Bankruptcy Myths: Week 5

Myth: I can always sign a reaffirmation agreement through Bankruptcy in order to save my home from a forced sell.

Truth:  The state of Maryland does not have a homestead exemption that will exempt all of the equity in a person’s home.  Instead only $21,625 of equity can be exempted through Bankruptcy.  If you have more than this amount of equity in your home, you may be forced to sell your home to pay off your creditors.

Myth: As long as I live in the State of Maryland, I may file Bankruptcy in the state and use Maryland’s exemptions in my bankruptcy.

Truth:  You must have been a resident of Maryland for at least 2 years prior to the filing of your bankruptcy.  If you have not lived in Maryland for a full 2 years immediately preceding your bankruptcy, then the exemption from the state in which you lived before moving to the state of Maryland will be used under most circumstances.

Myth:  My bank accounts will be frozen if I file for bankruptcy.

Truth: Your bank accounts may be frozen if you have an outstanding debt with a bank that you have an account with.  For instance, if you have a credit card with a balance with “A Bank” and you decide to file for bankruptcy, “A Bank” will likely freeze any checkings or savings accounts you have with them.

For more information visit Smith Legal Services at, www.mysmithlegal.com.