Chapter 7

A Chapter 7 bankruptcy filing is an orderly, court-supervised procedure by which a trustee collects the assets of the debtor's estate, reduces them to cash and distributes that cash to creditors. This is subject to the debtor's right to retain certain exempt property. The distribution method for the assets is finalized by the bankruptcy court and the order in which creditors are paid is determined by the rights of secured creditors.

If you file a Chapter 7 bankruptcy, the court could eliminate your unsecured debts and you would owe your unsecured creditors nothing. You may owe your secured creditors, however. This is a determination made by the court and the trustee assigned to your case. Your attorney will work with you to ensure that all applicable exemptions to your assets have been applied. Whatever assets are left are divided among your creditors, with your secured creditors taking priority.

Each state has its own exemptions, in addition to the federal exemptions. This means that it is important to have a Maryland bankruptcy attorney who is well-versed in your state's bankruptcy laws. For example, in Maryland, there is a specific percentage of earned but unpaid wages that are exempt. Your attorney will know how this exemption applies to your case so that you receive every exemption you are entitled to.

Often, by the time a person files for bankruptcy protection under Chapter 7, there is usually little or no nonexempt property to distribute once all of the federal and state exemptions have been applied. This means that there may not be an actual liquidation of the debtor's assets. These cases are called no-asset cases. If there are assets that you wish to keep that are not covered by the exemptions in Chapter 7, your Maryland bankruptcy attorney may work with you to file a Chapter 13 reorganization so that you can keep those assets.

Where there are assets, and a Chapter 7 filing is appropriate for your specific case, a creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, the debtor receives a discharge that releases the debtor from personal liability for certain dischargeable debts. The debtor normally receives a discharge three to four months after the petition is filed.

If you find that your financial situation has become overwhelming and you need to get out from under a crushing debt burden, contact The Burns Law Firm, LLC. We can help you file a Chapter 7 bankruptcy so that your assets are protected under state and federal law and your debt liability is relieved.