Chapter 7 bankruptcy provides a way for Maryland debtors to address their financial obligations. Debtors may wish to think about whether Chapter 7 is right for them.
Liquidation and other issues
Chapter 7 involves liquidating cash and property to pay creditors. One concern about liquidation is whether the court may force them to sell needed assets. Be mindful that all assets receive a review by the bankruptcy court. While some property receives exemptions, other property faces seizure for liquidation.
The option of Chapter 7 seems appealing because some debts receive a discharge. That only happens with some debts, however, and those with many obligations that bankruptcy won’t address may not want to file Chapter 7.
Be aware that there are rules in place that prevent someone from filing for bankruptcy again within a specific timeframe. Filing for Chapter 7 could be impossible if a previous bankruptcy was dismissed within the past 180 days or a Chapter 7 or Chapter 13 received discharges within eight and six years, respectively.
Chapter 13
Chapter 13 bankruptcy might be preferable for those wishing to avoid potentially troubling outcomes from filing for Chapter 7 bankruptcy. Chapter 13 would establish a repayment plan for some debts. Debtors who fail the Chapter 7 bankruptcy means test might consider Chapter 13.
Although someone might not be eligible for Chapter 7 after passing the required means test, they might not want to file for Chapter 13. They could re-apply for bankruptcy protection after a certain amount of time expires by retaking the means test. Some find filing for chapter 13 preferable to waiting for what happens in several months.
One significant benefit to filing for Chapter 7 or Chapter 13 bankruptcy is getting a fresh start. Those who do not make changes could find themselves seeking bankruptcy protection in the future.