Eliminate Debt While Saving Your Home

Recently the Maryland legislature passed a new law that increases a homeowners chance of keeping their home even after filing Chapter 7 bankruptcy, which eliminates almost all of their debts.  A terrific website called legalconsumer.com recently posted an article about the new Maryland Homestead law, and in part, it provides as follows:

Almost every state provides protection for equity in the family home, and many states have increased the amount of protection in recent years. Seven states offer unlimited protection. Most states are not as generous.

New Federal Residency Requirement

Under the new bankruptcy law, you must be have lived in the state for at least 40 months (three years and four months) before you can claim any homestead protection greater than $146,450. (If your state’s exemption offers less than this amount, the law is irrelevant to you.) The law is poorly worded but seems to say that if you move from one home to another in the same state, you can claim that state’s homestead protection.

IF you are moving to another state, OR you moved to Maryland within in the last two years, click here.

  • MD Exemptions
  • Owner occupied residential property to $21,625 (husband and wife may not double)
    Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (f)(II)
  • Property held as tenancy by the entirety is exempt against debts owed by only one spouse
    In re Birney, 200 F.3d 225 (4th Cir. 1999)

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Tenancy by Entirety Exemption

Tenancy by the Entirety (TBE) is a form of property ownership, based on traditional English common law, that is still recognized in about 1/2 of states and the most common form of martial property ownership in many of them.

It protects property that is jointly owned by a married couple as an “entirety” — which is to say, as a single marital entity, not as individuals.

Tenancy by the Entirety (TBE) was originally conceived as a debt shield — a way of protecting wives and children from being left homeless and penniless as a result of the debts of a husband. Under the English common law TBE doctrine, a husband could not sell property owned by “the entirety”, or give it away, or pledge it as security for a loan without the consent of his wife.

Today, 25 states still recognize some form of tenancy by the entirety, but they differ on the extent to which the property is exempt.

If you are a Maryland resident and are considering filing Chapter 7 or Chapter 13 personal bankruptcy, call us today for a free consultation at (410) 766-4044.  A Maryland bankruptcy lawyer/attorney will answer any questions that you might have and lead you in the right direction.