In Maryland, bankruptcy provides a legal action to help consumers manage debts. At the end of some cases, consumers become completely debt-free. Some cases don’t include all debts. However, the consumer has the opportunity to start a new claim in the future. A bankruptcy attorney in New Market explains all laws and guidelines that apply to the cases.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a reorganization of debt into a new repayment plan. The cases last between three and five years and require the consumer to follow the exact stipulations. The consumer must pay all their payments according to the terms of the claim. Certain debts are discharged after the consumer completes the case.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the liquidation of key assets to generate funds to pay off debts. The cases last up to six months, and all debts are paid off typically. The court decides which assets are sold to generate proceeds, and a trustee is assigned to manage the process.
What is an Automatic Stay?
An automatic stay is provided when the bankruptcy case is filed. It lasts the full duration of the case according to the chapter chosen. It prevents any creditors from taking legal action against the consumer for outstanding debts. However, early discharge of the case may stop the automatic stay. Once the discharge occurs, all debts become the responsibility of the consumer.
What Restrictions Apply to Bankruptcy Claims?
In chapter 13, the consumer cannot start any new lines of credit while their case is active. This includes credit card accounts and loans. The consumer is required to use disposable income to pay off debts that weren’t included in the bankruptcy claim. The court can track the consumer’s activity for compliance.
In Maryland, bankruptcy claims stop creditors from filing legal claims initially. The chapter selected by the consumer dictates which laws and stipulations apply. Chapter 13 is a repayment plan, and chapter 7 is liquidation. Each of the cases helps consumers pay off debts effectively. Consumers who want to learn more about the cases can contact a bankruptcy attorney in New Market or visit us right now.
