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Bankruptcy


  Bankruptcy laws were designed to give honest people a fresh start in life, free from burdensome debt. Loss of employment, illness, family issues, and financial mismanagement are common reasons that cause people to become overwhelmed by bills.  Usually when a person becomes overwhelmed by bills, they must deal with their creditors aggressively attempting to get money from them.  These collection attempts often include foreclosure, repossession, law suits, wage garnishments, and harassing telephone calls at home and work.  The good news for people in these situations is that they may legally stop all collection attempts and protect their property while obtaining relief from their bills.

  Immediately upon filing a bankruptcy case, an “automatic stay” occurs and prohibits all collection action from the person who filed the case. While in bankruptcy, the person who owes the debts is referred to as the debtor.  This “stay” means that the mortgage company cannot foreclose the debtor’s home, the finance company cannot repossess the debtor’s car, garnishments must stop, and creditors must stop calling the debtor.

  There are basically two different types, or chapters, of bankruptcy available to consumer debtors.  Chapter 7 is a liquidation bankruptcy and Chapter 13 is a reorganization bankruptcy.  The Chapter 7 bankruptcy is best used when a person cannot realistically expect to pay a significant portion of their debts within a reasonable period of time.  A Chapter 7 bankruptcy makes most, but not all debts disappear without paying anything to creditors.  A Chapter 13 bankruptcy involves a payment plan whereby the debtor pays all or a portion of their debt through a court appointed trustee over a period of time, usually three to five years.  A Chapter 13 bankruptcy is commonly used when a person needs to catch up on missed mortgage and car payments.  A Chapter 13 bankruptcy can be an extremely flexible and useful way to deal with debt problems.

  In most cases, you will not lose any of your property in a bankruptcy.  The law allows debtors to keep certain property up to certain limits in value.  You will still have to make all of your mortgage and car payments if you want to keep those items.

  Filing bankruptcy is not a death sentence to your credit rating. The bankruptcy will appear on your credit report for seven to ten years, but oftentimes, is the first step to rebuilding a good credit score. Most people who are candidates for filing bankruptcy already have damaged credit scores. When your debts are discharged by a bankruptcy, you have a clean slate and an opportunity to prove your creditworthiness. There are steps that you can take after filing a bankruptcy that will make it possible to re-establish good credit fairly quickly. We can discuss these steps at our initial consultation. It is possible to get credit cards and buy a house or car after filing bankruptcy.

  If you think that bankruptcy may be necessary for you and live in Maryland, contact us right away. You may be able to get relief in ways other than bankruptcy and we can tell you about other solutions. Your creditors only care about collecting money from you and do not care about what is best for your situation.  You need someone in your corner who knows how to help.