Bankruptcy Exemptions in Maryland

Most debtors file for bankruptcy petitions due to high medical bills, divorce, job loss, and other circumstances that are out of control. But most of them also wanted to start anew, and to protect creditors from juicing out every single cent of their hard work, congress has added exemptions to the law to protect assets. 

Bankruptcy exemptions allow petitioners to keep basic necessities including residential properties, automobiles, home furnishings, and retirement plans. If you need to know more about the assets you can keep, get in touch with your trusted bankruptcy lawyer in Baltimore, MD.

Who is Eligible for Bankruptcy Exemption?

Not everyone has the financial capacity to maintain their lifestyle after filing for bankruptcy,  and this law was created to protect those people. Individuals are eligible to claim bankruptcy exemptions in Maryland as long as they have been residents in the state for 730 days prior to filing their claim. When business owners file for a chapter 7 bankruptcy case, the court may close and return the property to the creditors or sell it to pay unsecured creditors.

Maryland Bankruptcy Exemptions

In Maryland, you can still keep certain properties even after filing for bankruptcy. These are called bankruptcy exempts. Most bankruptcy exemptions are listed in Maryland’s code section 11 or you can also ask these from your trusted Baltimore bankruptcy attorney. Some of the written highlights include:


  • Home Equity


The homestead exemption in Maryland is around $25,000. If your home’s less than that, neither the creditor nor the trustee are allowed to touch it. Unless you’ve made about half the loan payments, you might have a little bit of cash equity in your home.


  • Personal Property


The law will help you protect about $6,000 worth of clothing, furniture, tools, electronics, and other household goods. The item’s cash value or garage sale value is where the financial cap refers to.


  • Insurance Money


In Maryland, life insurance policy equity and payments are automatically exempted. Same with similar payments, such as worker’s compensation and personal injury.


  • Retirement Accounts


Retirement accounts, as well as college tuition savings accounts and other tax-deferred accounts, are usually exempted from bankruptcy. Creditors usually try to liquidate these accounts when you owe money. With bankruptcy, it will help protect all defined benefit plans.


  • Public Benefits


Government benefits such as VA disability and Social Security benefits are normally exempted, as well as child support and other similar benefits. Earned but unpaid wages are also included in bankruptcy exemptions.


  • Wildcard Exemption


This refers to the debtor’s choice of personal property to be exempted from bankruptcy. It can be up to $6,000 and can be claimed in either cash or property.

Unwritten Exemptions

If you’re earning more than half your loan payments, your home equity might exceed the $25,000 mark. Luckily, bankruptcy lawyers know some legal tricks. One such trick is called a tenancy in common, which is a special type of joint ownership.

If a married couple files for bankruptcy, the filer can make their spouse a tenant in common to exempt their home that has exceeded the equity. This can be achieved with the help of a bankruptcy lawyer. But keep in mind that seizing another person’s property to pay off debts is illegal. 

If you and your family need help in protecting assets, eliminating debts, and getting a fresh start, contact a Baltimore bankruptcy lawyer today, such as Atty. Richard Hackerman.

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