Filing bankruptcy in Maine can be beneficial, if the debtor can only afford to make minimum payments, without having enough left over for the basic necessities. A fresh start can provide hope for a better financial future, or help some debtors restructure payments to a more affordable amount, in the effort to become debt free. However, the benefits do not come without sacrifice, so it should be the financial decision of last resort.
Personal Bankruptcy in Maine
Residents of Maine can file Chapter 13 or Chapter 7 bankruptcy, according to the U.S. Bankruptcy Code, Title 11.
- Chapter 7 Bankruptcy - Chapter 7 bankruptcy can give the debtor a clean slate on most secured and unsecured debts. However, the debtor will have to take a “means test” to determine whether the bills are actually more than the income will cover. If the individual qualifies, certain assets are liquidated to help satisfy the creditors. Then, all other qualifying amounts are written off, in the hopes that the debtor will make appropriate financial decisions in the future, or gain the resources to provide for the basic necessities. The average income for the single wage earner is $40,618, for a household of two, it is $52,065, and for a family of three the amount is $64,342.
- Chapter 13 Bankruptcy - For individuals who want to retain their homes, cars, and other assets, Chapter 13 bankruptcy may be the best option. As long as the person does not have more than $1,010,650 in secured debt and $336,900 or less in unsecured debt, he/she may qualified to have payments restricted to a more affordable amount. Then, as long as the plan payments are made to the court, and all other debts remain current, the debtor may retain all assets. (See more on Filing Chapter 13 in Maine).
Filing Bankruptcy during Foreclosure
Filing bankruptcy during foreclosure may only put a stay on the inevitable. If the process has already been initiated, the lien holder can ask the court to remove the stay, so the property can be resold. However, a Chapter 13 restructure plan may save the family home and car. The best plan is to contact a bankruptcy lawyer, before a notice of foreclosure has been given, to discuss the best financial options for the debtor.
Maine Bankruptcy Exemptions
In the state of Maine, the debtor can file for an exemption of some assets, so the items cannot be liquidated to pay off the creditors. The following chart lists some of the most common exemptions:
Type of Asset(s)
Details on Applicable Exemption(s)
Must file for homestead before filing for bankruptcy, if over 65, the exemption is limited to $100,000-if disabled the amount doubles-but spouses cannot double, spouse or dependent may file homestead, property in tenancy may be exempt.
A bank balance of $125, cash for food up to $300, bed and bedding, clothing, Bible and other books worth no more than $200, a sewing machine worthy $200 or less, burial plots and church pew, cooperative association shares of $100 or less, 2 cows, 2 pigs and 12 sheep-including 4 tons of hay, old car worth up to $750, furniture up to $3000, moving expenses, $500 worth of deposits
$400 weekly disability, fraternal and society benefits, group life, life or endowment proceeds, exempt annuity, life insurance proceeds for wife, life insurance prohibited for use to pay creditors, medical malpractice
Business partnership assets
Qualifying ERISA, personal retirement benefits, public and savings banks employees,
AFDC, unemployment, veterans, and workmen’s comp benefits, aid to the elderly and disabled
Tools of Trade
Uniforms and arms, angler’s boat, fishing tackle and net up to $500, tools, fixtures and implements worth no more than $500
Maine Bankruptcy Court Filing Options
- Use a Bankruptcy Lawyer - A bankruptcy lawyer is highly recommended. Legal advice can ensure the debtor claims all applicable exemptions, does not forget any of the necessary paperwork, and can answer any pertinent questions in court. Legal advice can also determine the right bankruptcy for the debtor’s personal circumstances.
- Use a Filing Service - A filing service can do no more than fill out the proper paperwork and file it with the court. The service is not responsible for lost or forgotten documents. In addition, no legal advice or availability to answer questions is allowed. The debtor is alone.
- File “Pro Se” - Filing pro se may save money. However, unless the debtor is well versed in Maine bankruptcy law, he/she is likely to miss vital exemptions and other pertinent information that can drastically affect the financial outcome of the case. No legal advice is available, during the stressful and often confusing process.
Courts and Maine Bankruptcy Trustee Information
Maine District Court
Edward T. Gignoux
156 Federal Street
Portland, ME 04101-4152