Greenbelt Personal Loan Attorney

Attorney Assisting Clients with Personal Loan Debt in Greenbelt, MD

Personal loans are a common financial tool that people use to cover unexpected expenses, make large purchases, or consolidate other debts. However, when financial hardships arise, many people and families may struggle to repay these loans, leading to increased financial stress and overwhelming debt. If you are in this situation, bankruptcy may provide a powerful solution to address personal loan debt and ensure that you can achieve a fresh financial start. At The Law Office of Donald L. Bell, we can advise you on what steps you can take to discharge personal loans and other debts through bankruptcy. We will provide the guidance you need to regain financial stability.

Whether a personal loan was taken out to address emergency expenses or other needs, bankruptcy can help eliminate or restructure these debts. Our experienced bankruptcy attorney can assist you by assessing your financial situation, helping you prepare and submit all required information when filing for bankruptcy, and taking the necessary steps to secure debt relief.

Types of Personal Loans and How Bankruptcy Can Help

Personal loans are typically unsecured, meaning they are not tied to specific assets or collateral, such as a home or vehicle. Because of this, personal loans often come with higher interest rates than secured loans, and missed payments can quickly lead to escalating debt. Bankruptcy offers a way to eliminate or reduce these debts, providing you with the opportunity for a fresh start without the burden of unmanageable loan payments.

Some common types of personal loans that can be addressed through bankruptcy include:

• Unsecured Personal Loans: These loans are not backed by collateral and are often used for a wide variety of purposes, such as paying medical bills, covering educational expenses, or consolidating other debts. Because unsecured personal loans are based on the borrower's creditworthiness, they can carry higher interest rates and penalties if not repaid on time.
• Peer-to-Peer Loans: Certain lending platforms allow debtors to borrow money from other people or investors rather than from traditional banks. While these loans can be an attractive alternative for borrowers, they are also unsecured and may become difficult to repay if financial circumstances change.
• Personal Lines of Credit: A borrower may withdraw funds from a financial institution up to a certain limit and pay interest only on the amount borrowed. If the balance grows too large, it may become unmanageable, and bankruptcy may be needed to resolve the debt.
• Credit Union Loans: Credit unions often provide personal loans to their members, typically at lower interest rates than traditional banks. However, these loans still require regular payments, and missed payments can lead to financial difficulties.
• Loans From Individual People or Businesses: Some people may find it necessary to borrow money from friends or family members or from an employer or another business. Even though these loans may be informal, they can still be eliminated when the borrower files for bankruptcy.

No matter the type of personal loan, bankruptcy can provide relief by discharging or restructuring the debt. This can allow a debtor to move forward without the burden of excessive financial obligations.

Addressing Personal Loan Debt Through Bankruptcy

For people struggling with personal loan debt, bankruptcy offers two primary options:

Chapter 7 Bankruptcy

The most common option for people seeking to eliminate unsecured debts such as personal loans will usually allow debts to be discharged completely. In Chapter 7 cases, eligible debts are discharged, meaning that the borrower will no longer be responsible for repaying them. Chapter 7 bankruptcy can provide quick relief from debt, and it allows people to move forward with a clean financial slate.

While Chapter 7 bankruptcy can eliminate personal loan debt, it is important to note that not all debts can be discharged, and certain assets may be subject to liquidation. However, Maryland offers several exemptions that protect essential property from liquidation during Chapter 7, such as a home, vehicle, and personal belongings.

Chapter 13 Bankruptcy

For those who do not qualify for Chapter 7, other options may be available. In a Chapter 13 bankruptcy, a debtor will develop a repayment plan, and they will make ongoing payments toward their outstanding debts during a three-to-five-year period. This option may be used by people who have a steady income but are struggling with large amounts of debt. In Chapter 13, borrowers can consolidate their debts, including personal loans, into a manageable monthly payment plan.

Some of the key advantages of Chapter 13 bankruptcy include:

• Debt Reorganization: Personal loans and other types of debts can be included in the repayment plan, allowing borrowers to pay off the amounts owed over time while potentially reducing the total amount they will be required to pay.
• Asset Protection: Unlike Chapter 7, Chapter 13 bankruptcy allows debtors to keep all of their property, including non-exempt assets, while making payments on their debts.
• Creditor Negotiation: In Chapter 13, creditors must accept the terms of the repayment plan as long as it is approved by the bankruptcy court. This can provide borrowers with better repayment terms and more time to address their debts.

Chapter 13 is often a better option for people who have secured debts, such as mortgages or car loans, but it can also provide significant relief for personal loan debt.

Issues to Consider When Discharging Personal Loan Debt

While most personal loans are dischargeable in bankruptcy, there are certain considerations that may affect how the debt is treated during the bankruptcy process. For example, if a personal loan was taken out just before filing for bankruptcy, creditors may challenge the bankruptcy on the grounds of fraud. This is known as presumptive fraud, and a person may be accused of taking out a loan with no intention of repayment.

To avoid complications, it is important to consult with a knowledgeable bankruptcy attorney before taking any action. At The Law Office of Donald L. Bell, we can work with you to assess your situation and make sure you comply with the applicable bankruptcy laws while taking steps to ensure that you can receive relief.

Contact Our Greenbelt, MD Bankruptcy Attorney for Personal Loan Debt Relief

If you are struggling to repay personal loans and address other types of debts and expenses, bankruptcy may provide you with the relief you need to achieve a fresh financial start. At The Law Office of Donald L. Bell, we can help you take steps to resolve debt-related issues successfully. Contact us and set up a free consultation by calling 301-614-0535 today.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.