Chapter 13 Bankruptcy in Maryland: The Complete Guide

Sheereen E. McNair, Esq.
Jul 6
5 min read

Updated: Jul 13

If you are behind on your mortgage or car and you are trying to catch up before you lose them, Chapter 13 may be the tool that buys you the time and the protection you need. I wrote this guide to explain how it really works, in plain language, so you can see whether it fits your situation. I am Sheereen McNair, a Maryland bankruptcy attorney, and I help people use Chapter 13 to keep what matters and get back on solid ground.

Chapter 13 is sometimes called the wage earner plan. Instead of wiping debts out all at once, it reorganizes what you owe into a single, court protected repayment plan you can actually afford. It is built for people who have steady income but have fallen behind.

What Chapter 13 does

Chapter 13 lets you keep your property and catch up on what you are behind on over time, usually three to five years. You make one monthly payment to a trustee, who distributes it to your creditors under a plan the court approves.

The moment you file, the same automatic stay that applies in Chapter 7 goes into effect. It stops foreclosure, repossession, wage garnishment, and collection calls right away. That breathing room is often the whole point. It gives you a protected window to reorganize instead of losing everything in a rush.

Who Chapter 13 is for

Chapter 13 tends to be the right fit when one or more of these is true:

You are behind on your mortgage and want to keep your home
You are behind on a car loan and want to stop a repossession
Your income is above the Chapter 7 median and you do not qualify for a straight discharge
You have valuable property you want to protect
You owe certain debts that Chapter 7 will not clear, like some tax debt, and you need a structured way to pay them

If your main problem is unsecured debt like credit cards and you qualify for Chapter 7, that may be the simpler path. Part of my job at your consultation is telling you honestly which chapter actually serves you.

How the repayment plan works

Your plan amount is based on your income, your necessary expenses, and the type of debt you owe. A few principles drive it:

You catch up on secured arrears. If you are behind on your mortgage, the past due amount gets spread across the life of the plan so you can cure it while staying current going forward.

You keep up on ongoing secured payments. Your regular mortgage or car payment generally continues, either through the plan or directly, so you hold on to the property.

Unsecured creditors get what is left. Credit cards and similar debts are paid from whatever your budget allows after the necessary items. In many plans that is only a fraction of the balance, and the remainder is discharged at the end.

The plan runs three to five years. When you finish it, the eligible remaining balances are wiped out and you are done.

How Chapter 13 saves your home

This is the part that brings most people to Chapter 13. If a foreclosure is moving forward, filing stops it through the automatic stay, and the plan then lets you cure the past due payments over time rather than in one lump sum the bank demands. As long as you keep up with your plan and your ongoing mortgage, you keep your house. For a lot of families this is the difference between losing the home and saving it.

How Chapter 13 saves your car

If you are facing repossession, filing stops it the same way. The plan lets you catch up on what you owe. In some situations the way the car loan is treated in the plan can also make the payments more manageable. We will look at your specific loan and tell you what is realistic.

Eligibility basics

Chapter 13 has a few requirements:

You need regular income that can support a plan
Your total debt has to fall under the legal limits set for Chapter 13, which adjust over time, so we confirm the current figures for your situation
You complete the required credit counseling before filing
You must be current on tax filings

Most working people and many retirees with steady income qualify. We confirm the details for your situation before we file.

The Chapter 13 process step by step

1. Free consultation. We review everything and confirm Chapter 13 is the right fit.

2. Credit counseling. A short approved course before filing.

3. We file your petition and your proposed plan. The automatic stay stops foreclosure, repossession, and garnishment right away.

4. Meeting of creditors. A short meeting, often virtual, about a month after filing. We prepare you for it.

5. Plan confirmation. The court approves your plan.

6. You make your monthly plan payments for three to five years.

7. Financial management course and discharge. After you complete the plan, the eligible remaining debt is wiped out.

What it costs

Chapter 13 has a court filing fee, and attorney fees on top of that. One thing people appreciate is that in Chapter 13 a large part of the attorney fee is often built into the plan itself, so you are not paying it all up front. We keep our fees fair and we will give you a clear, honest number at your consultation.

Chapter 7 or Chapter 13

The short version. Chapter 7 wipes out qualifying debt quickly and works best when your main problem is unsecured debt and you pass the income test. Chapter 13 reorganizes your debt into a plan and works best when you are behind on a house or car you want to keep, or your income is too high for Chapter 7. Many people could technically file either one, and the right choice depends on your goals. That is exactly the kind of thing we sort out together at your consultation.

Common questions

Can Chapter 13 stop a foreclosure? Yes. Filing triggers the automatic stay, which stops the foreclosure, and the plan lets you catch up on the past due amount over time.

Will I keep my house and car? Generally yes, as long as you keep up with your plan and your ongoing payments on them.

How long does Chapter 13 last? Three to five years, depending on your income and your plan.

What happens if I miss a plan payment? There are options, including modifying the plan, but it is important to talk to us right away if you are struggling, so we can protect your case.

Can I switch from Chapter 13 to Chapter 7 later? In many cases yes, if your circumstances change. We can talk through that if it comes up.

Where we practice in Maryland

Middleton Legal represents clients across Maryland. If you are in one of these communities, we have written a guide specific to your local court and filing process.

Do not see your city? We serve the whole state. Call 240 896 3253 and we will tell you where you would file.

You have more options than you think

If you are behind and afraid of losing your home or your car, Chapter 13 may be the protection and the time you need to set things right. Let us look at your numbers and tell you honestly whether it is your best path. The consultation is free and there is no pressure.

Call 240 896 3253 or book your free consultation online.

This guide is general information for Maryland residents and is not legal advice. Every case is different. Middleton Legal is a debt relief agency that helps people file for relief under the Bankruptcy Code.