Maryland Bankruptcy Frequently Asked Questions

Thirty questions we get asked most often about filing for bankruptcy in Maryland, answered plainly. If yours is not here, call (410) 752-9300 and ask.

What are the types of bankruptcy protection available under the law?

Bankruptcy runs on federal law, the United States Bankruptcy Code. Federal law sets most of the process, though state law does real work in places, particularly exemptions, which decide what property you keep.

The Code offers several chapters. Three cover almost everyone who walks through our door. Chapter 7 is a liquidation for individuals and small business owners. Chapter 13 is a repayment plan for individuals with steady income. Chapter 11 is a reorganization for businesses that mean to keep trading.

What are some key terms to know in the bankruptcy process?

Automatic stay
The injunction that takes effect when a bankruptcy is filed. It stops most collection activity, including past due notices, phone calls, and filing or continuing lawsuits.
Creditor
The person or business owed money. The lender.
Debtor
The person or business who owes it.
Discharge
The release granted at the end of the process. Once a debt is discharged you are no longer liable for it, the order is permanent, and creditors may not act to collect it later. Not every debt qualifies.
Exemption
A category of property the law lets you keep rather than surrender for liquidation. Maryland sets its own exemptions, and they are why most filers keep their household property. See what we say below about keeping your home.
Garnishment
Where a creditor sues, wins a judgment, and the court orders your employer to withhold part of your wages. Both federal and Maryland law limit how much can be taken.
Schedules
The forms filed with your petition setting out income, assets, debts and other financial detail.
Secured debt
Debt backed by collateral, so mortgages and car loans. Fall behind and the lender can take the property through foreclosure or repossession.
Unsecured debt
Debt with no collateral behind it. Credit cards and medical bills are the common examples.
Trustee
The official appointed by the court who administers your case and stands between you and your creditors.
Workout
An agreement with a creditor on new payment terms, or on forgiving part of a debt. Workouts happen inside a Chapter 11 or Chapter 13 case and also outside bankruptcy altogether, since creditors sometimes prefer negotiating to the alternative.
341 meeting
The meeting of creditors. You have to attend and the trustee questions you under oath. Creditors may come but usually do not.

Should I file for bankruptcy?

It depends on what kind of debt you carry and what your income and property look like. We can give you a view in a free consultation. Some general markers are worth knowing first.

Chapter 7 clears most unsecured debt, so credit cards, medical bills and utility arrears. If you pass the means test and are carrying a large amount of that kind of debt with no realistic way to pay it, filing often makes sense.

What you owe matters as much as how much. If the bulk of your debt is student loans, delinquent child support or certain back taxes, bankruptcy may not help you much, because those generally survive it.

Where you want to keep a house or car and need to stop a foreclosure or repossession, Chapter 13 is usually the better tool. It requires steady income and a court-approved plan, and it can clear a good deal of unsecured debt along the way. Many Chapter 13 filers still repay part of what they owe unsecured creditors, depending on income.

Sometimes the answer is not to file at all. Creditors will often negotiate rather than risk getting nothing, and a workout can be the better outcome. Talk to a debt counselor or an attorney before deciding, because the exceptions matter and there are a lot of them.

Do I qualify to file for bankruptcy?

Chapter 7 eligibility runs through the means test. If your household income falls below the Maryland median for your household size, you generally clear it. Above the median you are not shut out, but a longer calculation of your actual expenses decides the question.

Business debt changes the analysis. Where more than half of what you owe is non-consumer debt, the means test does not apply to you, though the other eligibility requirements still do.

Chapter 13 works differently. Your debts have to fall within the statutory limits, and you need regular income sufficient to fund the plan payments. The current limits are on our Chapter 13 page.

If I am married, should I file separately or jointly?

This turns on the facts. Where most of the debt is joint and most of the property is owned together, filing jointly is often best. Filing separately can make more sense in other situations, for instance where one spouse brought large personal debts into the marriage and the couple owns no property together.

Two questions usually decide it. How much property and assets do you own jointly, and how much separately? And how much of the debt is joint rather than individual? Filing separately does not automatically insulate your spouse, because joint debts remain joint. Worth talking through with an attorney before choosing.

Which chapter is best for my situation?

Again, the facts decide, but the rough shape is this. If you qualify and want a clean liquidation, Chapter 7. If you want to reorganize, keep a house, or your income is too high for the means test, Chapter 13. Farmers and fishermen have their own route in Chapter 12. A business that wants to reorganize, or to wind down in an orderly way over time, is looking at Chapter 11.

What debts are erased, and what cannot be discharged?

Unsecured debts are generally dischargeable. Credit cards, medical bills, utility arrears, unsecured personal loans, and in some cases past due income taxes, though taxes come with timing rules and conditions.

Several categories survive a discharge. Past due alimony and child support do. So do most recent tax debts, and debts arising from fraud or from willful and malicious injury. Student loans are dischargeable only on a showing of undue hardship, which is a demanding standard rather than an impossible one. Judgments for death or personal injury caused by driving while intoxicated also survive.

