Q: Is bankruptcy a defense to a breach of contract claim under Maryland law?
Even if they have a clause in the contract that says otherwise?
A: Yes. Under federal law as well.
A: Bankruptcy, once you file the petition, automatically stays any collection activity and lawsuits against you, even foreclosure actions against your home. When you get your discharge, it discharges your personal liability from all debts arising out of any contracts (other than most student loans and child support obligations, and it does not release property from recorded liens). The federal bankruptcy law overrides any state law, including private contractual rights and provisions, that are in conflict with it. Violation of the automatic stay, and continuation of efforts to collect a discharged debt, are punishable by civil contempt, civil fines, and an award of attorney's fees incurred by the debtor having to respond to such violations.
David Luther Woodward agrees with this answer
A: Mr. Oakley has outlined it beautifully: Section 362 of the Bankruptcy Code effectively stops all creditors in their tracks and forces them to the court where the bankruptcy is filed for any relief to which they may be eligible.
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