Chapter 13 bankruptcy is good for people who are going through a rough patch, but will be able to pay back their debt in the next 3-5 years. Basically Chapter 13 (sometimes called reorganization bankruptcy) allows you to keep all of your property – your house, your car, all of your household items – while you agree to pay back a portion or all of your debt in the next 3-5 years. Chapter 7 bankruptcy is better for someone who may have lost their job or spent entirely too much money and will never be able to pay back their debt. With Chapter 7, all debt is erased, but you may have to give up your property in order to pay creditors back. Ultimately you should consult a bankruptcy lawyer in Maryland to determine if and how you should file for bankruptcy, but below are some details that may help you learn a little bit about Chapter 7 and Chapter 13.
If you do not have a job you will be unable to apply for Chapter 13 bankruptcy because you have to be able to prove to a judge that you will be able to pay back your debt in the 3-5 year period. Even if you have a job, if your debt is too high and your job does not pay enough, you may not have the option to file for Chapter 13 bankruptcy because the judge will not be sure that you will be able to pay off your debt. A Chapter 13 bankruptcy lawyer will be able to help you determine if a judge might think that you can handle Chapter 13 bankruptcy.
There are also cases in which you may not file for Chapter 7 bankruptcy. If you have filed for bankruptcy in the past 6-8 years, you are not allowed to file for Chapter 7 bankruptcy again. Another reason that you may not be allowed to file for Chapter 7 bankruptcy is if with your current income, necessary expenses, and amount of debt, you would be able to handle paying back your debt under Chapter 13 bankruptcy.
When you realize you have to file for bankruptcy, you will go through a lot of stress and you may feel embarrassed because you were unable to handle your finances. It is important to realize that everyone can make mistakes and it may not have even been your fault because a lot of people are losing their jobs and are unable to take care of themselves and their families. If you are unsure of what to do, you should definitely turn to a qualified team of lawyers who can help you determine if you should file for bankruptcy and if so, which type you should follow for.