Ways to hold title in Maryland

Our Maryland Bankruptcy Attorneys have handled literally hundreds of consumer bankruptcy cases. One of the most common questions we get is "What is Chapter 7 Bankruptcy and what is Chapter 13 Bankruptcy". Here we give a description of each.
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy have their unique advantages. It is important to understand some of the major differences between these two chapters as well as the advantages and disadvantages. Our Maryland Bankruptcy Attorneys will help you determine which choice is best for you.
Chapter 7 Bankruptcy provides for a fast process where you can get rid of your dis-chargeable debt. This means that you can generally get rid of all of your credit card debt, garnishments, deficiencies (such as from a car repossession) and various other debt. In most cases you will keep your personal items including your car. And in many cases you will be able to keep your home. Thus many consumers will choose a Chapter 7 Bankruptcy when they are looking for a fast process that allows for a "fresh start". It is important to understand, however, that you must qualify under the "means test". This means test was included as part of 2005 BACPA and is a necessity to enter into Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy, on the other hand, provides for an orderly repayment plan where you can keep assets with substantial value (real estate, automobiles, jewelry, savings) while making a payment plan with your creditors. This plan, once approved, will be over a period of 3-5 years and will stop harassing creditor calls. Chapter 13 Bankruptcy also may allow you to strip the second loan from your home and cram down your car loans. Thus the major advantage of Chapter 13 Bankruptcy is that you will be able to keep your assets. The major disadvantage is that you will be in a payment plan for a 3-5 year period and will need to pay a portion of your debt, unlike the Chapter 7 fresh start where you do not pay these debts.
Chapter 11 Bankruptcy is normally used by larger businesses or individuals with substantial assets. This is normally a reorganization of a business and most consumers would not fall into this category.
The local rules of bankruptcy differ a bit state by state. Thus, it is important that you speak to an attorney in your state to determine your best options. Some states, for example, have a homestead exemption which could protect equity in your home. Some other states, like Maryland, have a tenancy by the entirety exemption which allows a debtor to protect individual equity in a home against joint creditors, depending on the circumstances. These powerful protections could help you decide to file in one state instead of another.
In Maryland in particular there are some important exemptions to remember. First of all, there is a tenancy by entirety exemption. When properly available and applied, this exemption allows protection of the equity of a home against individual debtors. Thus, for instance, a debtor could individually apply for chapter 7 bankruptcy and wipe out $40,000 of credit card debt while still protecting a home held as tenancy by the entirety with $100,000 of equity. In addition, Maryland offers exemptions which add up to about $12,000 in exempt property per debtor. In a couple this means $24,000 of exempt property. This $24,000 is substantial when taken into consideration that the value used is the "fire sale" value of items and not the original market value.

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