What Are the Maryland Bankruptcy Exemptions?

What Are Maryland Bankruptcy Exemptions and Why Are They Important in Chapter 7 Bankruptcy?

If you’re filing Chapter 7 bankruptcy in Maryland, exemptions are one of the most important things to understand. Bankruptcy exemptions are legal protections that let you keep certain property instead of having it sold to pay your creditors.

A common myth is that filing bankruptcy means losing everything you own—but that’s not how it works for most people. In fact, many Chapter 7 filers keep all of their property because it’s protected by exemptions.

Maryland’s bankruptcy exemptions are designed to protect everyday essentials. This includes things like your bed, clothes, basic household furniture, and work tools. These rules help make sure you’re not left without the basics you need to live and work.

That said, exemptions won’t usually protect luxury items like high-end jewelry, designer clothing, or expensive vehicles. If you own more than what the exemption laws cover, that property could be at risk in a Chapter 7 case.

Knowing what Maryland’s exemptions cover can help you figure out whether Chapter 7 is the right path and what you’re likely to keep. We’ll walk you through those protections in the next section.

Does Maryland Allow the Use of Federal Bankruptcy Exemptions?

If you’ve lived in Maryland for at least two years, the state requires you to use Maryland’s bankruptcy exemptions. You can’t use the federal bankruptcy exemptions listed in the U.S. Bankruptcy Code. However, you may still be able to use certain federal nonbankruptcy exemptions, which can protect things like retirement accounts connected to government jobs.

The list of Maryland exemptions is found in the Maryland Code, Courts and Judicial Proceedings § 11-504. We’ve outlined the key exemptions below to help you understand what property you may be able to keep.

Important Maryland Bankruptcy Exemptions

Maryland offers several exemptions that can help protect your home, belongings, and other essential property when you file Chapter 7 bankruptcy. Here's a breakdown of key exemptions available under Maryland law.

Real Property Exemptions: Maryland Homestead Exemptions

Maryland’s homestead exemption protects up to $31,575 in equity in your home or other residential real estate. This amount matches the current federal homestead exemption as of April 1, 2025, and it may be adjusted for inflation in future years.

Unlike some other states, Maryland does not allow married couples filing jointly to double the homestead exemption.

Personal Property Exemptions: 

• Tools of the Trade: Clothing, books, tools, instruments, and appliances used in your work are protected up to a combined value of $5,000, as long as they’re necessary for your trade or profession. This doesn’t include inventory.

• Health Aids: Medical devices and health aids that have been professionally prescribed are fully protected, with no dollar limit.

• Household Goods and Personal Items: Clothing, furniture, books, household appliances, pets, and other personal belongings are exempt up to a total value of $1,000.

• Wildcard Exemptions: You can protect up to $6,000 in cash or any kind of personal property. You may also use an additional $5,000 wildcard exemption to protect personal property of any kind during your bankruptcy case.

Money Benefits

Certain types of money you receive—or are entitled to receive—are protected under Maryland law when you file bankruptcy. Here’s a breakdown of what may be exempt:

• Injury or Death-Related Payments: Money you recover because of an accident, illness, injury, or death is fully protected. This includes compensation for lost future earnings.

  • Note: If you’re receiving disability benefits, those benefits may not be protected from creditors if the debt was for basic necessities and was incurred after the disability began.

• Child Support: Any child support you’re receiving now or expect to receive in the future is fully exempt. Creditors can’t take this money to pay off debts.

• Alimony (Spousal Support): Alimony is protected, but only to the same extent that wages are. That means a portion may be protected, while the rest could be subject to garnishment depending on your situation.

• Trust Property: If you have a beneficial interest in a trust that’s protected from creditors under Maryland law (specifically § 14.5-511 of the Estates and Trusts Article), that interest is also exempt in bankruptcy.

Earned and Unpaid Wages

• These vary depending on the county you are filing for bankruptcy in. 

• Caroline, Kent, Queen Anne’s and Worcester counties — greater of 75% of actual wages or 30 times the minimum wage limit set by the U.S. federal government

• All other counties in Maryland the exemption is either 75% or $145 per week whichever is greater. - Com. Law §15-601.1

Retirement Accounts

• Retirement funds are generally exempt. Any retirement plans deemed by the IRS as a tax-deferred can be fully protected with an exemption. Thus, creditors can’t go after it. Some examples include traditional and Roth IRAs, 401(k), 403(bs), profit sharing, money purchase plans. 

• State employees can also fully exempt their pension plans 

• Deceased Baltimore police officers 

• ERISA-qualified benefits

• State Police- MD Code Ann. 

Public Assistance

The following can be exempt so none of these assets will be liquidated:

• Baltimore Police death benefits

• Crime victims' compensation

• General assistance

• Unemployment compensation

• Workers' compensation

Insurance Proceeds 

• Life insurance or annuity contract proceeds when the beneficiary is the insured’s dependent, child, or spouse is fully exempt. Ins. 16-111(a)

Filing Chapter 7 Bankruptcy 

If you're confused about how to apply these Maryland exemptions to your bankruptcy case, you may want to speak with a bankruptcy attorney to get some legal advice. Maryland law can be confusing for people who have never seen it before. A Maryland bankruptcy attorney can guide you in the right direction and help you decide if Chapter 7 bankruptcy or Chapter 13 bankruptcy is the right decision for you. Many bankruptcy lawyers provide clients with free consultations. 

If a lawyer doesn't fit into your budget, don’t worry! Upsolve has free bankruptcy tools to help you file for bankruptcy on your own.