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Bankruptcy in Maryland and Washington, D.C.

Filing for bankruptcy is a momentous decision, but you shouldn’t look at it as a financial death sentence. In many cases, a bankruptcy is in the long-term best interests of the debtor, not a desperation move. It is critical, however, that you select the bankruptcy option that is right for you and that you manage the process appropriately. At Henderson Law, we can help you do just that.

Bankruptcy is primarily federal law, although there are some state law variations that apply to matters such as property exemptions. For most issues, the U.S. Bankruptcy Code applies the same way everywhere in the United States. The following is a description of the four forms of bankruptcy.

Chapter 7 Bankruptcy (individual liquidation)

In a Chapter 7 bankruptcy, a trustee is selected to liquidate (sell) the debtor’s property and the proceeds are distributed to the creditors. Eligibility for Chapter 7 is not automatic – if your income is too high, the court will reject your petition or even convert it to Chapter 13. You won’t lose all your property. You are entitled to certain exemptions such as your homestead, your primary vehicle, and a limited amount of personal property or cash. Your debts will be canceled once the bankruptcy is complete.

Chapter 13 Bankruptcy (individual debt restructuring)

In a Chapter 13 bankruptcy, you keep your property, restructure your debts, and pay them back over a three- to five-year period. This might be the right option if you have valuable property you want to protect. A Chapter 13 bankruptcy petition works the opposite of a Chapter 7 – if your income is not high enough, the court might reject it or even convert it to a Chapter 7 petition.

Chapter 11 (company debt restructuring)

Chapter 11 bankruptcy is usually filed by a corporation, an LLC, a partnership, or some other type of company. An individual can file if he has too much debt or too high an income for Chapter 7 or Chapter 13. If you file for Chapter 11, you are in good company – General Motors and United Airlines have done the same. Chapter 11 works like Chapter 13 in that the company restructures its debt and pays it off over time.

Chapter 12 (for farmers and fishermen)

Chapter 12 bankruptcy was designed for “family farmers” and “family fishermen” who have regular incomes. Chapter 12 bankruptcies also include a repayment plan. This form of bankruptcy is seldom used.

Frequently Asked Questions (FAQs)

What should I do if a creditor contacts me after I have filed for bankruptcy?

Once the court accepts your bankruptcy petition, it will issue an automatic stay. This means that your creditors can take no collection action against you, even those creditors you didn’t list in your bankruptcy filings. There are very few exceptions, although one exception applies to debts that arise after you filed your bankruptcy petition.

If a creditor contacts you, direct them to your lawyer or, if you haven’t hired a lawyer, send them basic information about your bankruptcy and tell them not to contact you again. If they persist, you can report them to the court and the court can penalize them.

What is a reaffirmation agreement?

A reaffirmation agreement is an agreement that allows a creditor to maintain the legal rights of a creditor against you, notwithstanding a bankruptcy discharge. You must sign this agreement for it to be enforceable against you. You might want to do this if, for example, the bankruptcy court discharges your automobile loan and you want to keep your automobile. Don’t let a creditor fool you into signing a reaffirmation agreement by mistake.

Can I be fired for filing for bankruptcy?

No, at least not legally. According to 11 U.S.C. § 525 (b), a private employer may not terminate the employment of an individual who has filed for bankruptcy under the Bankruptcy Act. Your employer also cannot fire you for failing to pay a debt that was discharged in bankruptcy, even if the employer itself is the creditor. Your employer can, however, fire you for an independently valid reason, notwithstanding that you have filed for bankruptcy.

If I file under Chapter 7, can I choose between the state exemptions and the federal exemptions?

The federal government and the state governments all maintain a list of bankruptcy exemptions or property that you can keep even after a Chapter 7 bankruptcy, and they can differ in significant respects. If you file your bankruptcy in Maryland, you must use the Maryland exemptions; you cannot use the federal exemptions. If you file in D.C., however, you may use either D.C.’s exemptions or the federal exemptions, but one thing you cannot do is “mix and match” between the two.

Contact Henderson Law, Today

At Henderson Law, we enjoy a long track record of success in handling complex and challenging cases that other law firms shy way from. We understand that every case it unique and that every client comes to us with individual concerns. We are committed to crafting a solution to your financial problems that is tailor-made to suit your needs, not someone else’s.

If you are considering filing for bankruptcy in Maryland (including Baltimore, Annapolis and elsewhere) or Washington D.C., contact us online or call (410) 721-1979 so that we can set up a time to go over your case and discuss your options with you.

Henderson Law is accepting new cases in the District of Columbia and Maryland. Henderson Law is willing to take new clients across the State of Maryland, including, but not limited to, new cases arising in the following cities: Annapolis, Crofton, Bowie, Upper Marlboro, Crownsville, Davidsonville, Edgewater, Millersville, Odenton, Severna Park, and Pasadena. Please call Henderson Law for an initial consultation.

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