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Will I lose everything if I file for bankruptcy?

| May 11, 2021 | bankruptcy |

Many people in Ocean City are buckling under the weight of overwhelming debt. Fortunately, there is help available, but unfortunately many people are afraid to take advantage of the most powerful debt reduction tool available to them.

This tool is personal bankruptcy. Many people are afraid that if they file for bankruptcy, they will lose everything they own.

The good news is that this is not true. In fact, Maryland law provides many exemptions that allow people to keep their most important assets after they file for bankruptcy protection.

Chapter 7 bankruptcy

Chapter 7 bankruptcy provides a way for individuals to quickly return to financial solvency. Those who qualify for Chapter 7 can eliminate most types of debts within 3-5 months.

The tradeoff for this fast turnaround: The person filing for Chapter 7 must give up many of their assets. Under the terms of the bankruptcy, these assets are sold in order to satisfy creditors.

Exemptions

U.S. bankruptcy law recognizes that people should not have to get rid of everything they own when they file for Chapter 7, and so it provides exemptions for many categories of assets. Generally, an individual who files for Chapter 7 in Maryland can keep up to $12,000 in exempted assets. A married couple filing jointly can keep up to $24,000.

Maryland has a long list of the types of assets that can be considered exempt. The requirements can be complicated, but they generally include clothing, household goods and sentimental items. Individuals may be able to keep a car or other large items up to a certain dollar amount in value.

Learn more

Chapter 7 isn’t for everyone. There are other means of relieving debt. However, it is the most powerful and fastest method of eliminating debt, and many people could benefit from it if took the time to learn more about it. Those who are struggling with debt can speak to an experienced attorney about their options.

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