January 26, 2017
If you live in Maryland and file for bankruptcy, you'll be able to protect property using bankruptcy exemptions. The Maryland homestead exemption protects equity in your home. Here you’ll find specific information about the homestead exemption in Maryland.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy.
The Maryland homestead provision allows Maryland residents to protect the current amount available under the federal homestead exemption. Currently, under the Maryland exemption system, homeowners can exempt up to $23,675 of home equity.
Some states allow married couples filing a joint bankruptcy to double the homestead exemption, but in Maryland, you cannot do so.
In Maryland, the homestead exemption applies to real property, including your home, condominium, or co-op. You must own and occupy the property in order to protect it. The homestead exemption also applies to a manufactured home that you have converted to real property by permanently affixing it to the land.
In Maryland, the homestead exemption is automatic. You don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy.
If you haven't filed for bankruptcy and a creditor serves you with a writ of garnishment (or other paperwork the creditor is using to try to take your property to satisfy the debt) you must file a response within thirty days and claim any applicable exemptions, including the homestead exemption. If you are served with a writ of garnishment, the document itself will explain the process of how to claim exemptions.
If you and your spouse hold your home as tenants by the entirety (you jointly own it as a single marital entity, not as individuals), you might be able to protect more equity than you would with the homestead exemption amount.
Property held as a tenancy by the entirety is owned as a whole by both married persons. Creditors cannot take it to pay the debts of only one owner. For this reason, a tenancy by the entirety is often referred to as a “super exemption,” although it is not actually an exemption.
A tenancy by the entirety provides limited protection, however. If the bankruptcy filer has tax debts, or if both spouses are liable for a debt (for example, joint credit card debt or medical debt incurred during the course of the marriage), a tenancy by the entirety will not provide protection in excess of the federal homestead exemption.
Maryland also has a “wildcard” exemption that you can use to protect up to $6,000 in any property. You can combine the wildcard and homestead exemptions to protect up to $29,675 in your home.
The Maryland homestead exemption has an unusual provision. You cannot claim it if you used it on the same property within eight years before filing for bankruptcy. The eight-year bar also applies if your spouse, child, child’s spouse, parent, sibling, grandparent, or grandchild successfully claimed the homestead exemption for the property you wish to protect.
Maryland’s homestead exemption is found in the Code of Maryland, Courts and Judicial Proceedings, section 11-504(f)(1)(i)(2). The U.S. Code section that Maryland bases it’s homestead exemption amount on can be found in 11 U.S.C. 522 on the website of the Office of Law Revision Counsel.
While there are no scheduled periodic updates for the Maryland exemption laws, the federal homestead exemption amount is adjusted every three years. The next adjustment will occur on April 1, 2019.