Maryland Bankruptcy Exemption Laws

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MD Bankruptcy InformationMaryland Bankruptcy Exemption Laws

(Portions reprinted by permission from How to File for Chapter 7 Bankruptcy, Nolo © 1989-2014 )


Federal Exemptions NOT Available
in Maryland (see below)

Maryland Homestead Exemption

Owner occupied residential property or condo or co-op to $22,975 (husband and wife may not double)
Property held as tenancy by the entirety is exempt against debts owed by only one spouse   (more...)

Auto/Truck (aka Motor Vehicle)

none (see Wild Card)   (more...)

Other Property

Appliances, furnishings, household goods, books, pets, & clothing to $1000 total Clothing, books, tools, instruments, & appliances needed for trade or profession to $5,000    (more...)

Wild Card Exemption

$6,000 of cash or any property; must claim exemption within 30 days of levy or attachment.   (more...)

Maryland Wage Garnishment Law

Earned but unpaid wages, the greater of 75% or $145 per week; in Kent, Caroline, & Queen Anne's of Worcester Counties, the greater of 75% or 30 times federal minimum hourly wage   (more...)

 


More Maryland Exemptions...

[Click here for more info & citations...]


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Wherever possible, I link to free sources of law. Not all states have systems that readily lend themselves to direct linking to specific code sections. In the 38 or so states that do allow it, I link directly to the state legislatures version of the statutes.

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Updates & Errata

I've been maintaining these tables since 1997. I try to update them twice a year. Laws change, and, even with a 99.9% accuracy, there are thousands of citations here, so a few might have a glitch or two. If I've missed something important, or something has changed, let me know. I'll fix it. Other users will thank you. - Albin Renauer


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Protecting Your Assets in Bankruptcy: Maryland Property Exemption Laws

Property you get to keep*

The law of what has come to be called "Asset Protection" is actually a mixture of laws that allow you to keep certain property no matter what, even if you owe money to others. Every state has laws that designate specific property you get to keep so that you can continue living a productive life. That is, even if you owe a trillion dollars to someone, the law won't make you sell the shirt off your back to pay it. And in Texas and Florida, they won't even make you sell your million dollar mansion, or in Nevada, your gun.

These rules are called "property exemptions." They vary from state to state. They designate what property is off limits to your 'creditors '-- the legal name for those who claim you owe them money.

When you fill out your bankruptcy forms (Form 6, Schedule C), you will be asked what property you claim as exempt -- and a citation of the law that allows it.

This page gives you those citations and gives a brief summary of the exemption.

The help topics on the right provide additional information.

*Exemptions & "secured debts"

Note that property that is collateral for a purchase-money loan (such as a car securing a car loan or a home securing a first mortgage) is not protected by exemptions from repossession actions by that lender. Any equity you may own in the property is protected and may give you certain rights against holders of judgment liens and second or third lien holders.

Let's repeat that first point before we go further: Exemption laws do NOT protect you from losing property if you've voluntarily pledged the property as security for a loan and you don't make the payments.

Example:
Unsecured vs Secured Debts

So... for example. If you owe $30,000 to credit card companies, that debt is "unsecured". There is no collateral attached to it. No matter what they threaten, the credit card company can't take any of your exempt property. Likewise, most medical bills and lawsuit settlements are "unsecured" debts. If an unsecured creditor bothers to go to court get a judgment against you, they can get the court to attach a "judgment lien" to your property. But if the property is exempt, you typically can (and should) ask the bankruptcy court to remove that lien from your property (but you have to ask -- its not automatic).

Continuing the example ... If you were persuaded to pay off your credit cards and other unsecured debts with a lower interest, "secured" loan, say, from a loan consolidation company, you probably pledged your home equity or other property as collateral.

As a general principle, once you've voluntarily (i.e. through a contract or signing something) pledged your property as security for a loan, the exemption laws no longer protect you. The creditor can repossess the property you pledged regardless of whether it is protected by an exemption.

Note that this is a general principle, among other factors -- more than we can go into here.... That's why we wrote a book... Specific facts might lead the court to apply other principles to, for example, undo a recent transaction if it unfairly benefited a single specific creditor at the expense of many others.

See Chapters 3, 4 and 5 of the How to File for Chapter 7 Bankruptcy for more about this.

 

Conditions of use & common sense advice before you use this information — Permission to use these materials is given only on the condition that the user will be solely responsible for verifying the accuracy of the information contained here.

