What You Need To Know About Baltimore Bankruptcy Exemptions

Bankruptcy exemptions work in both Chapter 7 and Chapter 13 bankruptcy cases, and Maryland state law applies to those filing for bankruptcy in Baltimore. Bankruptcy exemptions help protect certain assets of yours, like your car or home, during the bankruptcy process.

Federal Vs. State Exemptions

Some, but not all, states adopt the federal guidelines for exemptions. In the State of Maryland, bankruptcy filers are required to use the state, not federal, bankruptcy exemptions.

Chapter 7 Vs.Chapter 13 Bankruptcy Exemptions

In Chapter 7 bankruptcy, under the guidance of a bankruptcy trustee, your assets are sold to pay off your debt in agreement with your creditors. However, some assets, like your home, clothing, or tools of your trade may be protected. In Chapter 13, you agree to a payment plan to pay off your debts, but how much you pay is partially affected by exempted property or assets.

Maryland Bankruptcy Exemptions

In Baltimore, the most common exemptions used for bankruptcy are:

• Homestead exemption – Approximately $23,000 of equity in your home, used as a primary residence, may be exempt. (Please check with your attorney for details as Maryland homestead exemption terms and amounts are subject to change).
• Personal property – This can include up to $5,000 worth of clothing, trade tools, books, and inventory. Other personal property can include health aids, appliances, and furnishings.
• Wildcard Exemptions – Maryland does not have a motor vehicle exemption, but the wildcard exemption can be used towards a motor vehicle. Consult with your lawyer about the current allowed amounts.
• Public Benefits & Support – These exemptions may include child support, alimony, and/or public assistance benefits.
• Retirement Benefits – IRAs and ERSA-qualified benefits may be exempt under bankruptcy. The retirement accounts and benefits of state employees may also be exempt.
• Insurance & Other Benefits – Proceeds from health, disability, or life insurance may be exempt under certain conditions.

Federal Nonbankruptcy Exemptions

Since the State of Maryland requires the use of state (not federal) exemptions, people filing for bankruptcy in Baltimore are also entitled to federal “nonbankruptcy” exemptions. Although the name might sound confusing, these are additional exemptions that can protect your assets from the bankruptcy process. However, federal nonbankruptcy exemptions only apply to a very specific set of circumstances, such as:

• Retirement Benefits – For civil, foreign or military service; railroad employee, CIA employee, military veteran, and social security benefits.
• Death & Disability – These benefits are exempt if you are a government employee, longshoreman, harbor worker or if your benefits are the result of war.
• Survivor Benefits – Survivor benefits are exempt for lighthouse workers, certain judicial employees, and active military personnel.

Check With An Attorney

The information in this article is subject to change in accordance with Maryland State law. It is always best to consult with an attorney with experience in bankruptcy law when deciding which bankruptcy exemptions you qualify for.

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