Chapter 7 Bankruptcy for a Fresh Start in Baltimore
According to the Baltimore Sun July 2017 article, after 37 years in business, Baltimore Clayworks shut down and filed for Chapter 7 bankruptcy. The filing followed a six-month saga involving an attempt to pay off its debts. Baltimore Clayworks’ board of directors decided to close the non-profit ceramic arts center helping to provide job training for adults with autism. Through Chapter 7 bankruptcy, the non-profit seeks to liquidate its assets to pay off its debts.
At the time that bankruptcy was filed, the non-profit faced more than $1 million in debt when it planned to relocate and sell the organization’s gallery and studio buildings in Mount Washington. The deal did not work out. In the summer, it planned to raise more than $50,000 to restore its cash flow, but it only generated 10% of the goal.
What is Chapter 7 Bankruptcy in Baltimore?
Chapter 7 is traditionally a personal bankruptcy for individuals trying to get out of debt. The bankruptcy option is a good one for those with unsecured credit like:
- Credit cards
- Payday loans
- Store cards
Unsecured credit is any type of credit given to an individual based on a promise to pay. No collateral was needed to secure the loan or credit. Secured credit is backed by collateral like a home mortgage.
By completing a Chapter 7 bankruptcy filing, debts are eliminated. The debtor no longer owes his or her creditors.
An Automatic Stay is Part of the Baltimore Chapter 7 Relief
One thing that makes a Chapter 7 so powerful is that it comes with an automatic stay. The stay prevents the creditor from starting, continuing, or completing the legal process against you. This legal process could be garnishing wages or shutting off utilities. It will not provide relief to prevent the sale of property. Only Chapter 13 can do that.
Chapter 13 bankruptcy is called a wage earner’s bankruptcy because the debtor must pay back debts to creditors.
Preparation Prior to Filing Chapter 7 Bankruptcy
Bankruptcy rules changed in 2005. No longer were debtors allowed to choose their bankruptcy chapter. Prior to the change, it did not matter how much money the debtor had or if he or she wanted to repay or have debts eliminated.
Current bankruptcy laws involve a Means Test. This test determines whether a debtor can file Chapter 7 or Chapter 13. If, after completing the test, the debtor has money left over, it is called disposable income. He or she can then file for Chapter 13. If the debtor has no disposable income after all bills are paid, then he or she qualifies for Chapter 7.
Contact Hassan, Hassan & Tuchman, PA for Assistance with Your Chapter 7 Bankruptcy
Chapter 7 bankruptcy is worth the work of completing. It involves completing pre-bankruptcy counseling and credit counseling. After filing, you will have to attend a court hearing and complete a debtor’s education course. A skilled bankruptcy attorney can handle everything in between to help you get a fresh financial start. Contact us.