Though they have a low unemployment rate, ranked 35th in the nation, Maryland has almost doubled their bankruptcy filing rate in the last two years. It is likely, then, that many more people are considering that option, since the economy is not yet showing great improvement. The key to knowing if and how to file for bankruptcy can best be found by consulting a bankruptcy attorney to inform the filer of their rights and options, as well as to find all the benefits that would apply in their particular situation.
Finding a Bankruptcy Attorney
Finding a bankruptcy attorney should be a task undertaken with care. While many claim to be experts in this field, which is not always the case. It is up to the consumer to do their research, get recommendations from the state bar association, trusted friends, or reliable legal websites to find possible candidates. They must then interview several and research their record of accomplishment to settle on one that is right for them.
Bankruptcy Options
There are two primary options for individuals and families filing bankruptcy today.
- Chapter 7 is the most common because it can relieve the debtor of most unsecured debts by discharging, or erasing them. However, it is most advantageous for those with few assets, since the filer may be required to liquidate some property.
- Chapter 13 is less common, but works well for those with significant property they are unwilling to liquidate and enough monthly disposable income to make smaller monthly payments, satisfying all creditors within three to five years
Maryland Exemptions
Three-quarters of Maryland filers choose Chapter 7. The good news is, there are some state exemptions that they can claim to protect some types and values of property. While there are federal exemptions as well, Maryland does not allow filers to claim them. The state exemptions include:
|
Homestead |
None |
|
Personal Property |
Burial plot; perpetual care trust funds; prepaid college funds; clothing, household goods, furnishings, appliances, and miscellaneous property up to $1,000 total; health aids; cash or property up to $6,000; other personal property up to $5,000 total |
|
Wages |
Wages earned but unpaid in Caroline, Kent, Queen Anne’s, and Worcester counties, either 75% of actual wages or 30 times the federal minimum wage, whichever is greater; in remaining counties, 75% or $145/wk, whichever is greater |
|
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; state employees; ERISA-qualified benefits |
|
Public Benefits |
Unemployment; worker’s comp; Baltimore police death benefits; crime victims’ compensation |
|
Tools of the Trade |
Up to $5,000 of tools, books, instruments, and clothing |
|
Insurance |
Fraternal benefits; some life insurance or annuity proceeds, dividends, interest, loan, cash or surrender value; medical benefits deductions or payments; disability or health benefits |
Filing the Petition
The new bankruptcy reform requirements include credit counselling, which must take place before filing the bankruptcy petition. Once filed, the court will enact a stay on all collection activities by creditors and appoint a bankruptcy trustee to oversee the process. They will call a required 341 meeting with creditors to answer any questions about exemptions and bankruptcy plans. If all elements are in order, the petition may be granted, allowing the debtor to fulfill the plan and begin again, debt-free.