Do I need an attorney, or can I file myself?

You can file on your own, and there is plenty of material online to help. The risk is that the process is unforgiving of mistakes. Get something wrong and you can lose property you could have kept, or have your petition dismissed.

An attorney prepares the petition, deals with the trustee, negotiates with creditors, attends the 341 meeting with you, and carries the case to the end. The largest practical benefit is that someone who does this routinely is doing the communicating, and knows which details matter before they become problems.

Can I get bankruptcy forms on the internet?

Yes. The federal courts publish them free as PDFs. We still discourage filing without representation, for reasons that have teeth.

If your case is dismissed for misconduct or bad faith, you generally have to wait at least 180 days before filing again. That can happen by failing to appear, disobeying a court order, or dismissing your own case after a creditor moves for relief from the stay. Section 109(g) of the Bankruptcy Code sets this out. Where a discharge is denied outright, you may be barred from discharging those same debts in a later case.

Timing matters most if you own real estate and foreclosure is moving. Unless you are prepared to handle every deadline and document carefully, and to deal with creditors and their lawyers yourself, engage a Maryland bankruptcy attorney.

What should I do, and not do, before filing?

Start collecting records. Your last two tax returns, and income documentation such as pay stubs covering at least the six months before you file.

Expect your recent financial activity to be examined. You may be asked about transfers or sales of property, about new lines of credit, and about major purchases in the months before filing.

Bankruptcy is relief for the honest debtor, and the following will cause you trouble.

  • Do not move assets or property out of your name.
  • Do not hand property to family members or friends.
  • Do not run up credit card balances you have no intention of repaying.
  • Do not take on new credit or make major purchases, luxury purchases especially, while you are already struggling.

How much will it cost me to file?

The court’s filing fee is $338 for a Chapter 7 case, $313 for Chapter 13 and $1,738 for Chapter 11. Fees change, so check the District of Maryland’s filing fee schedule for current amounts. Attorney’s fees and other charges come on top.

If you see an advertisement for an unusually low flat fee, ask what it excludes. We charge an all-inclusive flat rate so there are no surprises. We are neither the cheapest nor the most expensive, and we would rather be judged on the result.

What happens once my petition is filed?

The court assigns a trustee to your case and the automatic stay takes effect, which stops most collection against you. In Chapter 7 you turn over non-exempt property for liquidation. In Chapter 13 your plan payments begin. Our process timeline sets out the sequence.

How soon will creditors stop contacting me?

Usually a day or two after the petition is filed. The stay is effective on filing, and most courts notify creditors electronically. Notice goes to every creditor whose name and address you provided, which is one reason the schedules need to be complete.

Will I have to deal with creditors directly?

No. Your attorney handles communication with the trustee and creditors. The one place direct contact can happen is the 341 meeting, where creditors are entitled to attend, though they rarely do.

Will I have to go to court?

In a Chapter 7 case, usually not, unless an objection is raised. You do have to attend the 341 meeting, which generally happens 20 to 40 days after filing. It takes place in the trustee’s office or a meeting room at the courthouse, and the trustee runs it, not a judge. You answer questions about your case under oath.

Chapter 13 adds a plan confirmation hearing, and that one is held in a courtroom.

How long does the process take?

A Chapter 7 case usually completes in four to six months. A Chapter 13 plan runs three to five years.

Where do I find an approved credit counseling course?

The course has to be completed in the 180 days before you file, from an agency approved for use in this district. It can be finished in a day, and telephone and online options exist for anyone who cannot attend in person.

Will I be able to keep my home?

In Chapter 13 you generally keep the house provided you can maintain the monthly mortgage payment. Where you are already in arrears, the plan is how you cure them over time.

Chapter 7 is a different question, and it comes down to equity. If enough of your equity is unprotected, the trustee may sell the house and pay creditors from the proceeds.

Maryland’s homestead exemption protects $150,000 of equity for an individual filer, or $300,000 for a filer at least 60 years old who is a veteran or has a qualifying disability. Where more than one person claims the exemption on the same property, the combined claims are capped at $300,000. Those figures took effect on June 1, 2026 (2026 Md. Laws, ch. 400 (S.B. 939)) and begin adjusting with the Consumer Price Index in fiscal year 2028. As a practical matter your equity would need to exceed the exemption by enough to make a sale worth the trustee’s while, after the mortgage, the costs of sale and the trustee’s fee.

Will I be able to keep my car?

Most filers do. Where the car is financed and you are current, you can generally keep making the payments and keep the car. Maryland’s exemptions protect a limited amount of value, so a vehicle with substantial unprotected equity is the case that needs thought.

Chapter 13 gives you more room, because arrears on a car loan can be handled through the plan. If you are behind on payments and want to keep the vehicle, say so early, because the options narrow once the lender moves.

