Filing for Chapter 13 bankruptcy in Maryland can be a complex process. Understanding what to expect can help you navigate it with more confidence.
Chapter 13 bankruptcy allows individuals with a regular income to create a plan to repay all or part of their debts.
Eligibility and income assessment
You must meet certain eligibility criteria to file for Chapter 13 bankruptcy. You must show that you have consistent wages, salary or self-employment income. The court will assess your income source and amount to determine your ability to meet the repayment plan requirements.
Repayment plan creation
One of the primary features of Chapter 13 bankruptcy is the repayment plan. It outlines how you will repay your creditors over three to five years, based on your income, expenses and debts. You will develop and submit this plan as part of your Chapter 13 bankruptcy application.
After filing, you will attend a meeting with your creditors known as the “341 meeting.” The bankruptcy trustee and your creditors can ask questions about your financial situation and the proposed repayment plan. You must provide accurate and honest information during this process.
Plan approval and confirmation
Once the creditors’ meeting is complete, the court will review and either approve or deny your repayment plan. If approved, you will begin making regular payments according to the plan’s terms.
Completion of repayment
You must make on-time payments as agreed to fulfill your obligations. If you stick to the repayment plan, the court will discharge the remaining eligible debts at the end of the term. You cannot discharge certain debts, including student loan debt and some tax debts.
Chapter 13 bankruptcy could give you a fresh financial start. It remains on your credit report for seven years from the filing date. However, its impact diminishes over time and you can start rebuilding your credit. More than 157,000 people filed for Chapter 13 bankruptcy in 2022, a 30% increase from 2021.