Filing for Chapter 7 bankruptcy can feel overwhelming, especially if you’re concerned about losing your home. In Maryland, whether you can keep your house depends on several factors.
Maryland’s homestead exemption
Maryland offers a homestead exemption, which protects the equity you can keep in your primary residence. As of now, Maryland allows an individual filer to exempt up to $25,150 in home equity. If you’re married and both of you file jointly, this exemption increases. If the equity in your home falls below this amount, you probably won’t have to worry about losing it during bankruptcy.
If the value of your home exceeds the exemption limit, the bankruptcy trustee might sell the property to pay off creditors. However, you could still negotiate with the trustee to keep your home if you can buy back the non-exempt equity or find another solution.
Secured debts and reaffirmation
In most Chapter 7 bankruptcies, mortgage loans count as secured debts, meaning the lender can foreclose on your house if you stop making payments. However, if you’re current on your mortgage and want to keep the property, you can negotiate a reaffirmation agreement with the lender. This process allows you to continue making payments and keep the house.
Maryland’s protections for homeowners
Maryland law provides certain protections for homeowners. If you’re facing foreclosure, the state offers mechanisms like foreclosure mediation programs that might help you keep your home by working with the lender.
If you file for Chapter 7 bankruptcy and are concerned about losing your home, you can take steps to understand your rights and make the best decision for your situation.