Will I lose everything?

No. Exemptions protect categories of property from liquidation, and Maryland sets its own. In Chapter 7 they decide what the trustee cannot touch. In Chapter 13 they feed into how much you have to repay creditors over the life of the plan.

Will I lose my pension or retirement savings?

Generally no. Retirement savings held in a qualified plan, such as a 401(k) or 403(b), are protected, and they neither get liquidated in Chapter 7 nor increase what you repay unsecured creditors in Chapter 13. Individual retirement accounts are also protected, though traditional and Roth IRAs are subject to a statutory ceiling that is high enough not to affect most people.

What is the impact on my credit?

Expect a hit at first, particularly if your delinquent debts have not yet shown up on your report. What happens after that is more encouraging than people assume.

Lenders read a bankruptcy in context. They know a Chapter 7 discharge cannot be repeated for eight years and that your unsecured debt has been cleared, which makes you a more predictable borrower than someone still buried in it. The negative effect fades as you rebuild, pay on time and behave carefully with credit.

The comparison that matters is not against a clean report. It is against where you are heading without filing. If your score is already low, you are being turned down for credit, and your debt is out of proportion to your income, then continuing to miss payments will keep damaging your credit anyway, and you risk losing secured property on top. In that situation filing often costs you less than not filing.

Will it appear on my credit report, and for how long?

Yes. A Chapter 7 stays on your report for around ten years, a Chapter 13 for about seven.

Weigh that against what comes off. Unsecured debt is reduced or eliminated, which removes the accumulated delinquencies that were dragging your score down. That is the sense in which people call it a fresh start. If you already own your home and vehicles and are unlikely to need new loans soon, the trade is easier still.

One thing to consider before filing. If you are expecting a windfall, an inheritance, a promotion or an investment maturing, factor it in, because you may not need to file at all.

How long will it take to re-establish credit?

The filing sits on your report for seven to ten years, and its weight decreases as time passes, provided you take the fresh start seriously.

Rebuilding is unglamorous and it works. Set a budget you can actually keep. Get a secured credit card and use it lightly, with a view to converting it to an unsecured account later. Pay every bill on time. Watch your credit report for errors. Open checking and savings accounts, and put something into savings even when the amount feels trivial.

What if I forget to list a creditor?

It depends on whether anything was distributed. In a Chapter 7 no-asset case, where no property was liquidated and no funds went to creditors, an omitted debt would generally still be discharged. Where assets were liquidated and creditors were paid, an omitted creditor’s debt may survive the discharge, because that creditor never had the chance to make a claim.

This is why we go through the schedules carefully with clients rather than quickly.

How will an inheritance affect my case?

An inheritance you become entitled to within 180 days after filing a Chapter 7 becomes part of the bankruptcy estate, whether it arrives as property, securities or cash. The trustee will generally take it and distribute the proceeds to creditors.

Exemptions may save some or all of it. Maryland’s wild card exemption covers up to $6,000 in cash or property of any kind, so a cash inheritance of $6,000 or less can be protected with it. A married couple cannot double that (Md. Code, Cts. & Jud. Proc. § 11-504(b)(5), (f)(1)(i)(1)). Inherit a home when you do not already own one and the homestead exemption may apply instead, protecting $150,000 of equity for an individual filer, with combined claims on the same property capped at $300,000.

Chapter 13 handles it differently. Report any inheritance received during the three to five years of your plan to your trustee. The court may require the non-exempt value to be paid to unsecured creditors, which raises your plan payment. The reasoning is that unsecured creditors should receive at least what a Chapter 7 would have given them.

Timing catches people out. The 180 days runs from the date of death, not the date the money reaches you. Say a parent dies two months after you file and probate then takes another year to finalize. The death fell inside the 180 days, so the inheritance is part of the estate even though you receive it long afterwards.

What happens if someone I co-signed with files?

Their discharge releases them. It does not release you. As co-signer you can still be pursued for the full balance, which is the risk co-signing always carried.

What happens if my ex-spouse files?

If you own property together or are named as co-debtors on any loan, you can be held liable as a co-debtor even though they have been discharged. Where you share no property and no loans, their filing should not reach you.

What happens if my tenant files?

A landlord is a creditor, so the automatic stay binds you the moment your tenant files, and continuing to collect or evict without the court’s permission puts you in breach of it. What you can do next depends heavily on whether you already hold a judgment for possession. Our post on bankruptcy and eviction in Maryland covers that from the tenant’s side, and the same dividing line governs yours.

We handle both landlord-tenant disputes and bankruptcy, so call us with the specifics rather than guessing at them.

Where do I file if I have moved recently?

As a general rule you file where you lived for the greater part of the 180 days before filing. Moving between states shortly before you file can also affect which state’s exemptions apply to you, which is a separate question and occasionally a more consequential one.

Still have a question?

Call (410) 752-9300 or use the contact form on this page. See also how bankruptcy works in Maryland.