Maryland Bankruptcy Exemptions: Home, Wildcard, and Retirement

If you file bankruptcy in Maryland, state law decides what property you keep, and the list is modest compared with many other states. Maryland bankruptcy exemptions protect about $25,150 of equity in your home, up to $5,000 in work tools, your retirement accounts, Social Security and veterans’ benefits, and give you a flexible cushion of roughly $11,000 to spread across a car, cash, a tax refund, or anything else that doesn’t fit a specific category. There is no separate vehicle exemption, and spouses filing jointly cannot double the homestead. Everything below walks through each category, the dollar limits, and the places where Maryland’s rules create gaps worth planning around.¹

Who Can Actually Use Maryland’s Exemption List

Maryland has opted out of the federal bankruptcy exemption scheme. You cannot choose the federal protections in 11 U.S.C. § 522(d); if you qualify as a Maryland filer, you use Maryland’s list.¹

Qualifying means domicile in Maryland for the 730 days (about two years) immediately before you file. Moved more recently? You may have to use the exemptions from the state where you lived during most of the 180 days before that two-year window. And if no state’s rules fit, federal law lets you fall back on the § 522(d) federal exemptions.² Confirm your residency math before assuming the Maryland numbers below apply to you.

Your Home

Maryland’s homestead protects equity in owner-occupied residential real property, including condominiums and manufactured homes permanently converted to real property. The cap tracks the figure in 11 U.S.C. § 522(d)(1), as periodically adjusted for inflation. The most widely reported Maryland figure is $25,150, and the federal number it tracks was last recalculated effective April 1, 2025. Verify the current amount with the court or an attorney before relying on it.¹

Equity is current fair market value minus mortgage balance and any other liens. If your equity sits under the cap, a Chapter 7 trustee generally cannot sell the home. If it exceeds the cap, the trustee can sell and hand you the exempt amount from the proceeds.

One rule catches married couples off guard: Maryland does not allow both spouses to claim the residential exemption in the same case. Filing jointly does not double the homestead.

The Wildcard, the Bank Account Protection, and the Bankruptcy-Only Exemption

Maryland’s flexible exemptions are the ones that save most filers. There are three to know, and they stack.

The first $500 in a bank account is automatically exempt, no election required. A broader wildcard then protects up to $6,000 in cash or any other property of your choosing, but you have to elect it within 30 days of an attachment or levy. The automatic $500 and the elective wildcard together cannot exceed $6,000.¹

On top of that, bankruptcy filers get an additional $5,000 exemption for personal property of any kind under § 11-504(f)(1)(i)1. Combined with the $6,000 wildcard, you have up to $11,000 to spread across whatever assets need protection: a vehicle, electronics, jewelry, a tax refund, or cash savings.

No Separate Vehicle Exemption

Maryland has no standalone motor vehicle exemption. This surprises a lot of filers. To keep a car or truck, you apply the $5,000 bankruptcy personal property exemption, the $6,000 wildcard, or some mix of the two. Protecting an $8,000 paid-off car burns $8,000 of your flexible exemptions and leaves less for everything else.

If you still owe on a car loan, only the equity counts. A $12,000 vehicle with a $10,000 loan has $2,000 of equity, which is far easier to shelter. If you need the car for work, plan the exemption math before you file.

Tools of the Trade

Up to $5,000 in clothing, books, tools, instruments, and appliances necessary for your trade or profession is exempt. Inventory held for sale or resale does not qualify. The category reaches a mechanic’s tool chest, a photographer’s camera gear, a contractor’s power tools, or anything else you actively use to earn a living.¹

If a creditor holds a non-purchase-money security interest in your professional equipment (for instance, you pledged existing tools as collateral for a personal loan), federal law lets you strip that lien when it impairs your exemption. For cases filed on or after April 1, 2025, the lien-avoidance power under § 522(f) reaches tools valued up to $8,575.² A purchase-money lien (financing you used to buy the equipment in the first place) cannot be avoided this way.

