The thought of filing for bankruptcy brings with it many questions. Will you lose your home or car? What will happen to your retirement plans? How will you feed your family if you lose everything? Maryland bankruptcy laws are designed to protect both you and your creditors throughout the bankruptcy process. Understanding these laws before you begin will alleviate some of these common fears.

Bankruptcy Exemptions

Filing for bankruptcy in Maryland does not mean you will lose everything you own. Maryland bankruptcy laws protect certain assets, including:

• Up to $1,000 for furniture, clothing, appliances, books, pets and household goods
• Burial plots
• ERISA qualified benefits, but not IRAs
• Health aids
• Recoveries for lost future earnings
• Medical benefits when deducted from wages
• Annuity or life insurance proceeds
• 75 percent of disposable wages
• Public benefits
• Business partnership property
• Up to $5,000 for items needed for your profession, including books and clothing
• Up to $6,000 for any property, including cash
• Up to $5,000 for aggregate interest in real or personal property

Maryland differs from other states in that it does not offer a homestead exemption or an exemption specific for your vehicle, although the wildcard exemption could apply to either item.

Chapter 7 Bankruptcy Information

Chapter 7 bankruptcy protection offers the chance to wipe out many debts and start fresh. While not all debts are eliminated with this form of bankruptcy, and you will still need to pay on your student loans, back taxes and support payments, most types of debt are eliminated after you have paid what you can from the proceeds of non-exempt assets. In order to file Chapter 7, you must pass a means test. This requires that your income be at or below the median income level in your state.

Chapter 13 Bankruptcy Information

Since Maryland provides no homestead exemption, many debtors, even those who qualify for Chapter 7, choose to file Chapter 13 instead if they own a home. This allows them to attempt to pay back their debts with court supervision under a trustee-created repayment plan. If your mortgage can be brought up to date, you can sometimes keep your home with Chapter 13 bankruptcy.