to its value through the trustee’s experience. All assets will then be distributed accordingly. Those who file in a joint file are able to have sets of exemptions.

Exempt Property

Maryland breaks its property exemptions into asset categories. These include homestead, insurance, miscellaneous, pensions, personal property, public benefits, tools of trade, wages, and wild card. Insurance exemptions can include health benefits and disability benefits, while miscellaneous can include business partnership property.

Pension exemptions include the state police and state employees, while personal property can include health aids, burial plots, appliances, books, and clothing up to one thousand dollars. Public benefits can include unemployment compensation, crime victim compensation, and workers compensation.

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