Chapter 7 Bankruptcy in Maryland: The Complete Guide

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

Updated: Jul 13

If debt has taken over your life, Chapter 7 may be the fresh start you have been looking for. I wrote this guide to answer the questions I hear every day, in plain language, so you can understand your options before you ever pick up the phone. I am Sheereen McNair, a Maryland bankruptcy attorney, and helping people get a clean financial start is what I do.

Bankruptcy is not a failure. It is a legal tool that Congress created so honest people who fall behind can reset and move forward. Let us walk through how Chapter 7 works here in Maryland.

What Chapter 7 actually does

Chapter 7 is often called liquidation bankruptcy, but that name scares people more than it should. For most people who file, nothing is sold at all. What Chapter 7 really does is wipe out most unsecured debts, the kind that are not tied to property, and give you a discharge that legally erases your obligation to pay them.

The moment you file, a federal court order called the automatic stay goes into effect. It stops wage garnishment, collection calls, lawsuits, and most other collection activity right away. For a lot of my clients, that first quiet week is the first time they have slept well in months.

Do you qualify for Chapter 7 in Maryland

Qualifying comes down to two steps.

Step one is the income comparison. We look at your average income over the last six months and compare it to the median income for a Maryland household of your size. If you are at or below the median, you qualify and we move forward.

Here are the current Maryland median income limits. These apply to cases filed on or after April 1 2026.

Household of 1: $86,928 per year
Household of 2: $114,611 per year
Household of 3: $135,949 per year
Household of 4: $166,173 per year
Add $11,100 for each additional person

Step two is the means test, and it only matters if your income is above the median. Being over the median does not disqualify you. The means test looks at your actual monthly expenses, things like housing, transportation, medical costs, and childcare, and subtracts them. If what is left is low enough, you still qualify. Many above median filers do.

These numbers update each April and November, so we always confirm the current figure for your filing date.

What debts Chapter 7 wipes out

Chapter 7 is very good at clearing unsecured debt, including:

Credit card balances
Medical bills
Personal loans
Most older payday loans
Deficiency balances after a repossession or foreclosure
Many old collection accounts and judgments

Some debts cannot be wiped out in Chapter 7. These usually include child support and alimony, most recent tax debt, and most student loans. If your situation involves those, we will talk through it honestly so you know what bankruptcy can and cannot do for you.

What you keep: Maryland bankruptcy exemptions

This is the question I hear most. Will I lose my house, my car, my things. For the large majority of people who file Chapter 7 in Maryland, the answer is that you keep what you have.

Exemptions are the legal protections that let you keep property through bankruptcy. Maryland uses its own set of exemptions rather than the federal list, and here is what they protect.

Your home. Maryland protects up to $125,000 of equity in an owner occupied home, condominium, co-op, or a manufactured home permanently affixed to your land. That figure was raised from roughly $31,000 effective June 1, 2026. Married couples cannot double it, and there is no special senior amount.

Your car. Maryland does not have a separate car exemption. Instead you protect the equity in your vehicle using the wildcard exemption below. For most clients whose car is worth what they still owe on it, or close to it, there is little or no equity to protect and the car stays with you as long as you keep up the payments.

The wildcard. You can protect up to $6,000 of cash or any property you choose. Any part of this $6,000 you do not use can be added on top of your home equity protection, which gives homeowners extra room.

Everyday belongings. On top of the wildcard, Maryland protects up to $5,000 in additional personal property, up to $5,000 in tools, books, and equipment you need for your work, and up to $1,000 in household furnishings and goods. Health aids that a doctor prescribed are protected with no dollar limit.

Retirement savings. ERISA qualified retirement plans and IRAs are protected, so the accounts you built for your future generally stay safe.

Certain benefits and support. Disability and health benefits, child support you receive, most public assistance, and a portion of unpaid wages are protected as well.

In plain terms, if you are current on your house and car and you want to keep them, Chapter 7 usually lets you do exactly that. We run your specific numbers against these protections before we file so you know what is safe, with no guessing.

How Chapter 7 works, step by step

People picture bankruptcy as a long courtroom battle. For most Maryland filers it is closer to a guided checklist. Here is the whole path from start to finish.

1. Free consultation. We look at your full picture, your income, your debts, and what you own, and confirm that Chapter 7 is the right fit before you commit to anything.

2. Credit counseling. You take a short approved course from a nonprofit agency. It can be done online or by phone, usually in about an hour, and you must finish it in the 180 days before we file.

3. We prepare and file your petition. This is the turning point. The moment your case is filed, a federal court order called the automatic stay goes into effect and the collection pressure stops. Garnishment, calls, and lawsuits pause right away.

4. The trustee reviews your case. A court appointed trustee looks over your paperwork to confirm it is complete and accurate. We assemble your documents so this part is quiet and uneventful.

5. The meeting of creditors, also called the 341 meeting. About a month after filing you attend a short meeting where the trustee asks a few straightforward questions under oath, usually by video or phone. It typically lasts only a few minutes. We prepare you beforehand so you know exactly what will be asked, and we are with you for it.

6. Financial management course. After filing you take a second short approved course. This one is about budgeting and rebuilding, and it is required before your debts can be wiped out.

7. Discharge. The court issues your discharge order, which legally erases your eligible debts. Your fresh start is now official and permanent.

How long Chapter 7 takes in Maryland

A typical Chapter 7 case runs about three to four months from the day we file to the day you receive your discharge. Here is roughly how that time breaks down.

Before filing, the pace is mostly up to you. Gathering documents and finishing the credit counseling course can take a few days or a few weeks depending on how quickly paperwork comes together. We help you move through it.

After filing, the timeline is steady and predictable. The automatic stay protects you from day one. The 341 meeting usually happens around thirty to forty five days after filing. The discharge normally arrives about sixty to ninety days after that meeting, once the short waiting period for creditors passes and your financial management course is on file.

Most cases move on this schedule without any bumps. If something in your situation needs extra attention, we tell you up front so there are no surprises. Even so, Chapter 7 is the fastest route to relief that the bankruptcy system offers.

What Chapter 7 costs

There are two pieces to the cost, and we are upfront about both.

The court filing fee. The federal court charges a filing fee to open a Chapter 7 case. As of 2026 that fee is $338. If paying it all at once is a hardship, the court allows the fee to be paid in installments, and in some low income situations it can be waived entirely. We help you apply for either option when it fits.

Attorney fees. On top of the court fee are the fees for handling your case. We keep our fees fair, and we offer flexible payment plans, because the people who need this help are rarely sitting on extra cash. You will get a clear, honest number at your consultation with no surprises and no hidden add ons.

We know money is exactly the thing that is stretched thin when you are considering bankruptcy. That is why we talk about cost openly and early, and why we build a payment plan that works for real life.

Common myths, set straight

I will lose everything. Almost never true. Most Chapter 7 filers keep all of their property.

Bankruptcy ruins my credit forever. It does not. Many clients see their score begin to recover within months, because the debt that was dragging them down is gone, and we help you rebuild from there.

Everyone will know. Bankruptcy is a legal process, not a headline. It is not announced to your employer, your neighbors, or your family.

Only irresponsible people file. The people I help are nurses, teachers, veterans, small business owners, and parents who hit a medical crisis, a job loss, or a divorce. Life happens. This is the tool built for it.

Frequently asked questions

Can Chapter 7 stop a wage garnishment? Yes. Filing triggers the automatic stay, which stops garnishment, usually the same day.

Can I file if I am unemployed? Often yes. Chapter 7 does not require a job, and low income can actually make qualifying easier.

Will I have to go to court? In most cases you never see a courtroom. You attend one short meeting of creditors, and we are with you for it.

How often can I file? There are time limits between filings. If you have filed before, we will check your dates and tell you where you stand.

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 do not have to figure this out alone

If you are overwhelmed by debt in Maryland, you have options, and you do not have to sort through them by yourself. Let us run your numbers and tell you honestly whether Chapter 7 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.