How Does Bankruptcy Work in Maryland?

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1 MARYLAND BANKRUPTCY BASICS PROCESS, TERMINOLOGY AND PRACTICAL EFFECTS If You Are Considering Filing for Bankruptcy in Maryland, It's Important to Have a Basic Understanding of the Process, Terminology, and Practical Effects Surrounding a Bankruptcy Filing Michael P. Coyle, Esquire Maryland Bankruptcy Attorney

2 In this second part of our two-part discussion on basic bankruptcy issues, we are going to focus on some specific ideas that a lot of people have questions about. If you are considering filing for bankruptcy in Maryland, it's important to have a basic understanding of the process, terminology, and practical effects surrounding a bankruptcy filing. But while having this basic knowledge is vital, you should never make a decision about a personal bankruptcy until you have had all of your questions and concerns answered by a bankruptcy lawyer. 2

3 DIFFERENT TYPES OF BANKRUPTCY Bankruptcy is a legal process, but it isn't a single process. There are many different types of bankruptcies, each with certain kinds of advantages and disadvantages when compared to the others. A key parts of the bankruptcy process is determining what type of bankruptcy is best suited for you and your needs. For example, let's say that you have lost your job, fallen behind on your bills, are overwhelmed by credit card debt, and are constantly trying to fend off calls from creditors who are harassing you. In such a situation, many people in Maryland choose to file for a Chapter 7 bankruptcy. In a Chapter 7, you essentially declare that you have no means of repaying your debts, and ask the bankruptcy court to discharge, or effectively dissolve, the debt that you have remaining. In this type of bankruptcy you might have to sell some of your assets, but most people who file for Chapter 7 don't have much in the first place. Other people might have a steady income but are nevertheless facing significant debt pressure. People in this situation might choose to file a Chapter 13 bankruptcy. In a Chapter 13 you and your creditors agree to a payment plan that 3

4 will allow you to repay some, or even all, of your debt over an extended period of time. THE BANKRUPTCY PROCESS Many people who come talk to us are worried that bankruptcy will ruin their lives. They don't really know what bankruptcy does, how it works, or what practical effects it will have. Most of their questions and concerns, however, can be answered simply by looking at the bankruptcy process, and how it works. The first step in any bankruptcy is filing the appropriate documents with a Maryland bankruptcy court. For example, if you decide to file for Chapter 7 bankruptcy, you'll have to file a number of documents, each of which contain specific information about you, your creditors, and your financial situation. Once you file the appropriate documents, the court will issue an automatic stay. This is effectively a court order that tells your creditors they can no longer pursue you for your unpaid debts. 4

5 In other words, as soon as you file for bankruptcy your creditors will be legally prevented from trying to collect the money you owe them. This will immediately relieve the pressure you have been facing since you began experiencing financial difficulties. After you file for bankruptcy you will then begin a process through which, over a series of months, you and your creditors will determine exactly what you can pay back. Once you have paid back what you can, your debts will then effectively be erased when your bankruptcy case ends. After that, you will be free to go about your life without the ever-present pressure from your creditors. You can, effectively, start over. FILING FOR BANKRUPTCY, EXPLORING YOUR OPTIONS One of the most common questions people ask a bankruptcy attorney is whether or not they should file for bankruptcy. While this is a natural question to ask, it's very rarely an easy question to answer. The truth is that, no matter what you read online, hear from friends, or think you know about the law, you can never be sure that filing for bankruptcy is in your 5

6 best interests until you take the time to speak to an experienced bankruptcy attorney in Maryland. At the Coyle Law Group, we have years of experience counseling clients on bankruptcy issues, and can help you determine if a bankruptcy filing is right for you. Unfortunately, we can only do this by sitting down with you, discussing your circumstances, and providing you with legal advice in person. In other words, if you haven't already done so, you need to schedule an appointment to come speak to us about your financial situation and concerns once we know the facts and can speak to you about your long-term goals, we can then give you advice on whether we believe filing for bankruptcy is right for you. 6

7 About the Author Michael P. Coyle, Esquire Mr. Coyle is one of the founding partners of Chaifetz and Coyle. Prior to Chaifetz and Coyle, Mr. Coyle was a law clerk to The Honorable Robert J. Yock. Mr. Coyle then was an attorney with several of the largest and most prominent law firms in the country, before starting his own practice. Mr. Coyle graduated summa cum laude from The Washington College of Law (American University) in 1994, and was a member of The Law Review. Prior to Law School, Mr. Coyle graduated with a BA in Government from Franklin & Marshall College, Lancaster, PA. Mr. Coyle s practice specializes in bankruptcy, foreclosure defense, general litigation, civil rights, and employment discrimination. Mr. Coyle manages the Bankruptcy Department of Chaifetz & Coyle Alexander Bell Drive, Suite 200 Columbia MD Phone: (410) Fax: