By: Casey Yontz, Attorney (18+ years bankruptcy experience)

Last updated: December 12, 2025

About the Author

Maryland Bankruptcy Exemptions: The Rules That Shape Your Case

Maryland bankruptcy exemptions are the legal rules that determine how certain property is treated when you file bankruptcy in Maryland. And in Maryland, exemptions matter even more because Maryland has opted out of the federal bankruptcy exemptions. That means most people filing here must use Maryland bankruptcy exemptions instead of the federal list.

Exemptions don’t do just one thing. In some cases, they determine whether certain property is protected from being taken. In other cases, they help determine the financial value that must be dealt with during the case — which can directly influence what creditors must receive. Either way, exemptions shape the strategy, the paperwork, and the outcome.

In this guide, we’ll break down the most important bankruptcy exemptions in Maryland in plain English — including the maryland bankruptcy homestead exemption, the maryland homestead exemption bankruptcy amount, and other key Maryland protections people use to safeguard essentials like housing, vehicles, household items, wages, and retirement accounts.

What Are Bankruptcy Exemptions In Maryland?

Bankruptcy exemptions in Maryland are the protection rules that come mainly from the Maryland Code — especially Md. Code, Courts & Judicial Proceedings § 11-504. Maryland has opted out of the federal bankruptcy exemptions, which means most filers here use Maryland’s exemption system (plus certain non-bankruptcy federal protections that may still apply).

The table below highlights several of the most-used maryland bankruptcy exemptions and where they come from in Maryland law, including the maryland bankruptcy homestead exemption rules and other key protections.

* The Maryland bankruptcy homestead exemption is capped by the federal homestead amount under 11 U.S.C. § 522(d)(1) as adjusted for inflation (the current figure for cases filed on/after April 1, 2025 is $31,575).

** Under Maryland law, the $500 “automatic” bank-account protection and the $6,000 cash/property election are part of the same $6,000 cap when applied in that context.

Maryland also has an explicit “opt out” provision that prevents using the federal exemption list in 11 U.S.C. § 522(d).

The Maryland Bankruptcy Homestead Exemption

The maryland bankruptcy homestead exemption is Maryland’s homeowner protection that applies in bankruptcy cases. It’s found in Md. Code, Courts & Judicial Proceedings § 11-504(f), and it lets an eligible filer exempt a portion of their equity in an owner-occupied home (or certain equivalent ownership interests).

The big concept: this exemption protects equity, not your home’s full market value. Equity is generally your home’s value minus mortgages and other valid liens. So if your home is worth $400,000 and you owe $360,000, the equity is about $40,000 — and the homestead exemption is applied to that equity number.

The maryland homestead exemption bankruptcy amount is capped by the federal homestead amount in 11 U.S.C. § 522(d)(1) (as adjusted every three years). For cases filed on/after April 1, 2025, that cap is $31,575.

Here’s what the Maryland homestead exemption in bankruptcy generally covers:

The headline takeaway: the Maryland bankruptcy homestead exemption can be a game-changer, but it’s very fact-specific — it depends on equity, liens, ownership type, and timing rules. If you own a home (or have meaningful equity) and you’re considering bankruptcy, it’s smart to talk with a Maryland bankruptcy lawyer before you file. A Maryland-specific exemption review can help you avoid valuation mistakes and protect what you’re entitled to protect.

Bankruptcy Exemptions in Maryland: Cash, Bank Accounts, And “Any Property” Protection

Maryland doesn’t have a standalone “motor vehicle exemption,” so when people want to protect car equity, they usually lean on Maryland’s flexible “cash / any property” protections in Md. Code, Courts & Judicial Proceedings § 11-504(b)(5) and (b)(6).

First, Maryland provides an automatic buffer of up to $500 in a deposit account (like a checking or savings account) at a depository institution. This protection applies without you having to make a separate election. That’s the “deposit account automatic protection.”

Second, Maryland allows an exemption for cash or property of any kind (think: a flexible wildcard-style bucket) up to $6,000. Here’s the catch that matters for planning: the statute caps the combined total protected under the $500 deposit-account protection and the $6,000 “cash or property” election at $6,000 total. (So it’s not $6,000 + $500.)

How people use this to protect a vehicle: Because a car is “property,” filers commonly apply the “cash or property of any kind” bucket to cover vehicle equity (your car’s value minus any loan payoff). If the equity fits inside the available amount, the vehicle is usually protected.

Common real-world plays:

• Protect one car with moderate equity. Example: if the car has about $3,500 in equity, a filer may apply the “any property” amount to cover it.
• Split the bucket across multiple things. Some people allocate it across a vehicle plus another asset that needs coverage (like cash on hand), as long as the total stays within the cap.
• Watch the bank account. If you have more than $500 in the bank, you may need to cover the “extra” using the same flexible bucket you were hoping to use for the vehicle — so timing (like when paychecks hit) can matter.
• Plan around equity spikes. Paying down a car loan right before filing can increase equity. That’s not always bad, but it can change what needs to be protected — and it can affect the math in both chapter 7 and chapter 13 cases.
• If equity is higher than the cap. When vehicle equity is above what Maryland exemptions can cover, people often look at whether a different filing strategy (including chapter choice) makes more sense.

Maryland Bankruptcy Exemptions: Retirement And Long-Term Security

In Maryland bankruptcy cases, most traditional retirement savings are strongly protected. Maryland’s own exemption statute protects certain retirement plans and accounts under CJP § 11-504(h).

Maryland’s State-Law Protection For Retirement Savings

Maryland’s exemption statute is one layer of protection. If your retirement account fits within the categories covered by CJP § 11-504(h), it is generally treated as exempt in a Maryland bankruptcy case.

Federal Bankruptcy Protections Still Apply Even If Maryland “Opted Out”

On top of Maryland’s state-law protection, there are also important federal protections that can apply in bankruptcy even when a state has opted out of the federal exemption list. The Bankruptcy Code exempts “retirement funds” in many tax-favored accounts (think: 401(k)s, 403(b)s, most qualified plans, and many IRA-type accounts) under 11 U.S.C. § 522(b)(3)(C).

The IRA Cap In Bankruptcy

One key nuance: traditional and Roth IRAs have a bankruptcy-only cap under 11 U.S.C. § 522(n). For cases filed on/after April 1, 2025, the aggregate cap is $1,711,975, and it is adjusted periodically. (Rollover amounts from certain employer plans are generally treated differently than “regular” IRA contributions for purposes of that cap.)

Non-Bankruptcy Federal Protections For Workplace Plans

Finally, outside of bankruptcy, many employer-sponsored plans also get powerful “non-bankruptcy” protection under federal law. ERISA generally requires qualified pension plans to include an anti-alienation rule, which is a major reason 401(k) and similar workplace plans are often harder for ordinary creditors to reach than non-ERISA accounts.

Practical Takeaway

Practical takeaway: if you have retirement savings, don’t assume every account is treated the same. A 401(k) and a traditional IRA can both be protected, but the legal “why” is different — and in rare cases, details like rollovers, inherited accounts, and last-minute contributions can change the analysis.

Overview of Maryland Chapter 7 Bankruptcy Exemptions

Maryland chapter 7 bankruptcy exemptions matter because chapter 7 is the bankruptcy chapter where non-exempt property can potentially be sold by a trustee. In other words, chapter 7 can be fast and effective, but exemptions are what help determine whether your assets are protected or whether certain equity could be exposed.

How Exemptions Work In A Maryland Chapter 7 Case

In chapter 7, you list what you own and apply the applicable Maryland exemptions. Property covered by a valid exemption is generally protected. Property that is not covered — or has value above the available exemption amount — may be treated as “non-exempt,” which can create risk depending on the facts.

A practical way to think about it is equity math. Trustees typically focus on whether there is meaningful value to administer for creditors after accounting for liens, costs of sale, and your allowed exemptions. That’s why small differences in valuation, payoff amounts, and timing can matter.

• Home equity: The key question is usually how much equity exists after mortgages and liens, and how much of that equity is protected by exemptions.
• Vehicle equity: Maryland doesn’t have a standalone vehicle exemption, so people often use flexible “any property” protections to cover car equity.
• Cash and bank balances: Money in the bank is an asset. When paychecks hit and bills clear can change how much needs to be protected.
• Retirement accounts: Many retirement assets are strongly protected, but special cases (like certain IRA scenarios) can require closer review.

