Chapter 7 vs. Chapter 13 Bankruptcy in Maryland: Which Option Is Right for You?

Tue, 13 Oct 2026 21:34:39 GMT

Chapter 7 vs. Chapter 13 Bankruptcy in Maryland: Which Option Is Right for You?

When debt becomes difficult to manage, choosing your next step can feel overwhelming. You may be worried about keeping your home, catching up on payments, or finding relief from credit card balances and medical bills. Bankruptcy may offer a way forward, but Chapter 7 and Chapter 13 serve different purposes.

Chapter 7 generally focuses on discharging qualifying debts without a multiyear repayment plan, while Chapter 13 allows eligible individuals to reorganize debt through a court-approved plan. The appropriate choice depends on your income, property, debts, and financial goals.

At The Coyle Law Group , we help individuals and families in Columbia and throughout Maryland understand their bankruptcy options. Attorney Michael Coyle reviews your circumstances and explains the potential benefits and responsibilities of each approach.

What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy can provide relief from qualifying unsecured debts, such as credit card balances, medical bills, and certain personal loans. Unsecured debts generally do not have collateral pledged to secure repayment.

In a Chapter 7 case, a court-appointed trustee reviews your financial information and may sell property that is not protected by applicable exemptions to pay creditors. However, filing for Chapter 7 does not automatically mean losing everything you own. Exemptions can protect qualifying property, and many individual cases involve no assets available for distribution to creditors.

Who May Qualify for Chapter 7 in Maryland?

For individuals with primarily consumer debts, eligibility generally involves a means test. This evaluates income and, when required, allowable expenses to determine whether a presumption of abuse arises.

Having income above the applicable Maryland median does not automatically rule out Chapter 7. Additional calculations may be necessary. An attorney can review your household size, income history, and expenses rather than relying on your salary alone.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows individuals with regular income to propose a repayment plan that typically lasts three to five years . Instead of liquidating nonexempt assets, you generally retain property while making payments under an approved plan.

Chapter 13 may be useful if you need to catch up on mortgage arrears, protect property that would be at risk in Chapter 7, or address debts through a structured repayment process. Eligibility also depends on statutory debt limits and your ability to fund the plan.

You do not necessarily have to repay every unsecured debt in full. The required amount depends on factors including disposable income, nonexempt property value, and the types of debts involved.

What Are the Main Differences Between Chapter 7 and Chapter 13?

How Debts Are Handled

Chapter 7 does not involve a multiyear repayment plan. Instead, a trustee may sell nonexempt property, and eligible individuals can receive a discharge of qualifying debts.

Chapter 13 organizes debts into a court-approved repayment plan. You make required payments over time, and qualifying remaining debts may be discharged after successful completion of the plan and other requirements.

How Long the Process Takes

A Chapter 7 discharge often occurs within several months, although administration of the case may continue afterward. Chapter 13 requires a longer commitment because repayment plans generally last three to five years.

How Property Is Treated

In Chapter 7, applicable exemptions help determine which property you can protect from sale by the trustee. In Chapter 13, you generally retain property, but its nonexempt value can affect how much you must pay unsecured creditors.

Chapter 13 can also provide a way to catch up on overdue mortgage payments while continuing to make ongoing payments. Chapter 7 does not provide the same repayment structure for mortgage arrears.

Can You Keep Your Home or Car in Maryland Bankruptcy?

Keeping your home or vehicle is often a major concern. The answer depends on more than which chapter you file. Your equity, applicable exemptions, loan status, and ability to maintain required payments all matter.

Maryland law provides bankruptcy exemptions that can protect certain property interests. Determining which exemptions apply requires reviewing your circumstances, including residency history and property ownership. An exemption protects qualifying equity; it does not eliminate a mortgage or vehicle lender’s lien.

Chapter 13 may allow a homeowner to cure past-due mortgage payments over the plan’s duration while maintaining ongoing payments. Timing matters: filing after a foreclosure sale may be too late to preserve the home through this process.

Does Bankruptcy Stop Collection Calls and Lawsuits?

Filing for bankruptcy generally triggers an automatic stay , which pauses many collection activities. Depending on the circumstances, this may stop collection calls, debt lawsuits, wage garnishments, and foreclosure proceedings.

The protection has limits. Some proceedings are excluded, repeat filings can affect the stay, and creditors may ask the court for permission to proceed. Bankruptcy therefore should not be viewed as a guaranteed or permanent stop to every creditor action.

Will Bankruptcy Eliminate All Your Debts?

Neither Chapter 7 nor Chapter 13 eliminates every financial obligation. Child support, alimony, certain taxes, and other categories of debt may remain after bankruptcy.

Student loans generally require a separate proceeding and a showing of undue hardship to obtain a discharge. Additionally, a discharge of personal liability does not necessarily remove a valid lien against property.

Reviewing your debts individually helps determine whether bankruptcy would address the obligations causing the greatest financial pressure.

Which Bankruptcy Option Fits Your Financial Goals?

Chapter 7 may warrant consideration when your primary concern is qualifying unsecured debt, you meet the eligibility requirements, and your property can be adequately protected.

Chapter 13 may warrant consideration when you have reliable income, need time to address overdue secured payments, or want to retain property that could otherwise be sold. Choosing Chapter 13 also means evaluating whether you can sustain the required payments for several years.

Consider what you need relief to accomplish. Are you trying to reduce unsecured debt, prevent the loss of your home, or create a workable monthly budget? Those goals should guide the discussion alongside the legal requirements.

Speak With a Bankruptcy Attorney in Columbia, Maryland

You do not have to choose a bankruptcy chapter before speaking with an attorney. A careful review of your finances can help you understand whether Chapter 7, Chapter 13, or another approach makes sense.

At The Coyle Law Group , Attorney Michael Coyle reviews income, expenses, assets, debts, and creditor activity while considering each client’s priorities. We provide practical guidance to help Maryland individuals and families make informed decisions about their financial future.

Call 301-417-5727 or contact The Coyle Law Group to schedule a consultation.

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Chapter 7 vs. Chapter 13 Bankruptcy in Maryland: Which Option Is Right for You?

Chapter 7 vs. Chapter 13 Bankruptcy in Maryland: Which Option Is Right for You?

What Is Chapter 7 Bankruptcy?

Who May Qualify for Chapter 7 in Maryland?

What Is Chapter 13 Bankruptcy?

What Are the Main Differences Between Chapter 7 and Chapter 13?

How Debts Are Handled

How Long the Process Takes

How Property Is Treated

Can You Keep Your Home or Car in Maryland Bankruptcy?

Does Bankruptcy Stop Collection Calls and Lawsuits?

Will Bankruptcy Eliminate All Your Debts?

Which Bankruptcy Option Fits Your Financial Goals?

Speak With a Bankruptcy Attorney in Columbia, Maryland