Protecting Your Assets: Maryland Bankruptcy Exemptions in Chapter 7August 1, 2023
Generally, Chapter 7 bankruptcy means you get relief from certain debts in exchange for liquidating your assets to pay your creditors. Some people hesitate to apply for Chapter 7 because they think they will lose everything. That perception is not entirely accurate. Maryland bankruptcy law provides exemptions in the Chapter 7 process to protect some of your property.
If you are filing for Chapter 7 bankruptcy in Maryland, you must use the state exemptions to determine what property you can keep. These Maryland exemptions are the exclusive rules that apply to your case, as you cannot avail yourself of the federal exemptions.
Under Maryland law, some limited exemptions keep all your property from being totally liquidated. Here are the Chapter 7 exemptions that you are allowed:
- $1,000 for household furnishing of any kind
- $5,000 for real or personal property
- $6,000 for any type of property
Being able to keep $12,000 or total property in bankruptcy may not seem like a lot, but there is much that you can gain in the process. The $6,000 “wild card” category also allows you to decide what you get to keep. For example, if you want to protect your car, you could be able to keep it as long as it is valued at $11,000 or less.
You may be struggling with a large amount of debt that you could never repay otherwise. While it will be challenging to part with your property, you can get a fresh start once your debt is discharged.
The Homestead Exemption Under Maryland Bankruptcy Law
One of the most critical issues in bankruptcy involves your home. The good news is that a house that both spouses jointly own may be protected when only one of the two spouses is filing for bankruptcy. Maryland law allows for a homestead exemption of $27,900 if the house is not jointly owned.
Even if your home equity exceeds the homestead exemption amount, it does not automatically mean that you will be forced from your home. You could lose your home if you fell behind on payments, but that would be through foreclosure instead of bankruptcy. If you are current on your mortgage payments, and your equity exceeds the homestead exemption, you may be forced to refinance your home and pay some of your equity to your creditors.
You Can Still Get Help Even if Chapter 7 Is Not Right for You
There is a chance that you can lose some of your property in bankruptcy. The debt discharge you receive at the conclusion of the process does not come without a cost. If you do not qualify for Chapter 7 bankruptcy under the means test or do not want to surrender some of your property, you can still get some help under the Bankruptcy Code. You can apply for Chapter 13 bankruptcy, which restructures your debts and gives you more breathing room.
An experienced lawyer can advise you on which process meets your needs. Then, they can guide you through the process from beginning to end, filing the necessary forms and representing you in bankruptcy court.
Baltimore Chapter 7 Bankruptcy Lawyers at LeViness, Tolzman & Hamilton Can Help You Find the Right Path
To learn more about the bankruptcy process and whether it is right for you, contact our Baltimore Chapter 7 bankruptcy lawyers at LeViness, Tolzman & Hamilton. Call us at 800-547-4LAW (4529) or contact us online to schedule a free consultation. You should talk with a lawyer to learn the pros and cons before you make any final decisions.
We have offices in Baltimore, Glen Burnie, Lanham, and Owings Mills, allowing us to represent clients in Maryland, including those in Anne Arundel County, Baltimore County, Carroll County, Harford County, Howard County, Montgomery County, Maryland’s Western Counties, Prince George’s County, Queen Anne’s County, Southern Maryland, and the Eastern Shore, as well as the communities of Catonsville, Essex, Halethorpe, Middle River, Rosedale, Gwynn Oak, Brooklandville, Dundalk, Pikesville, Nottingham, Windsor Mill, Lutherville, Timonium, Sparrows Point, Ridgewood, and Elkridge.