Maryland Homestead Bankruptcy Exemption

Maryland bankruptcy exemptions are some of the most restrictive in the country. In fact, there is no homestead exemption in the state of Maryland. This means that there is no specific amount of money set aside to protect an individual’s place of residence during the bankruptcy. However, this does not mean that everyone who files bankruptcy here will lose their home. In fact, it is likely that you will not, unless you have a significant amount of equity in the home.

Overcoming the Lack of a Homestead Exemption

The bankruptcy laws in the United States were written to protect creditors but also to give individuals the ability to obtain a fresh start financially. In many cases, this means protecting the property of that individual. In the case of Maryland bankruptcy exemptions, there are other exemptions to protect property, but not a specific homestead exemption. Other exemptions include pensions, personal property such as burial plots and household goods as well as public benefits and insurance protections.

How can you overcome the homestead exemption in bankruptcy? Here are a few things to keep in mind.

In some cases, having equity in the home (the value of the home not currently owed on) will mean selling the home, but only if that equity is enough to fund paying taxes, insurance, real estate agents and others in the process of selling the property.
One of Maryland bankruptcy exemptions is a wildcard exemption. This can be applied on property, including cash, up to $6000. In addition, there is an up to $5000 personal property or real property addition to this, which can be applied towards a home’s equity.
In situations where the home’s value is upside down (the borrowers own more than it is worth) the only way to keep the home is to reaffirm the debt with the lender and stay up to date on payments.

In many cases, it is possible to protect your home even without the homestead exemption. However, if your home has significant equity, it may be necessary to file Chapter 13 bankruptcy to protect the asset or to avoid bankruptcy altogether.

Hire an Attorney

Maryland bankruptcy exemptions do protect a great deal of property but protecting a home’s value can be difficult. For this reason, individuals should work with an attorney throughout the bankruptcy process. The attorney will offer advice and guidance on how to avoid losing real estate or other property during the bankruptcy process and will represent the individual in a court of law.

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