Bankruptcy is broken into two categories in the state of Maryland:
Chapter Thirteen bankruptcy and Chapter Seven bankruptcy. These are the
only two forms of bankruptcy that can be petitioned for personal
purposes. Individuals may petition on their own or in a joint filing
with a husband or wife. Chapter Thirteen bankruptcy allows individuals
the opportunity to pay off their own debts using their own income
through a set up payment plan. This payment plan is specific to each
individual case and sets out how much is required to be paid each month
for a maximum of five years or a normal minimum of three years.
Chapter Seven Bankruptcy
Chapter Seven bankruptcy allows individuals to become free from debts
anywhere between three to six months. Chapter Seven bankruptcy allows
individuals to sell their property and use the acquired funds to pay
off their debts. In these cases a trustee is assigned to the specific
case. He or she will then determine which kinds of property are exempt
through the state of Maryland and which are necessary to sell.
The maximum value of the property will obtain the needed funds. The
trustee will then use the compensation to pay off the creditors. Before
all the creditors are paid, the trustee will take his or her payment
from the compensation.
Property Exemptions Laws
Upon bankruptcy filing, individuals have the right to choose whether
they want to follow Maryland state exemptions or the federal exemptions
for liquidating property. Some forms of property can be deemed exempt
from bankruptcy. Maryland classifies which kinds of property are
allowed to be exempt and by a particular dollar amount.
If a piece of property does not fall into the exemption categories, the
owner may only keep the property if he or she pays the property's value
to the trustee. Certain debts are not allowed to be exempt from
bankruptcy. These include student loans, alimony, and child support.
Exemption is determined by the property's equity. Equity can be defined
as the value difference of the owned property and how much is still
owed towards the property. Equity can be quite high depending on the
property. Equity can at times be listed under exemptions for Chapter
Seven bankruptcy if the payments are being made on time and the loan is
All property that does not come under the categories of Maryland
exemptions will be liquidated according to its value through the
trustee's experience. All assets will then be distributed accordingly.
Those who file in a joint file are able to have sets of exemptions.
Maryland breaks its property exemptions into asset categories. These
include homestead, insurance, miscellaneous, pensions, personal
property, public benefits, tools of trade, wages, and wild card.
Insurance exemptions can include health benefits and disability
benefits, while miscellaneous can include business partnership property.
Pension exemptions include the state police and state employees, while
personal property can include health aids, burial plots, appliances,
books, and clothing up to one thousand dollars. Public benefits can
include unemployment compensation, crime victim compensation, and