Understanding Chapter 7 Bankruptcy in Maryland

Introduction

Filing for bankruptcy can feel overwhelming, but Chapter 7 bankruptcy offers a path to financial relief for many Maryland residents. Often called “liquidation bankruptcy,” Chapter 7 allows you to eliminate most unsecured debts, including credit card balances, medical bills, and personal loans. Understanding how it works, who qualifies, and what to expect can help you make informed decisions and take control of your financial future.

What is Chapter 7 Bankruptcy?

Chapter 7 is designed for individuals or couples with limited income and assets. In this type of bankruptcy, a trustee may sell non-exempt assets to repay creditors. However, Maryland law provides exemptions to protect essential property, such as your home, vehicle, and retirement accounts.

Who Qualifies for Chapter 7?

Not everyone can file for Chapter 7. To qualify, you must pass the means test, which compares your income to the median income in Maryland. If your income is below the median, you typically qualify. Those above the median may still qualify after adjusting for living expenses and debts.

The Chapter 7 Filing Process

1.  Credit Counseling: You must complete a court-approved credit counseling course within 180 days before filing.

2. Filing Petition: Your attorney files a bankruptcy petition with detailed financial information.

3. Automatic Stay: Once filed, creditors must stop collection efforts immediately, including foreclosures and lawsuits.

4. Trustee Review: A court-appointed trustee reviews your assets and financial information.

5. Discharge: Most debts are discharged within 3–6 months, giving you a fresh start.

   
   

Benefits of Chapter 7

• Immediate relief from most unsecured debts.

• Protection from creditor harassment.

• Ability to keep essential assets through exemptions.

Common Misconceptions

● “I’ll lose everything.” – Exemptions protect necessary property.

● “Bankruptcy ruins your life.” – Many find a fresh financial start improves quality of life.

● “I can never get credit again.” – Credit can be rebuilt with responsible habits.

Conclusion

Chapter 7 bankruptcy can be a lifeline for Maryland residents struggling with debt. Understanding your options, the filing process, and the protections available is crucial for making the best decision.

Ready to explore your options? Contact Middleton Legal today for a

free consultation to see if Chapter 7 bankruptcy is right for you.