There is a common notion that if you file for bankruptcy, you will basically lose everything.
However, that is not entirely true. You may be in a position to lose a significant amount of assets, especially with a Chapter 7 bankruptcy, but there are many ways to preserve some of your property.
One of the best strategies is to take advantage of Maryland’s bankruptcy exemptions. Here is some of the most crucial information you need to know about them.
What are bankruptcy exemptions?
Bankruptcy exemptions are specific categories of property you can keep when you file for bankruptcy. These exemptions help protect certain assets from sale or liquidation.
Generally, the goal of these exemptions is to help filers maintain a standard of living and have the means to restart financially.
Maryland law allows you to keep the following:
- Home equity: Under the homestead exemption, you can keep up to $21,150 of equity in any house you occupy, such as a house or condominium.
- Insurance and damages: Maryland allows you to exempt insurance and damages with no limit. These can include compensation from legal claims and life insurance proceeds.
- Personal property: You can exempt tools of your trade up to $5,000, prescribed health aids, household furnishings and goods up to $1,000 and a burial plot.
- Wildcard: A wildcard exemption can help you keep something that does not fall under traditional exemption categories. The limit is $5,000 worth of personal property or $6,000 of cash or property.
Unfortunately, there is no vehicle exemption for Maryland, but you can use your wildcard exemption to save your car.
Other exemptions may apply to your situation. Moreover, it is possible to double the limits if you file for bankruptcy together with your spouse. To learn more about what you can exempt, consider talking to a bankruptcy lawyer.
When can you use these exemptions?
You need to be living in Maryland for at least 180 days before filing for bankruptcy. Plus, you must be living here for at least 730 days before filing to take advantage of the state’s exemptions. Otherwise, you will have to use your previous state’s exemptions.
Early preparation can help you save as much property as possible
Maryland’s exemptions are relatively generous, which means taking advantage of them can help you start fresh more easily. Take time to learn more about them and understand the rules. This way, you have better chances of keeping as much as you can.