Lawyer | Bankruptcy–Chapter 7/Chapter 13

If you’re facing overwhelming debt, bankruptcy may be the right solution to help you regain control of your finances.

Not everyone isn’t a financial expert. Sometimes when the going gets tough, a clean slate is your smartest move. Bankruptcy is a legal tool designed to help individuals and families eliminate or restructure their debt. However, the right type of bankruptcy depends on your financial circumstances.

When filing for bankruptcy, it is essential to list all your debts, including car loans, home mortgages, and other obligations. In a Chapter 7 bankruptcy, all of your property becomes part of a “bankruptcy estate.” However, this does not mean you lose everything. Instead, the court may liquidate certain types of property to repay creditors. When you file a Chapter 7 Bankruptcy, you are essentially “discharging” all of your debt, meaning you will no longer have to pay them.

A Chapter 13 bankruptcy, on the other hand, is more like a debt consolidation plan. It allows you to pay off your debts over a specified period. In many cases, the repayment amount is less than the total debt owed, as you only need to pay what you can afford, and the remaining debt is discharged. Chapter 13 bankruptcy is particularly suitable for individuals who are behind on mortgage payments, owe taxes, or have valuable property they wish to protect.

The process of filing for Chapter 7 or Chapter 13 bankruptcy can be complex, making it highly beneficial to have an experienced attorney by your side to give legal advice in Laurel, Maryland. At The Mercy Law Firm LLC, we have extensive experience handling both Chapter 7 and Chapter 13 bankruptcy cases. We are committed to leveraging our expertise to guide you through this challenging process.

Key Uses of Filing Chapter 7 Bankruptcy:

Debt Discharge – Wipe out most unsecured debts and start fresh
Quick Process – Typically completed within 3–6 months
No Repayment Plan – Unlike Chapter 13, there are no structured monthly payments
Immediate Relief – Once filed, an automatic stay stops creditor harassment, wage garnishments, and lawsuits

Key Uses of Filing Chapter 13 Bankruptcy:

Keep Your Property – Avoid foreclosure and repossession by catching up on missed payments
Affordable Repayment Plan – Only pay what you can afford each month
Debt Reduction – Some debts may be reduced or discharged after the repayment period
Protect Co-Signers – Unlike Chapter 7, Chapter 13 helps protect co-signers from creditor collection efforts

Frequently Asked Questions (FAQs)

Will filing for bankruptcy ruin my credit forever?

No. While bankruptcy will remain on your credit report for 7 to 10 years, many individuals can start rebuilding their credit immediately after their case is discharged.

Do I need a lawyer to file for bankruptcy?

While you can file on your own, bankruptcy laws are complex. Having an experienced attorney ensures you maximize exemptions, protect assets, and achieve the best possible outcome.

Can I keep my house and car if I file for bankruptcy?

Yes. In Chapter 7, exemptions may allow you to keep your home and car if you’re currently on payments. In Chapter 13, you can catch up on missed payments and prevent foreclosure or repossession.

Who Qualifies for Chapter 7 Bankruptcy?

Individuals with limited income who cannot afford to repay their debts. Those who pass the Means Test determine if their income is low enough for Chapter 7. People who have little to no disposable income after essential expenses.

Who Qualifies for Chapter 13 Bankruptcy?

Individuals who have a regular source of income. Those with secured and unsecured debts within allowable limits. Homeowners behind on mortgage payments who want to avoid foreclosure. Individuals with assets they want to protect, such as cars, homes, and other valuable property.