This list was last updated, January 2014. Laws can and do change. Before relying on this or ANY information you find on the internet, confirm that it is current. (If you find something incorrect or out of date, please report it here. Thanks. )

Every effort has been made to report these laws accurately. However, there could be errors or omissions which could change the effect of the law in a particular case.

If you see a law listed here and want to know how it applies to you -- that's what lawyers are for. A lawyer can tell you whether and how a law would apply to your specific situation, and give you other ideas of how the laws might work in your favor, in your particular case. There are resources on this website to help you locate a lawyer in your area.

Laws are interpreted and applied by trustees and judges, and often even the judges don't agree on what the law means and when it applies. Over time, and hundreds of cases, there develops a pretty clear picture of what exemptions are allowed or routinely challenged within the local bankruptcy practice. Local customs can vary one district to the next, or even depend on the trustee. An experienced local bankruptcy professional should have a good sense of what flies and what doesn't with your local judge and trustee.

See the disclaimer, for other important limitations regarding this information.

The Long Tradition of Property Exemptions

The most famous asset protection law is the "unlimited homestead exemption " invented in the 1800s by the Republic of Texas as a way of attracting settlers. Other states across the plains, and Florida added unlimited homesteads to their laws and today several states still have them. Several years ago Nevada greatly expanded its exemption laws in hopes of becoming a haven for those seeking asset protection. Its generous homestead protection may be partly responsible for the Las Vegas real estate boom. Unfortunately for debtors in the rest of the country, most states offer far less protection.

Disclaimer

Citations and links to primary law and secondary sources are provided for those who wish to do further research. Every effort has been made to make this information up to date and accurate, but laws can and do change without notice. Persons relying on this information are responsible for confirming its timeliness and accuracy before relying on it. (This information was updated in December 2013.)

Also bear in mind that these brief summaries do not list every detail or exception to these exemptions. For example, there are often exceptions for collection of child support debt and/or taxes. These listings are designed to inform you of laws that exist for your benefit, so that you may exercise what rights you may have.

Finally, this website is intended to provide information only. It cannot answer whether your property does or does not qualify for a specific exemption.

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Maryland Exemptions

Federal vs. State Exemption Statutes and How to Read Them

Some states offer you a choice of their State law exemptions or the Federal bankruptcy exemptions.

Other states require you to use their state exemptions.

Some states have special exemptions that apply specifically to bankruptcy, while others apply exemption laws that affect any kind of court-ordered collection activity.

As such, the wording of these statutes commonly speak in terms used in court-ordered procedures such wages not being subject to or "garnishment" or of property or pension funds not being subject to "attachment" ...they're not talking sentimental attachment... they mean liens -- that are "attached" to property -- and sometimes can be "stripped" away or "avoided" (i.e. eliminated) in bankruptcy.

Also, unlike what you see on this web page, most states don't list their exemptions in a neat little table.

What appears on this page is a rather simplified summary of exemption laws to let you know what laws are out there and where to find them.

Users should check the actual citations for specific limitations or qualifications or updates of these exemptions.

One more thing... Some states change the emeption amounts by adminstrative order, so the numbers in the statute are old, and don't match current amounts, which you'll see here.

In states where that is the case, I make a note of that.

A few courts offer a simplified list of current exemptions and their amounts, but most don't. Wouldn't hurt to ask the clerk.

 

Federal Bankruptcy Code Exemptions Not Available in Maryland

Although the federal bankruptcy code provides a list of exemptions, these exemptions are not available in Maryland. Maryland law requires you to use the exemptions found in state law -- not the U.S. bankruptcy code.

Federal "non-bankruptcy" exemptions are available

However you are entitled to use so-called federal "non-bankruptcy" exemptions in addition to your state law exemptions. Non-bankruptcy exemptions are those found provisions of U.S. law that are not part of the bankruptcy code.

The four most significant non-bankruptcy exemptions are for

  • Wages (a general cap on what percentage of your wages can be garnished),
  • Social Security benefits,
  • Civil Service benefits,
  • Veterans Benefits

Other so called "non-bankruptcy" exemptions mostly deal with various benefits to government and military personnel, with a few odd laws regarding specially-regulated labor markets such as railroad workers, seamen, and longshoremen.

