What Are the Maine Bankruptcy Exemptions?

What Are Maine’s Bankruptcy Exemptions and Why Do They Matter?

If you decide to file Chapter 7 bankruptcy in Maine, the state’s exemptions will be important for you. Exemptions are the rules that outline what personal property you can keep. The vast majority of Chapter 7 filers keep all their personal property. But if you happen to own an expensive piece of property whose value isn’t covered by exemptions, you may be at risk of losing it during your bankruptcy. Again, this is rare but important to be aware of.

Can You Use Federal Bankruptcy Exemptions if You File in Maine?

Each state has a set of bankruptcy exemptions, and the federal government also has its own exemptions. Maine doesn't allow its residents to use federal bankruptcy exemptions, so you don’t need to worry about learning about the federal exemptions. 

There’s one possible exception though: If you haven’t lived in Maine for at least two years, you may need to use federal exemptions or the exemptions from the state you previously lived in.

What Are the Maine Bankruptcy Exemptions?

When reviewing Maine bankruptcy exemptions, remember that if you’re filing jointly with your spouse, both of you are entitled to a full set of exemptions. This means the exemption values are doubled unless stated otherwise.

For instance, a single filer can claim a $400 wildcard exemption to protect property not covered by other exemptions. However, a married couple filing jointly can claim a wildcard exemption worth up to $800 in total, as their exemption values are automatically doubled.

Real Property: The Maine Homestead Exemption

If you’re single and have no qualifying dependents, Maine law allows you to exempt up to $47,500 worth of equity in your home or other real estate used as your primary residence. If you have minor dependents living with you, the exemption amount doubles to $95,000. 

The same increased exemption applies if you live with adult dependents who meet specific criteria, such as being mentally or physically disabled and unable to maintain gainful employment or being at least 60 years old. This increased exemption helps ensure that families and those caring for dependents can protect more of their home's equity during financial hardship.

You can also apply this exemption amount to a burial plot.

Maine’s Personal Property Exemptions

Maine’s personal property exemptions are detailed and specific. For example, instead of broadly stating that “jewelry is exempt,” the law specifies a $750 exemption for jewelry, but with no limit on the value of one wedding ring and one engagement ring.

It's crucial to understand the specifics of these exemptions. You may need to select which property to exempt under the category limits and use a wildcard exemption or other exceptions to cover items that exceed ordinary value limits for each property category.

In addition to the jewelry exemption mentioned, the following personal property exemptions are allowed under Maine law. Unless otherwise noted, the full value of the property in question is exempt:

• Animals (up to $200 in value for each item)

• Books (up to $200 in value for each item)

• Clothes (up to $200 in value for each item)

• Commercial fishing boat (one; the fishing boat may not exceed 5 tons burden)

• Commercial wood hauling equipment (one of each type of professional logging equipment required to harvest and haul wood commercially)

• Cooking Stove (one)

• Crops (up to $200 in value for each item)

• Farm equipment

• Food provisions to last up to six months

• Health aids (professionally prescribed for filers or their minor dependents)

• Heating aids (5 tons of coal, 10 cords of wood, and 1,000 gallons of petroleum for family use)

• Household goods, household furniture, and appliances (up to $200 in value for each item)

• Musical instruments (up to $200 in value for each item)

• Tools of the trade (up to $5,000 in value)

• Wood stoves

Additionally, filers may exempt up to $5,000 in equity interest in one motor vehicle. If a vehicle isn’t owned outright, this interest is calculated using the difference between the vehicle’s value and the outstanding loan amount. For example, if a car is valued at $8,000 but the filer still owes $4,000 on the loan, they can exempt the $4,000 in equity they have in the vehicle.

Finally, if you did not use the total homestead exemption available to you, you can use up to $6,000 of the remaining unused homestead exemption to protect additional interest in tools of the trade, household goods, household furniture, appliances, and personal injury awards.

Maine’s Money Benefits

Maine doesn’t offer a wage exemption. So, if you have money in the bank from wages you’ve recently earned, these aren’t explicitly exempt. But you can use some of the unused homestead exemption remainder (up to $6,000) to safeguard your wages.

Maine offers a very generous pension and retirement exemption structure. Essentially, any pension and retirement accounts deemed reasonably necessary to support you or your dependents are exempt. It is rare for the retirement accounts of filers with low incomes to be considered so excessive that they don’t qualify for exemption.

For example, up to $1,000,000 in value in an individual retirement account is explicitly exempt. Therefore, it is unlikely that Chapter 7 filers with low incomes have pension or retirement funds so large that they wouldn't be exempt.

Unless noted otherwise, the following additional money benefits are exempt up to their full value under Maine law:

• Alimony or spousal support

• Annuity proceeds (not to exceed $450 monthly)

• Child support

• Child tax credit

• Crime victim reparation

• Death benefits granted to family members of first responders who lost their lives in the line of duty

• Disability or illness benefits

• Earned income tax credit

• Fraternal benefit society benefits

• Group health or life policy or proceeds

• Life insurance payments tied to the loss of your spouse (reasonable to the extent necessary to support you and your children)

• Loss of future earnings award (reasonable to the extent necessary to support you and your children)

• Personal injury recoveries up to $12,500, with no limitations placed on pain and suffering awards and awards for actual monetary loss

• Public assistance benefits

• Social Security benefits

• Stock bonus, profit shares, annuity, pension, or a similar plan/contract on account of age, death, disability, illness, or length of service (reasonable to the extent necessary to support you and your children)

• Tax-exempt retirement accounts, including 401(k)s, 403(b)s, defined benefit plans, money purchase plans, profit-sharing plans, SEP and SIMPLE IRAs

• Unemployment compensation

• Unmatured life insurance contract, matured life insurance contract, dividends, interest, or loan value for someone you depended on for support insuring you or your minor dependents (up to $4,000)

• Veterans’ benefits

• Wrongful death recovery award for the death of your spouse (reasonable to the extent necessary to support you and your children)

Other Maine Exemptions

Maine law honors a wildcard exemption that allows filers to safeguard an additional $400 in value for property that is not exempted by any other provision in the state’s bankruptcy laws. A new exemption has been added for cash, financial accounts, and bank accounts. This exemption allows individuals to protect these assets in their bankruptcy filings under Maine law. See 14 M.R.S. § 4422(17)

Need Help Filing Chapter 7 Bankruptcy in Maine? 

If you decide to file Chapter 7 bankruptcy, Upsolve may be able to help you file for free. When you file Chapter 7, exemption laws are what help protect your property so you can get a financial fresh start without having to start from scratch. Upsolve’s free web app walks you through the process of claiming exemptions to protect your property.

If you’d like to get legal advice from a seasoned bankruptcy attorney, Upsolve can help connect you for a free consultation. If you own a home or any expensive property you’re worried about losing if you file bankruptcy, it’s a good idea to speak with an attorney first to see how bankruptcy might affect your property.