If you have decided that Chapter 7 bankruptcy is the right solution to your overwhelming debt – hopefully a decision you came to with the assistance of a bankruptcy lawyer – you are probably now wondering what, if anything, you will be able to keep once your bankruptcy is over. This is often the top concern for people entering bankruptcy, and understandably so. No one wants to think about giving up their prized possessions and even their home to the bank. So what can you expect to keep? It all depends on what you own, its value, and how much you owe.
How Exemptions are Formed in Chapter 7 Bankruptcy
Part of filing for bankruptcy is putting all of your property into a bankruptcy estate, which is then sold off by a bankruptcy trustee to repay your debts. What actually gets funneled into your bankruptcy estate depends on your use of exemptions. The whole idea of exemptions is letting you keep enough to land on your feet after bankruptcy and start anew; it is not really in the bank’s best interest to toss someone out onto the street, regardless of what media stereotypes portray.
In Maryland, you must use the state’s exemption rules, not federal bankruptcy regulations. Some of these state-specific exemptions are:
- Homestead: You can claim up to $22,975 worth of your home’s equity. For example, if your home is valued at $100,000 and you owe just $50,000 on it, you have $50,000 of equity. The homestead exemption in Maryland can only be used once per eight years and does not double if you are married.
- Personal property: You can keep up to $5,000 of your own personal property or what you consider necessary to continue your career. You can protect clothing, appliances, books, cellphones, your pets, and more with this exemption.
- Retirement funds: If you have used an IRA or ERISA-qualifying benefits program, you may be able to protect the full amount from bankruptcy collections.
- Insurance: Most disability or health benefits and related insurance cannot be touched by bankruptcy. This exemption category can become complicated so review it with a bankruptcy attorney to ensure you are claiming all you can.
- Miscellaneous awards: If you have been granted a sizeable settlement or verdict award for a personal injury case, you should be able to keep all of them.
- Wildcards: Maryland grants its residents another $6,000 in cash or property, which can include vehicle equity, allowing you to keep your automobile if you owe less than that amount.
Now that you know a little more about the Maryland exemptions, it is time to see which of them apply to your Chapter 7 bankruptcy case. Contact Belsky, Weinberg & Horowitz LLC to connect with our Baltimore bankruptcy attorneys who can help you through your bankruptcy from start to finish.