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Bankruptcy in Maine

Facing financial challenges may feel as if you’re a character in one of Stephen King’s horror stories. But going through bankruptcy is not as bad as being drenched in pig blood (Carrie) or being chased by a crazed car (Christine).

In fact, 3,516 of your fellow Maine residents filed bankruptcy in 2011. If you are in financial distress or considering bankruptcy, this article is for you.

Please read on; we guarantee you’ll feel better as we show you how:

  • Maine bankruptcy law differs from the laws other states;
  • To choose between Chapter 7 or Chapter 13 bankruptcy;
  • To find and select a qualified bankruptcy lawyer; and
  • To prepare to work with a bankruptcy attorney.

How Maine Bankruptcy Law Differs from the Laws of Other States

Each state provides its own set of exemptions that determine how much property you can keep during bankruptcy. Some states permit you to choose between their exemptions and those of the federal government. Maine does not.

In most cases, Maine residents don’t lose any assets during bankruptcy (unless they don’t want to make the payments such as on a car loan for a car you no longer want or can’t afford). Your bankruptcy attorney knows how to use the exemptions to protect the most assets.

Here are the exemption highlights:

  • The equity in your home is protected at either $47,400 or $95,000, depending upon your age, health, and age of your children.
  • Your motor vehicle is protected if the equity is $5,000 or less.
  • Household goods and personal items are protected up to a value of $12,500.

These numbers apply for an individual filer, if you are married and filing jointly, these numbers are doubled.

Your Choices in Filing Bankruptcy in Maine: Chapter 7 or Chapter 13

When an individual or married couple files for bankruptcy protection, there is a choice between filing for Chapter 7 or Chapter 13 bankruptcy. In 2011, 86% of Maine bankruptcy filers filed under Chapter 7 and the remaining 14% filed under Chapter 13.

  • If your income is below the state median income and most of your debts are dischargeable, Chapter 7 is likely the best fit for you. Credit card bills and medical bills are discharged and you have fresh start within about 6 months.

  • If your income is above the state median and you don’t otherwise qualify, Chapter 13 is an alternative. Some debts will likely be discharged, while others are reorganized so you have the ability to repay them over 3 to 5 years.

  • Although your attorney may be able to qualify you otherwise (because there’s more than just income to consider), you definitely qualify if your income is less than $41,811 (and you’re single with no dependents) or less than $77,097, for a family of four.

As always, get good legal advice.

How to Find and Select a Bankruptcy Attorney

Have loved ones shared their financial horror stories (and fresh starts) with you? If so, ask them if they’d recommend that you work with their attorney.

  • If not, a professional such as a general practice or estate planning attorney or CPA may be able to refer you to a qualified bankruptcy attorney.
  • In the alternative, do an Internet search under “Find a Maine Bankruptcy Attorney” or call the local bar association.
  • Choose an attorney who is licensed in Maine, focuses on bankruptcy, and who you would feel comfortable working with. It’s okay to have a conversation with several prospective attorneys before hiring one.

How to Prepare to Work with a Bankruptcy Attorney

Stephen King churns out 2,000 words a day, every day, when he’s creating his next best seller. You don’t have to try to keep up with this Maine writing master, but you do need to write your own financial story.

Jot down and collect documentation for everything you own (assets), everything you owe (debts), and the bills you pay each month and annually (expenses). Your story, bestseller or not, is likely to have a happy ending (and a fresh start) after bankruptcy.

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