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Filing Chapter 7 Bankruptcy in Maryland: How Will it Affect You?

Do I have to list all of my debts if I file bankruptcy?

Yes, you must include all of your debt when filing personal bankruptcy, which includes credit cards, medical bills, student loans, taxes, fines and tickets and any personal loans or debts to family members. Even debts that are contingent, such as personal guaranties that have not yet come due, must also be listed. You cannot be selective in choosing which debts to list because the bankruptcy laws require each and every debt to be listed. In addition, you cannot choose to leave off of any credit accounts in a bankruptcy filing for the purpose of maintaining an active credit card post-bankruptcy. Credit cards will most likely be deactivated after the filing date, even if not reported on the bankruptcy schedules. If you inadvertently leave creditors off of your filing, you can file an amendment to your petition to add the creditors.

If I file bankruptcy, will I be able to keep my house/property?

While it depends on your individual circumstances, most people are able to keep their property and home if they file bankruptcy. If you have equity in your property, there are exemptions under the bankruptcy code and state law that can be claimed to allow you to keep your property. If you owe more on your home than it is worth, you will also be able to keep your home so long as mortgage payments remain current.

The choice of which chapter of bankruptcy code to file under also impacts the ability to retain property through the bankruptcy process.

How will filing bankruptcy affect my credit?

The way that bankruptcy filing can affect someone’s credit depends on how their credit was prior to filing. If you are delinquent on a number of accounts, your credit score is most likely already decreasing each month with the negative reporting on your credit. If you file personal bankruptcy with a credit score that is already going down, your score will not be affected drastically. On the other hand, if you have a good credit score prior to filing, you will see a more dramatic hit on your credit score post-filing. 

A bankruptcy filing may stay on your credit report for up to ten years, but there are ways to help build up your credit score even with the filing on your report.

If I file bankruptcy, will I ever have credit again and how can I rebuild?

Yes, you will have credit again. After being discharged in a bankruptcy case, your credit will begin to rebuild over time. When the negative reporting stops on debts that have been discharged and you make timely payments on post-bankruptcy obligations, your credit score will improve. Other aspects that can help improve your credit score are keeping your debt to income ratio low, making monthly payments, and when the time is right, getting a credit card that you pay off each month.

How long does the bankruptcy filing process take?

From the date of filing to the date of receiving a discharge, the average time in bankruptcy for a case filed under Chapter 7 is around 4 months. This does not include the time that is taken to prepare your Petition and Schedules, which can vary depending on the complexity of your case.

Will filing bankruptcy affect my security clearance?

In general, filing for personal bankruptcy relief will not automatically prohibit you from obtaining a security clearance. But being financially irresponsible can jeopardize your ability to obtain a security clearance. For those that have existing security clearances, a bankruptcy filing in and of itself will not result in losing your clearance so long as the filing is disclosed and you are candid with to your compliance officer regarding the circumstances that led to the bankruptcy filing. On the other hand, a security clearance can be revoked for attempting to hide the filing from your compliance officer. 

If you are considering filing a Chapter 7 Bankruptcy, contact one of our seasoned Bankruptcy attorneys today. Our team can help prepare the best strategy for your individual circumstances and be your advocate throughout the filing process.