Maryland Exemptions

Maryland Exemptions

Maryland homestead amount is keyed to the inflation adjusted amount of the federal exemptions. Those inflation adjusted amounts can be found here.

Can you double exemptions for joint filers? (General principles)

If you are married and filing together, you and your spouse must use the same law; one cannot use federal law while the other uses state law. However, the exemption law chosen applies separately to each spouse. Thus, it is generally possible to double the amount of state law exemptions, Cheeseman v. Nachman, 656 F.2d 60 (4th Cir. 1981) (married couple filing a joint petition was entitled to double the Virginia homestead exemption), unless state law (e.g. California) specifically prohibits a couple from doubling certain exemptions. See First National Bank v. Norris, 701 F.2d 902 (11th Cir. 1984)(Alabama); Granger v. Watson, 754 F.2d 1490 (9th Cir. 1985)(California).

Maryland Homestead Exemption
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Almost every state provides protection for equity in the family home, and many states have increased the amount of protection in recent years. Seven states offer unlimited protection. Most states are not as generous.
New Federal Residency Requirement

Under the new bankruptcy law, you must be have lived in the state for at least 40 months (three years and four months) before you can claim any homestead protection greater than $146,450. (If your state’s exemption offers less than this amount, the law is irrelevant to you.) The law is poorly worded but seems to say that if you move from one home to another in the same state, you can claim that state’s homestead protection.

IF you are moving to another state, OR you moved to Maryland within in the last two years, click here.

MD Exemptions
Owner occupied residential property to $21,625 (husband and wife may not double)
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (f)
Property held as tenancy by the entirety is exempt against debts owed by only one spouse
In re Birney, 200 F.3d 225 (4th Cir. 1999)

Tenancy by Entirety Exemption

Tenancy by the Entirety (TBE) is a form of property ownership, based on traditional English common law, that is still recognized in about 1/2 of states and the most common form of martial property ownership in many of them.

It protects property that is jointly owned by a married couple as an “entirety” — which is to say, as a single marital entity, not as individuals.

Tenancy by the Entirety (TBE) was originally conceived as a debt shield — a way of protecting wives and children from being left homeless and penniless as a result of the debts of a husband. Under the English common law TBE doctrine, a husband could not sell property owned by “the entirety”, or give it away, or pledge it as security for a loan without the consent of his wife.

Today, 25 states still recognize some form of tenancy by the entirety, but they differ on the extent to which the property is exempt.

Property held as tenancy by the entirety is exempt against debts owed by only one spouse. Includes property transferred in a trust.
In re Birney, 200 F.3d 225 (4th Cir. 1999)
Md. Code Ann., [Cts. & Jud. Proc.] § 14-113
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(8),(9)

Insurance exemptions

Virtually all states protect life insurance proceeds in some manner or another. Some restrict it to proceeds paid to a dependent. Many states also protect the cash-value or loan-value of insurance policies.

If a substantial amount of your assets are in life insurance, you may want to consult a professional to determine the extent to which those policies are exempt. The website does particularly thorough job of covering Maryland insurance exemptions.

Disability or health benefits, including court awards, arbitrations, & settlements
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(2)
Fraternal benefit society benefits
Md. Code Ann., [Ins.] § 8-431
Md. Code Ann., [Est. & Trusts] § 8-115
Life insurance or annuity contract proceeds or avails if beneficiary is insured’s dependent, child, or spouse
Md. Code Ann., [Ins.] § 16-111 (a)
Md. Code Ann., [Est. & Trusts] § 8-115
Medical insurance benefits deducted from wages plus medical insurance payments to $145 per week or 75% of disposable wages
Md. Code Ann., [Com. Law] § 15-601.1 (3)

Miscellaneous other exemptions

This category covers items like partnership property, alimony & support payments.

Alimony to the same extent wages are exempt
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504
Child support
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(6)

Pensions & retirement savings

The new federal bankruptcy law now automatically exempts a virtually all tax-exempt pensions and retirement savings accounts from bankruptcy, even if you are using state law exemptions. 11 U.S.C. Section 522(a)(3)(C). (See Help Topic: Special Rules For Retirement Accounts.)

The law protects any pension or retirement fund that qualifies for special tax treatment under Internal Revenue Code sections 401, 402, 403, 408, 408A.

ERISA-qualified benefits, IRAs (limited to tax-deductable contributions for non-Roth IRAs)
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (h)(1)
State employees
Md. Code Ann., [State Pers. & Pen.] § 21-502

Personal property exemptions
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This category covers your car, your non-retirement bank accounts, and most of your other personal possessions, other than your house.

States vary widely on how generous they are in this area. Some exemptions may be for any combination of property up to an aggregate amount. Other exemptions apply only to specific items, such as jewelry.

Remember that an exemption will not protect your car from being repossessed by the holder of the car loan you used to purchase the vehicle if you pledged the vehicle as security for the loan. To keep the car, you will have to pursue other options such as ‘redemption’ or ‘reaffirmation.’ See the help topics and How to File for Chapter 7 Bankruptcy for more on this.

Appliances, furnishings, household goods, books, pets, & clothing to $1000 total
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(4)
Burial plot
Md. Code Ann., [Bus. Reg.] § 5-503
Health aids
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(3)
Lost future earnings recoveries
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(2)
Perpetual care trust funds
Md. Code Ann., [Bus. Reg.] § 5-603
Prepaid college trust funds
Md. Code Ann., [Educ.] § 18-1913

Public benefits exemption

Most states exempt public benefits, consistent with the notion that such benefits are intended as a safety net for the recipient.

Baltimore Police death benefits
Md. Code 1957 Art. 24, § 16-103
Crime victims’ compensation
Md. Code Ann., [Crim. Proc.] § 11-816 (b)
General assistance
Md. Code 1957 Art. 88A, § 73
Unemployment compensation
Md. Code Ann., [Lab. & Empl.] § 8-106
Workers’ compensation
Md. Code Ann., [Lab. & Empl.] § 9-732

Tools of trade exemptions

These are the things you use to make a living. An automobile or truck can be a tool of trade if you use it as such. Commuting to work doesn’t count, but if driving is a necessary component of transacting your business, you can claim your vehicle is a tool of trade.

Clothing, books, tools, instruments, & appliances to $5,000
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(1)

Wage garnishment exemption

Federal non-bankruptcy law limits how much of your pay can be taken for collection purposes. Most state laws also cover this and may offer more protection. Most states have special limits for collection of spousal or child support.

Earned but unpaid wages, the greater of 75% or $145 per week; in Kent, Caroline, & Queen Anne’s of Worcester Counties, the greater of 75% or 30 times federal minimum hourly wage
Md. Code Ann., [Com. Law] § 15-601.1

Wild card exemption

Most, but not all, states allow a so-called “wild-card” exemption that can apply to any property. The wild card exemption can be of particular help if one or more of your other exemptions falls short of protecting your equity. You may split your wild card exemption amount over multiple items and stack it atop other exemptions as needed to protect exposed equity.

$6,000 of cash or any property; must claim exemption within 30 days of levy or attachment
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (b)(5),(f)
An additional $5,000 in any personal property
Md. Code Ann., [Cts. & Jud. Proc.] § 11-504 (f)