Eliminate Debt by Filing Bankruptcy: FAQ's

Q. WHY SHOULD I HIRE A LAWYER?

A. Only lawyers are allowed to give you legal advice and lawyers are bound by ethical rules to act in your best interest. A lawyer can tell you options that best meet your goals and protect your interests, and we don’t put your creditors’ needs ahead of yours.|
You don’t want just any lawyer. You want a lawyer who knows what they are doing and who has lots of experience in bankruptcy law. You want a lawyer who is going to take the time to meet with you and to explain how the law works. And you need a lawyer who is licensed in Maryland and regularly practices law in your local area.
You are not required to have a lawyer to file bankruptcy, but if you don’t know the law you can find yourself facing unintended results, including losing some of your assets or being dismissed from your case.

Despite what some do-it-yourself web sites say, the law is complicated and it requires you to fill out hard to understand legal documents, and take exact steps. Each person is different, and each case is different. There is no “one size fits all” way to fill out the forms. If you don’t do it correctly you may find that you have created a problem that might not be able to be fixed, and that Internet preparation service won’t be there to help either.

These problems could just be that corrected documents have to be filed, but they may be, among other things, loosing property and money, being denied access to bankruptcy by having a case dismissed, or being pulled into a drawn out legal process. Once problems arise, a lawyer will often have to charge more to try to fix it (and not always able to fix it) then to have done it right to begin with.

The lawyers at the Maryland Bankruptcy Center are experienced and will handle your case properly.

Q. HOW LONG DOES BANKRUPTCY STAY ON YOUR CREDIT REPORT?

A. Bankruptcy filings typically stay on your credit report for a period of ten (10) years. Just because bankruptcy is on your credit report that doesn’t meant that you won’t be given credit though. Think of a credit report as a financial diary, that tells creditors who are thinking of lending you money what you have done over the last seven – ten years.

If you work hard to reestablish your credit rating, what you did a few years ago weighs less against you. In order to improve your credit scores, you must pay all bills on time. Don’t max out any open lines of credit you have. If you want to buy a house or a car, save up a down payment.
Q. WHY ARE BANKRUPTCY FILINGS ON THE RISE?


A. Some people do everything right and still have to seek protection in the bankruptcy laws. But the biggest factor that has lead to filing bankruptcy is the easy availability of credit. For the last twenty years, credit card use has increased as creditors made it easier and easier to get credit, and higher credit amounts.
In addition to the easy availability of credit, rising unemployment and increased cost of medical care has caused bankruptcy filings to rise. Unfortunately many Americans are unable to afford medical insurance and as a result they are unable to pay their medical bills. Credit card bills and medical bills account for about 90% of the debt that people claim in bankruptcy.

Rather than seek help early, people borrow getting deeper in debt until the only option available is bankruptcy. If you are in that situation, you are not alone. Call us or e-mail us, we can help. That’s what we are here for, and that’s what we do.

Q. DO I OWE ENOUGH TO FILE BANKRUPTCY?


A. Many people think there is a magic number for being eligible to file. The decision to file is an individual decision that is based upon a lot of things, besides just the amount of debt you have. It depends on your particular circumstances of income and expenses. Factors such as how much you can afford to pay back, job stability, age, family needs, and health problems are all to be considered.

Part of what a good bankruptcy lawyer will do it go over your situation and discuss how bankruptcy will affect you. The bankruptcy attorney should give you whatever recommendations they can, and explain why they recommend that you look further at that option. We will help you through the process. Call or e-mail us today for a free consultation.

Q. WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7, CHAPTER 11, AND CHAPTER 13?


A. There are three types of bankruptcy cases — Chapters 7, 11, and 13.

Chapter 7: The goal for individuals who file Chapter 7 is to free themselves of debt through a bankruptcy discharge.

Chapter 11: Corporations, partnerships, and sole proprietors wishing to remain in business and reorganize their financial affairs may file Chapter 11.

Chapter 13: Chapter 13 is for individuals with regular income who want to reorganize their financial affairs. The debtor proposes a repayment plan, say to catch up on the arrears on their home mortgage. Only individuals and sole proprietors are eligible for Chapter 13, which is simpler and much less expensive than a Chapter 11.
Q. WHAT DOES BANKRUPTCY DO TO MY CREDIT?


A. In the end, a bankruptcy can make your credit better. Even if you’ve always made all your payments on time, you may owe so much money that a new credit application would be denied, so eliminating your debt would improve your credit.

Q. WILL I EVER BE ABLE TO BUY A HOUSE?


A. Most mortgage companies tell us that after 2 years, bankruptcy doesn’t hurt your chances of buying a home, so long as you are otherwise qualified.

Q. WILL I BE ABLE TO FINANCE A NEW CAR AFTER FILING BANKRUPTCY?


A. If your income qualifies you, you will most likely be able to finance a new car. However, you will probably be charged a higher rate of interest.

Q. HOW MUCH WILL THIS COST ME?


A. There is a court filing fee of about $200 that must be paid to the Federal Court. Attorney fees vary, depending on what your case requires the lawyer to do. We have payment plans available for most cases, and we will work with you to come up with a fee and a payment plan that you will be comfortable with.


Q. WOULD A DEBT CONSOLIDATION PLAN BE BETTER FOR ME?


A. It really depends on your situation – and on the consolidation company. Frequently, debt consolidation plans are phony deals that enrich the company at your expense. At the end of the day, your credit will be just as bad as or worse than if you had filed bankruptcy and you will still be in debt. There is only one way to have good credit and keep good credit…you must always pay according to the original terms and never owe more than you can afford to pay back.


Q. SHOULD I NEGOTIATE WITH MY CREDITORS?


A. Yes, but your creditors do not make it easy. Most creditors will not negotiate with you unless the account is already very delinquent. They usually want the settlement money “up front”…no payment plans; and after you pay out all the money, it does not restore your credit.

Q. CAN A PARALEGAL OR A LEGAL DOCUMENT SERVICE REPRESENT ME?


A. In Maryland, legal document preparers and paralegals cannot represent you. They cannot even give you legal advice. Further, they cannot represent you in court. Only an attorney can do those things for you. People go to them because they feel that it is cheaper than hiring a lawyer. Bankruptcy cases are very complicated and it takes the full attention of an experienced attorney to get the very best outcome for you.

Q. SHOULDN’T I FIRST TRY TO SEEK OUT SOME CONSUMER CREDIT COUNSELING?


A. Consumer Credit Counseling agencies of Los Angeles offer debt consolidation plans that only helps about 30% of the people who seek them out. Many such agencies claim to be non-profit, however many receive most of their funding in commissions called “fair share” plans paid to them by the credit industry. This is a clear conflict of interest.

Serving Clients in: Baltimore, Columbia, Glen Burnie, Towson, Annapolis, Pasadena, Rockville, Silver Spring, Laurel, College Park, Frederick, Ellicott City, Upper Marlboro, Landover, Lanham, Severn, Severna Park, Dundalk, Essex, Timonium, Catonsville, Brooklyn Park, Owings Mills, Reisterstown, Westminster, Eldersburg, Sykesville, Burtonsville, Odenton, Hanover, Prince George’s County, Howard County, Baltimore County, Montgomery County, Anne Arundel County, and Frederick County.
For your FREE consultation contact the Maryland Bankruptcy Center today at (410) 766-4044, 410-587-8900, or 877-549-0888. MDBankruptcyCenter.com