If you want a full Maryland-specific walkthrough of how chapter 7 works from start to finish, see our Chapter 7 bankruptcy in Maryland guide.

How Exemptions Affect A Maryland Chapter 13 Plan

Exemptions matter in chapter 13 too — just in a different way. Many chapter 13 filers keep their property, but exemptions can still influence the minimum amount that unsecured creditors must receive through the plan. That’s because chapter 13 generally must satisfy a “best interests” test: unsecured creditors must get at least what they would have received in a chapter 7 case. So if you would have had non-exempt equity in a hypothetical chapter 7, that value can raise the plan’s minimum required payout.

For a Maryland-focused overview of how chapter 13 works and what to expect from the plan process, visit our Chapter 13 bankruptcy in Maryland guide.

Maryland Exemptions For Life Insurance And Annuities

Maryland has a specific creditor-protection rule for certain life insurance and annuity proceeds. In plain English: if a policy or annuity contract is set up for the benefit of certain close family members, Maryland law can protect those proceeds from the insured person’s creditors.

When Life Insurance And Annuity Proceeds Are Protected

Maryland’s protection generally applies to the proceeds of a life insurance policy (or an annuity contract on the life of an individual) when it is made for the benefit of, or assigned to, the individual’s spouse, child, or dependent relative. That beneficiary detail matters — not every policy arrangement qualifies.

What “Proceeds” Can Include

Maryland defines “proceeds” broadly for this purpose. Depending on the policy and how it’s structured, it may include items like death benefits, cash surrender value, loan value, premiums waived, and dividends (with important caveats).

How Federal “Non-Bankruptcy” Protections Fit In

Even though Maryland has opted out of the federal exemption list, some protections come from separate federal laws that can still matter in real life. A big example is Social Security: federal law says Social Security benefits are not subject to execution, garnishment, or the operation of bankruptcy or insolvency law. That’s different from a Maryland exemption — it’s a federal protection that exists alongside state exemption rules.

Practical takeaway: life insurance/annuity creditor protection is very beneficiary-and-contract specific, and federal benefit protections can have their own rules. If you’re relying on these protections, it’s worth mapping the exact beneficiary, the type of annuity/policy, and where the money sits (paid out vs. deposited), so your exemptions match the facts.

Why These Assets Require Extra Care In Bankruptcy

Important note: life insurance, annuity, and benefit-related protections can be very fact-specific. The details matter — the type of policy, who the beneficiary is, whether anything was pledged as security, when the funds were paid out, and where the money is currently held can all change the analysis. This is not something to “wing it.”

If you have meaningful life insurance value, an annuity, or significant protected benefits and you’re considering bankruptcy, it’s smart to speak with a Maryland bankruptcy lawyer who is very familiar with these issues. A careful, Maryland-specific exemption review is often the difference between a clean filing and a preventable problem.

Common Mistakes And How To Avoid Exemption Problems

Most exemption problems don’t happen because someone is trying to game the system. They happen because people rush, guess, and “round” when the paperwork requires real numbers. The good news: many of the biggest mistakes are very fixable — if you catch them early.

Mistake #1: Using Bad Or Outdated Property Values

One of the easiest (and most expensive) mistakes is filing with rough estimates instead of recent, accurate valuations — especially for homes, vehicles, and anything valuable enough to raise questions. Trustees and creditors care about equity, and equity math only works if your valuations and payoff numbers are real.

• Vehicles: Pull a real-world value (and keep a screenshot or printout). Then confirm the current loan payoff.
• Homes: If possible, get a solid estimate and document it, and confirm mortgage payoff(s), HELOCs, and any other liens.
• Jewelry / collectibles / firearms / tools: If it would hurt to lose it, value it and document it. “It’s probably not worth much” is how people accidentally create a problem.

Mistake #2: Forgetting That Bank Balances Change By The Day

Money in the bank is an asset. People file with $300 in the account on Monday, and their paycheck hits Wednesday. If the filing date lands at the wrong time, you may need to protect more cash than you planned. This is especially important in Maryland because the deposit-account protection and “any property” protection have limits and planning nuance.

Mistake #3: Not Listing Everything (Or Listing It Incorrectly)

Bankruptcy forms require completeness and consistency. Undervaluing property, omitting accounts, or “forgetting” assets can create avoidable trustee questions and delays — even when the asset would have been exempt if it had been properly disclosed.

