What is Bankruptcy?

Bankruptcy can happen to anyone, from the young entrepreneur to the experienced business person.  Legally, bankruptcy means that an individual has handed over control of her finances to the court system because she is not longer able to keep up with her debts.  The word “bankruptcy” can strike fear in your heart.  Psychologists rank it as one of the top five stress-inducing events that can happen to us, along with death of a loved one, divorce, disability and serious illness.   Bankruptcy is a last resort, but in difficult financial times like these, it is becoming more common than ever, and entirely acceptable. 

If you are thinking about bankruptcy, the most important part is not to panic.  You have many options.   Because of the high number of bankruptcy’s, there are lot of programs designed to help you recover from bankruptcy.

When you file for bankruptcy, you effectively put yourself into the hands of the federal court process for bankruptcy protection.  Under Chapter 7, the Court will eliminate your debts entirely.  Under Chapter 13, you will be required to pay back some of your debts, but not all.

Chapter seven bankruptcy is reserved for those who do not have the resources with which to pay off debt.  Chapter seven bankruptcy is the most popular type of bankruptcy in Maryland.  If you file Chapter seven bankruptcy, ALL of your unsecured debts will be discharged (eliminated) and you will be able to keep your home, car and other property, so long as you do not have a large amount of equity in your home.

Under Chapter thirteen bankruptcy, you must reorganize your finances and develop a plan to pay off your debts.  If you file Chapter 13 in Marylnad, you will likely be able to keep all of your assets, including your home.  Chapter 13 prevents a foreclosure. 

If you live in Maryland and are seeking a Maryland Bankruptcy lawyer to help you file for Chapter 7 or Chapter 13 bankruptcy, call the Maryland Bankruptcy Center today.

David L. Ruben