Can You Keep Your Home After Bankruptcy in Maryland?

Facing bankruptcy can be a daunting experience, especially when it comes to concerns about losing your home. In Maryland, understanding how bankruptcy affects homeownership is crucial for homeowners considering this financial strategy. Many individuals wonder: Can you keep your home after bankruptcy in Maryland? The answer depends largely on a variety of factors including your financial situation, the type of bankruptcy you file, and the equity in your home.

In Maryland, there are primarily two types of bankruptcy individuals may file—Chapter 7 and Chapter 13. Each has different implications for home retention. Chapter 7 bankruptcy involves liquidating non-exempt assets to pay off outstanding debts. However, Maryland residents benefit from a homestead exemption that allows them to protect a portion of their home’s equity. As of 2023, Maryland’s exemption for home equity is $25,150 per individual, which means if your home’s equity falls below this threshold, you may be able to keep your home after a Chapter 7 filing.

On the other hand, Chapter 13 bankruptcy is designed for individuals with a regular income who want to create a repayment plan to pay back their debts over three to five years. This option often allows homeowners to keep their homes while reorganizing their debts. If you are behind on mortgage payments, Chapter 13 can help you catch up on those payments through the repayment plan. Essentially, you will be able to stay in your home as long as you adhere to the plan and continue making your regular mortgage payments.

Another important consideration is the current status of your mortgage. If you are current on your mortgage payments, you are much more likely to retain your home regardless of the bankruptcy type you choose. Conversely, if you are significantly in arrears, you might face a foreclosure process, which can complicate your ability to keep your home.

Equity plays a significant role in determining whether you can retain your home post-bankruptcy. If your home is valued at more than what you owe on your mortgage, the amount of equity is critical in both Chapter 7 and Chapter 13 situations. If you have minimal equity, you may have a better chance at keeping your home without issue. If your equity exceeds the exemption limit, you may risk losing your home in a Chapter 7 case.

It's also advisable to consider consulting with a bankruptcy attorney who understands Maryland's specific laws and can provide personalized guidance based on your circumstances. An attorney can help you navigate exemptions, determine the best course of action, and represent your interests throughout the bankruptcy process.

In conclusion, it is possible to keep your home after bankruptcy in Maryland under certain conditions. Understanding the implications of Chapter 7 and Chapter 13 bankruptcy, and knowing the value and equity of your home, plays a crucial role in your ability to retain homeownership during such financial hardships. As laws and situations can vary, seeking professional legal advice is highly recommended to ensure the best possible outcome regarding your home and overall financial health.