Special Notes regarding Maryland exemptions:

Maryland homestead amount is keyed to the inflation adjusted amount of the federal exemptions. Those inflation adjusted amounts can be found here. http://bit.ly/federal-exemptions-2010

Can you double exemptions for joint filers? (General principles)

If you are married and filing together, you and your spouse must use the same law; one cannot use federal law while the other uses state law. However, the exemption law chosen applies separately to each spouse. Thus, it is generally possible to double the amount of state law exemptions, Cheeseman v. Nachman, 656 F.2d 60 (4th Cir. 1981) (married couple filing a joint petition was entitled to double the Virginia homestead exemption), unless state law (e.g. California) specifically prohibits a couple from doubling certain exemptions. See First National Bank v. Norris, 701 F.2d 902 (11th Cir. 1984)(Alabama); Granger v. Watson, 754 F.2d 1490 (9th Cir. 1985)(California).

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Maryland Homestead Exemption

Home Valuation tools

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Yahoo Real Estate offers comparable home sales in your neighborhood.

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 $155,675. (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 or condo or co-op to $22,975 (husband and wife may not double), can only be claimed once every 8 years. (Note:Maryland homestead cap is equal to the Federal inflation-adjusted homestead amount.)
    Md. Code Ann., [Cts. & Jud. Proc.] 11-504 (f)
  • 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.

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Maryland Insurance exemptions

Virtually all states protect life insurance proceeds in some manner or another. Some restrict it to proceeds paid to a dependent. Many states also protect the cash-value or loan-value of insurance policies.

If a substantial amount of your assets are in life insurance, you may want to consult a professional to determine the extent to which those policies are exempt. The website AssetProtectionBook.com does particularly thorough job of covering Maryland insurance exemptions.

  • Disability or health benefits, including court awards, arbitrations, & settlements
    Md. Code Ann., [Cts. & Jud. Proc.] 11-504 (b)(2)
  • Fraternal benefit society benefits
    Md. Code Ann., [Ins.] 8-431
    Md. Code Ann., [Est. & Trusts] 8-115
  • Life insurance or annuity contract proceeds or avails if beneficiary is insured's dependent, child, or spouse
    Md. Code Ann., [Ins.] 16-111 (a)
    Md. Code Ann., [Est. & Trusts] 8-115
  • Medical insurance benefits deducted from wages plus medical insurance payments to $145 per week or 75% of disposable wages
    Md. Code Ann., [Com. Law] 15-601.1 (3)

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Maryland Pensions & Retirement Savings Exemptions

The new federal bankruptcy law now automatically exempts a virtually all tax-exempt pensions and retirement savings accounts from bankruptcy, even if you are using state law exemptions. 11 U.S.C. § 522(b)(3)(C). (See Help Topic: Special Rules For Retirement Accounts.)

The law protects any pension or retirement fund that qualifies for special tax treatment under Internal Revenue Code sections 401, 402, 403, 408, 408A, 414, 457, or 501(a).

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Maryland Personal Property Exemptions

Auto Valuation Tools:

Kelley Blue Book

Edmunds

Both of these websites offer interactive tools to determine the current value of your used car.

This category covers your car, your non-retirement bank accounts, and most of your other personal possessions, other than your house.

States vary widely on how generous they are in this area. Some exemptions may be for any combination of property up to an aggregate amount. Other exemptions apply only to specific items, such as jewelry.

Remember that an exemption will not protect your car from being repossessed by the holder of the car loan you used to purchase the vehicle if you pledged the vehicle as security for the loan. To keep the car, you will have to pursue other options such as 'redemption' or 'reaffirmation.' See the help topics and How to File for Chapter 7 Bankruptcy for more on this.

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Maryland Public Benefits Exemptions

Most states exempt public benefits, consistent with the notion that such benefits are intended as a safety net for the recipient.

  • Baltimore Police death benefits
    Md. Code 1957 Art. 24, 16-103
  • Crime victims' compensation
    Md. Code Ann., [Crim. Proc.] 11-816 (b)
  • General assistance
    Md. Code 1957 Art. 88A, 73
  • Unemployment compensation
    Md. Code Ann., [Lab. & Empl.] 8-106
  • Workers' compensation
    Md. Code Ann., [Lab. & Empl.] 9-732

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Maryland Tools of Trade Exemptions

These are the things you use to make a living. An automobile or truck can be a tool of trade if you use it as such. Commuting to work doesn't count, but if driving is a necessary component of transacting your business, you can claim your vehicle is a tool of trade.

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Maryland Wage Garnishment Laws

Most states have a wage garnishment law. In some states, wage garnishment laws can be used in bankruptcy as an exemption to protect income that you had coming due, but not yet received, as of the day you filed, for work you had already done -- so called "earned but unpaid wages".