Mistake #4: Waiting Too Long To Get Advice On Fact-Specific Exemptions

Some protections (like certain life insurance/annuity issues, unusual retirement situations, or recent transfers) can be highly fact-specific. If you suspect you’re in one of those categories, it’s usually smarter to get Maryland-specific guidance early — before you lock yourself into bad timing or bad numbers.

The simple rule: if you can document it, document it. Good valuations and clean paperwork make exemptions easier to claim, easier to defend, and harder to challenge.

Frequently Asked Questions About Maryland Bankruptcy Exemptions

Can I Use Federal Bankruptcy Exemptions In Maryland?

In most cases, no. Maryland has opted out of the federal exemption list, so most filers must use Maryland bankruptcy exemptions. However, some separate federal protections (like certain benefits) can still apply even when you can’t use the federal exemption list.

What Is The Maryland Homestead Exemption Bankruptcy Amount?

Maryland’s bankruptcy homestead exemption is capped by the federal homestead amount (as adjusted for inflation). The exact number can change over time, so it’s smart to confirm the current cap for the date you plan to file, then compare it to your home’s equity (value minus liens).

Does Maryland Have A Vehicle Exemption For Bankruptcy?

Maryland does not have a standalone motor vehicle exemption. Many people protect vehicle equity using Maryland’s flexible “cash or property of any kind” protection (often used like a wildcard), and sometimes other applicable Maryland exemptions depending on the facts.

How Do Maryland Bankruptcy Exemptions Affect Chapter 13 Repayment Plans?

Exemptions can influence the minimum amount unsecured creditors must be paid in a chapter 13 plan. If you would have had non-exempt equity in a hypothetical chapter 7 case, that value can increase the minimum required payout under the “best interests” test in chapter 13.

Are 401(k)s And IRAs Protected In Maryland Bankruptcy?

Many retirement accounts are strongly protected, but the details can matter. Workplace plans often have multiple layers of protection, and certain IRA situations can involve special rules or caps. If you have significant retirement savings, it’s worth confirming exactly what type of account you have and how it’s treated.

The Importance of Legal Advice And Staying Updated

Bankruptcy exemptions can look simple on the surface, but small details can change outcomes — property values, lien payoffs, timing, household size, recent transfers, and the way an asset is titled can all affect how an exemption analysis plays out. That’s why most people who own property should talk with a Maryland bankruptcy lawyer before filing. It’s one of the best ways to avoid preventable mistakes and surprises.

It also matters because exemption amounts and rules can change over time. A local Maryland bankruptcy lawyer who regularly files cases in Maryland is more likely to be current on updated exemption amounts, local trustee expectations, and the practical “how this works in the real world” details that don’t show up in generic articles.

Maryland Bankruptcy Exemptions And A Smarter Path Forward

If you’re filing (or considering filing) bankruptcy, Maryland bankruptcy exemptions are one of the most important parts of the entire process. They don’t just “protect stuff.” They shape the strategy, the timing, and the outcome — especially when you’re dealing with home equity, a vehicle, money in the bank, retirement accounts, or life insurance and annuities.

For homeowners, the maryland bankruptcy homestead exemption can be a huge stabilizer, but it only works if you know your real equity and apply the rules correctly. And because the maryland homestead exemption bankruptcy amount is tied to inflation-adjusted limits, it’s smart to confirm the current cap before you file. For many filers, the most practical protections come from the “any property” bucket and related rules — which is also how many people protect vehicle equity in a state that doesn’t offer a standalone car exemption.

Whether you’re worried about what you can keep or how your assets affect your case, the best approach is simple: use accurate valuations, document what you can, and don’t guess. If you own property or have meaningful assets, it’s worth speaking with a Maryland bankruptcy lawyer who works with these exemptions regularly. A careful Maryland-specific review can prevent avoidable problems and help you get the cleanest, most predictable result possible.

Explore Bankruptcy Help by State

Browse our state guides to learn exemptions, means test rules, costs, and local procedures. Use these links to jump between states and compare your options.

• Arizona
• California
• Colorado
• Florida
• Georgia
• Illinois
• Indiana
• Maryland
• Michigan
• New York
• Ohio
• Oregon
• Pennsylvania
• Tennessee
• Texas
• Virginia
• Wisconsin