New Maryland Exemption

Maryland has enacted a new exemption law. This law adds a homestead exemption of $20,200.00 per household. This new law is part of Maryland Courts and Judicial Proceedings Section 11-504 (f)(1)(I). The exemption applies to the homeowner and can only be claimed once in 8 years. The exemption claimed by one homeowner, cannot be claimed by joint owner of the property for another 8 years. The exemption is tied to the Bankruptcy Code Section 522(D)(1), and therefore the amount of the exemption is subject to change every 3 years. This exemption is in addition to the other $12,000 of exemptions listed in Section 11-504.

This homestead exemption is good news for homeowners in Maryland. It means that if they have $20,200 in equity, they are able to keep their house even if they file a Chapter 7 bankruptcy case. The Chapter 7 trustee will not be able to sell the house for the benefit of their creditors unless there is more than $20,2000 in equity. This law also will apply to judgment creditors of the homeowner, they will not want to foreclose on the property unless the sale price will be sufficient to pay off the current liens and credit the homeowner with $20,2000.

This law was enacted to help homeowners who have lived in the property for a substantial period of time and have built up some equity in the property. It will protect them from losing their homes due to financial circumstances beyond their control, such as unexpected medical bills.

Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.