In some states, the wage garnishment law protects not only wages owed to you, but also wages already in your possession and saved over time preferably holding it in a separate bank account. In other states wage garnishment laws do not protect wages once they are they are in your possession.

There is a federal wage garnishment protection found in the CCPA (Consumer Credit Protection Act), 15 U.S.C. § 1673, which limits how much of your pay can be taken for collection purposes. But this law law is generally found not to be an exemptions in bankrupty. See, e.g. IN RE HORTON, Case No. 10-53495., Bankr. ED Kentucky, 3/4/2011

Some courts have also held that some state wage garnishment laws do not create an exemption in bankruptcy. See, eg. Utah, Tennessee, Vermont, Missouri.

Other courts have held that state garnishment statutes DO create an exemption. See, e.g., Oregon, Iowa, Ohio, Kansas, Indiana.

And in Illinois there are recent published bankruptcy court opinions going both ways on the issue of whether Illinios wage garnishment law can be used as an exemption in bankruptcy.

Click here for collected case law on the question: Do wage garnishment laws create an exemption in bankruptcy?

Finally, if you live in a state that lets you use the Federal bankruptcy exemptions in 522(d), and you choose to use them, then you get no exemption for earned but unpaid wages; the wildcard exemption is your only option. See, e.g. U.S. v. Christensen, 200 B.R. 869 (D.S.D. 1996) (applying FDCPA law, based on similar statutory structure to bankruptcy's opt-out law)

  • Earned but unpaid wages, the greater of 75% or $145 per week; in Kent, Caroline, & Queen Anne's of Worcester Counties, the greater of 75% or 30 times federal minimum hourly wage
    Md. Code Ann., [Com. Law] 15-601.1
    Md. Code Ann., [Cts. & Jud. Proc.] 11-504 (e)
    In re Stine, 360 F.3d 455 (4th Cir. 2004)
    Bank of America v. Stine, 379 Md. 76, 839 A.2d 727 ( 2003)

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Maryland Wild Card Exemption

Most, but not all, states allow a so-called "wild-card" exemption that can apply to any property. The wild card exemption can be of particular help if one or more of your other exemptions falls short of protecting your equity. You may split your wild card exemption amount over multiple items and stack it atop other exemptions as needed to protect exposed equity.

Exemption Laws of Other States

Alabama Bankruptcy Exemptions

Alaska Bankruptcy Exemptions

Arizona Bankruptcy Exemptions

Arkansas Bankruptcy Exemptions

California Bankruptcy Exemptions

Colorado Bankruptcy Exemptions

Connecticut Bankruptcy Exemptions

Delaware Bankruptcy Exemptions

District of Columbia Bankruptcy Exemptions

Florida Bankruptcy Exemptions

Georgia Bankruptcy Exemptions

Hawaii Bankruptcy Exemptions

Idaho Bankruptcy Exemptions

Illinois Bankruptcy Exemptions

Indiana Bankruptcy Exemptions

Iowa Bankruptcy Exemptions

Kansas Bankruptcy Exemptions

Kentucky Bankruptcy Exemptions

Louisiana Bankruptcy Exemptions

Maine Bankruptcy Exemptions

Maryland Bankruptcy Exemptions

Massachusetts Bankruptcy Exemptions

Michigan Bankruptcy Exemptions

Minnesota Bankruptcy Exemptions

Mississippi Bankruptcy Exemptions

Missouri Bankruptcy Exemptions

Montana Bankruptcy Exemptions

Nebraska Bankruptcy Exemptions

Nevada Bankruptcy Exemptions

New Hampshire Bankruptcy Exemptions

New Jersey Bankruptcy Exemptions

New Mexico Bankruptcy Exemptions

New York Bankruptcy Exemptions

North Carolina Bankruptcy Exemptions

North Dakota Bankruptcy Exemptions

Ohio Bankruptcy Exemptions

Oklahoma Bankruptcy Exemptions

Oregon Bankruptcy Exemptions

Pennsylvania Bankruptcy Exemptions

Rhode Island Bankruptcy Exemptions

South Carolina Bankruptcy Exemptions

South Dakota Bankruptcy Exemptions

Tennessee Bankruptcy Exemptions

Texas Bankruptcy Exemptions

Utah Bankruptcy Exemptions

Vermont Bankruptcy Exemptions

Virginia Bankruptcy Exemptions

Washington Bankruptcy Exemptions

West Virginia Bankruptcy Exemptions

Wisconsin Bankruptcy Exemptions

Wyoming Bankruptcy Exemptions

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