Maryland Chapter 13 Bankruptcy

Bankruptcy is a legal procedure to help those who are not capable of paying their debts. Anyone can file for bankruptcy as it is his or her right, and this is allowed by the federal law. All bankruptcy procedures are handled by the federal court.

Maryland Chapter 13 Bankruptcy Laws, also known as Reorganization Bankruptcy, is for individuals who are earning regular income but have unsecured debts of not more than $307,625.00 or secured debts not more than $923,000.00. The court sets a payment plan wherein a debtor can afford and give it to an appointed trustee who will then pay to the creditor. Chapter 13 is more effective among homeowners who are behind their mortgage payments and has enough non-exempt assets.

Filing for Maryland Chapter 13 Bankruptcy

Debtors who are residing in Maryland can file for Maryland Chapter 13 Bankruptcy at a bankruptcy court. The court will ask them to reproduce documents such as certificate of credit counseling, debt repayment plan, proof of payment from employers if available, monthly income statement or tuition fee accounts. Unless asked by the court, they must also file schedules of their assets and liabilities, current income and expenditures, executor contracts and current leases, and financial statements. A copy of most recent year of tax return is also provided to the trustee.

Filing for a petition has a fee, as well as other miscellaneous fees. For individual debtors who can’t afford to pay the court for these fees, they are allowed for four installment basis up to 120 days but can be extended up to 180 days upon filing. Joint petition has a one-time payment for filing the case and a one-time payment for miscellaneous fee.

The Proceedings for Chapter 13

The court will set the length of time for paying the creditors, and this will range from 36 to 60 months (3-5 years) while the debtors propose a plan on how they will pay their creditors over that period. A trustee is appointed to evaluate and collects payments from the debtors and distribute it to the creditors. The proposed written plan will begin within 30 to 45 days after the case begins.

The trustee will hold a meeting between 21 to 50 days after filing so the presence of individual debtors and also both the married couples is a must. After that, they will be placed under oath, and should answer any questions regarding financial matters asked by both the trustee and the creditors. To avoid any problems, the debtors should make their plans as complete and as accurate as possible and should have consulted the trustee before the meeting.

During this period, the court will prohibit creditors from repossessions, or any foreclosure proceedings, as well as payment collections so the debtors still owns their properties. Protection will also be granted for co-debtors. However, debtors may lose their properties if the creditors have foreclosed it before the filing or if they fail to pay their creditors regularly after filing.

Knowledge about bankruptcy law is important when filing for Maryland Chapter 13 Bankruptcy. These can protect debtors from any creditors who want to take advantage of their unfavorable situation.

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