Retirement Accounts

Retirement savings are among the best-protected assets in a Maryland bankruptcy. Money payable from qualified retirement plans is exempt from creditor claims, with a single exception for claims by the Maryland Department of Health. The protection covers 401(k) plans, 403(b) plans, traditional and Roth IRAs, § 414(d) government deferred-compensation plans, and employer-sponsored pensions.¹

There is one meaningful gap. The U.S. Supreme Court held in Clark v. Rameker that inherited IRAs (other than those inherited from a spouse) are not “retirement funds” for bankruptcy purposes, because the account holder cannot contribute, must take distributions regardless of age, and can withdraw the whole balance at any time without penalty. If you inherited an IRA from a parent or other non-spouse, those funds are likely part of the bankruptcy estate.

Insurance Proceeds and Personal Injury Awards

Life insurance and annuity proceeds are exempt when the beneficiary is the insured person’s spouse, child, or dependent relative. That reaches death benefits, cash surrender values, loan values, and dividends applied to the policy. The exemption falls away if the insured pledged the policy as collateral, and a transfer made to defraud creditors can be unwound.³

Money payable for sickness, accident, injury, or death is also exempt under § 11-504(b)(2), with no dollar cap. The category covers personal injury settlements, court judgments, workers’ compensation payments, and insurance benefits. Disability income benefits lose exempt status for debts incurred after the disability began for necessities like medical care or housing.¹

Social Security, Veterans’ Benefits, Support Payments, and Health Aids

Social Security benefits are fully exempt under federal law, which bars those payments from any bankruptcy or insolvency proceeding.⁴ Veterans’ benefits get the same absolute protection; VA payments cannot be seized before or after the beneficiary receives them.⁵

Child support and alimony are exempt under Maryland law without a dollar limit. Professionally prescribed health aids for you or a dependent are also protected with no cap.¹

One practical warning: exempt funds can lose their protection if they are mixed with non-exempt money in a bank account and you cannot trace them back to the exempt source. Keep Social Security and injury proceeds in a dedicated account rather than depositing them alongside wages.

Household Goods

You can protect up to $1,000 in household furnishings, appliances, clothing, books, pets, and similar items used by you or your dependents. Value them at current used-sale price, not what you paid. A five-year-old couch may be worth $50 at a thrift store even if it cost $900 new. Most filers can cover their household goods under this limit without dipping into the wildcard.

Property Held as Tenants by the Entireties

Maryland recognizes tenancy by the entireties, a joint ownership form available only to married couples. When one spouse files alone and the couple has no joint unsecured debt, entireties property is generally shielded from the trustee and from individual creditors entirely. A creditor of one spouse cannot force a sale of entireties property under Maryland law, and the trustee inherits that limitation.²

Two limits matter. Joint unsecured debt (credit cards both spouses signed for, medical bills in both names) opens the entireties property up to the trustee for the amount of that joint debt. And the Supreme Court held in Craft v. United States that a federal tax lien attaches to one spouse’s interest in entireties property despite the state-law rule. IRS back taxes pierce the shield.

How This Changes in Chapter 13

The same exemption list applies in Chapter 13, but the effect is different. There is no liquidation, so the trustee does not sell your non-exempt property. Instead, the value of your non-exempt assets sets the floor for what your three-to-five-year repayment plan must pay unsecured creditors. This is the “best interests of creditors” test: your plan has to deliver at least what those creditors would have received in a Chapter 7 sale.

Practically, more non-exempt property means a higher monthly plan payment. If you have $15,000 in non-exempt car equity, your plan must distribute at least $15,000 to unsecured creditors over its life, on top of secured and priority obligations. Using the wildcard and bankruptcy personal property exemption aggressively reduces that floor.

1
Maryland General Assembly. Maryland Code Courts and Judicial Proceedings 11-504 – Exemptions From Execution on a Judgment
2
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
3
Maryland General Assembly. Maryland Code Insurance 16-111 – Life Insurance and Annuity Contract Proceeds
4
Office of the Law Revision Counsel. 42 USC 407 – Assignment of Benefits
5
Office of the Law Revision Counsel. 38 USC 5301 – Nonassignability and Exempt Status of Benefits