In Montgomery County, Maryland, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally excused, when they are unable to pay them. This hopefully allows them to start over with a clean slate and move on, after having learned to better manage their use of credit in the process. However, bankruptcy should not be treated as a way to avoid debt that one simply doesn't feel like paying. It is meant to be a safety net for people or businesses who are truly unable to pay off their debts. Because bankruptcy is not without negative consequences (such as a severely damaged credit rating for many years afterward), it should be viewed as an option of last resort.

Therefore, it is a good idea to talk with an experienced bankruptcy lawyer in Montgomery County, Maryland. They will be able to advise you on the likely legal and financial consequences of filing for bankruptcy, and help you determine if it's the right option for your. Because this determination depends heavily on the facts of each individual case, the counsel of a Montgomery County bankruptcy attorney cannot be substituted.

Types of Bankruptcy in Montgomery County, Maryland

There are three basic bankruptcy schemes that are most commonly used in Montgomery County: Chapters 7, 13, and 11. Bankruptcy is a creation of federal law, so the procedure for filing for bankruptcy in Montgomery County, Maryland will be roughly the same as it would be anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of some of the debtor's assets to pay off as much of his or her debt as possible. Once the liquidation is complete, and the proceeds given to the creditors, the rest of the debt is discharged. Liquidation is essentially selling assets to the highest bidder. Only some of the debtor's assets have to be sold, and varied classes of property are exempt, meaning that the debtor can keep them, including homes, cars, insurance policies, and retirement accounts. It should be noted that certain types of debt cannot be discharged through Chapter 7 bankruptcy, including student loans, child support payments, criminal fines, and recent taxes.

The other normally used bankruptcy system in Montgomery County is Chapter 13 bankruptcy. This allows a debtor to repay most or all of their debts in a structured manner. It reorganizes the debt into lower periodic payments that, with a bit of frugality, the debtor should find manageable. This allows the debtor to continue to earn a living, and allows the creditors to eventually collect what they are owed. Once a repayment plan is approved by the bankruptcy court, creditors are legally barred from seeking repayment under the terms of the agreements that gave rise to the debt in the first place, and will instead have to accept payment under the new plan. Chapter 13 bankruptcy is usually a better option for people who have a steady income. Although it can be used by individuals, Chapter 11 bankruptcy is used almost exclusively by businesses. Not unlike Chapter 13, Chapter 11 focuses on restructuring of debt, rather than discharging it. Chapter 11 requires that the debtor come up with a reorganization plan designed to reduce debt and cut costs. Before being implemented, this plan must be approved by a majority vote of participating creditors.

While going through Chapter 11 bankruptcy, a business can continue operations, and its stock can continue to be traded.

How Can a Montgomery County Bankruptcy Lawyer Help?

Filing for bankrtuptcy in Montgomery County is a major decision with costs and benefits that must be weighed carefully. Before filing, it would be a good idea to speak with a good Montgomery County bankruptcy attorney.