Bankruptcy Law

Myths About Bankruptcy

A. Bankruptcy Fiction vs. Bankruptcy Fact
The public perception of bankruptcy is obscured by two common fables

1. Filing Bankruptcy Ruins Your Life – Among other falsehoods, the fallacies cited in support of this woeful tall tale run the gamut from claiming that bankruptcy will never allow you to get credit or buy anything again, to proclaiming that you will be fired and never get a good job, to contending that your reputation will be ruined and alleging that you will lose all your property.

2. Bankruptcy is Only Filed, by Cheats, Who Suffer No Consequences – People who chose the bankruptcy option almost always do so as a last resort. There are costs to bankruptcy and the bankruptcy option is not for everyone.

3. How Do I Separate Bankruptcy Fact From Bankruptcy Fiction? – Look at our FAQ page. If you don’t find the answer there, contact our office to schedule a consultation.

B. When Should Bankruptcy Be Considered

1. You Cannot Repay Your Debts – Many of our clients can no longer make payments on credit cards and other debts, the payments only go to pay interest or unreasonable financial sacrifices will be made over a long period of time to repay debt.

2. You Have Been Sued – Bankruptcy stops lawsuits and related expenses including expenses you may be paying an attorney.

3. Your Wages or Bank Accounts Have Been Garnished – Bankruptcy Stops Garnishments.

4. Your Car, Truck or Other Property has Been Repossessed – Bankruptcy Stops Repossessions

5. Your Home is About to Be Foreclosed – Bankruptcy Stops Foreclosure

C. Types of Bankruptcy
Bankruptcy takes two different forms.

1. Liquidation Bankruptcy – This bankruptcy gets rid of all dischargeable debt. The vast majority of all debt is dischargeable. However, bankruptcy does not necessarily get rid of liens on houses and cars. Thus, sometimes secured debt paymentshave to be made, such as house and car payments if you want to keep that property. Otherwise, as long as you can exempt your property, you can keep it. The vast majority of people filing a liquidation bankruptcy keep all their property. A liquidation bankruptcy is also known as a Chapter 7 Bankruptcy.

2. Plan Bankruptcy – This bankruptcy is filed in order to permit some or all debt to be repaid through a “plan” – a written document proposing the amount and frequency of payment. Chapter 13 Bankruptcies and Chapter 11 Bankruptcies are examples of Plan Bankruptcies. Plan bankruptcies are filed for a number of reasons. A few of these are:
a.         To catch up on car payments, house payments, or other secured debt;
b.         To eliminate liens created by second, third or fourth mortgages;
c.         To get rid of or discharge some debts that cannot be discharged in a Chapter 7 or liquidation case;
d.         Because income exceeds expenses;
e.         Because income exceeds means testing thresholds (amounts set by law); and,
f.          Because the value of property exceeds exemptions.

Please contact our offices at (301) 942-0802 or use our no obligation Inquiry Form to learn more about how our bankruptcy services can bring you the relief you need.

For the best Maryland bankruptcy legal advice contact us for a free initial attorney consultation over the phone or in one of Maryland offices in Frederick, Howard, Montgomery or Prince George’s Counties.

Chris Wampler & Eugene Souder: your Maryland attorneys