Homeowners also have plenty to gain from a bankruptcy. But there are a few more things to keep in mind. For example, if you're a homeowner considering a Chapter 7 bankruptcy in Maryland, be aware that the Homestead Exemption is not very generous. Maryland allows an exemption on the first $23,675 of your equity. Any amount of equity over that is considered to be an asset.
For example, if you had a house with $100,00 in equity, the first $23,675 of this equity would be off-limits to your creditors. But the remaining $76,325 of equity could be seized to pay off your debt. That means a bankruptcy trustee would have the right to seize your house and attempt to sell it.
If, however, you own the house with your spouse as tenants by the entirety, and your spouse is neither filing for bankruptcy nor sharing any unsecured debt with you, then your house will be totally exempt, regardless of your equity. If you do share unsecured debt with a spouse, a bankruptcy trustee can demand that you turn that equity over to the bankruptcy estate. Failure to do so could mean that you will lose your house. So make sure you get an accurate valuation of your house to determine the amount of equity you have in it. This will help you make an informed decision about filing a Chapter 7 bankruptcy.
If you're a homeowner considering a Chapter 13 bankruptcy, be aware that the court does not encourage repeat customers. Homeowners in debt can't stave off foreclosure indefinitely through multiple bankruptcy filings. Homeowners can take advantage of the same automatic stay renters enjoy when filing their first Chapter 13 bankruptcy in a given year. But if they want to file a second one in that same year, the automatic stay is limited to 30 days. After that, the mortgage bank can proceed with foreclosure.
With the help of an attorney, however, you can request a hearing to share with the court how your current financial situation is more likely to benefit from a Chapter 13 bankruptcy than the one that prompted your first Chapter 13 bankruptcy. The court can then extend the automatic stay for the full length of the Chapter 13 proceedings, ensuring your home is safe from foreclosure.
If a homeowner wants to file a third Chapter 13 bankruptcy in that same year, there is no automatic stay at all. Filing a fourth Chapter 13 in a single year is not allowed.
If you're ready to take back control of your finances, call 301-589-4597 or email me at [email protected] to discuss your options. I offer free consultations to those enduring severe financial strain in Maryland and Washington D.C., including areas around Baltimore, Bethesda, Silver Spring, Gaithersburg, Rockville, Wheaton, Upper Marlboro, Bowie, College Park, Laurel, Frederick, Hagerstown, Hyattsville, Salisbury, Towson and Glen Burnie. Let me help you make a new start today.