Can I Keep My House and Car in a Maryland Bankruptcy?

Can you keep the roof over your head and the car you rely on if you file bankruptcy in Maryland? 

Most people keep all of their property by applying Maryland exemptions and choosing the right chapter. If you need a steady legal path, Chambers Law Firm, P.C. can help you decide between Chapter 7 and Chapter 13 so you could keep your house and car.

Keeping What’s Exempt and Resetting Unsecured Debt in Chapter 7

Chapter 7 aims to discharge qualifying unsecured debt while you keep exempt property. In Maryland, the homestead available in bankruptcy is tied to the federal amount through Maryland Courts & Judicial Proceedings § 11-504(f), which incorporates the inflation-adjusted figure in 11 U.S.C. § 522(d)(1). Maryland also offers a bankruptcy-specific $5,000 personal-property protection, an ERISA retirement exemption, a separate up to $6,000 “cash or property” exemption, and $1,000 for household goods. There isn’t a stand-alone vehicle exemption, so your lawyer uses the stack of personal property protections to cover car equity, which is often enough for a typical family vehicle, making keeping the car under Chapter 7 bankruptcy a realistic goal for many filers. 

The automatic stay stops foreclosures, repossessions, lawsuits, and garnishments the moment your petition is filed (11 U.S.C. § 362). If you’re current on your mortgage and your equity fits inside the homestead limit, the Chapter 7 trustee should not sell the house. When only one spouse files and there are no joint unsecured creditors, Maryland’s tenancy-by-the-entirety law often shields a jointly owned home from the filing spouse’s individual creditors. There is no limit to how much equity in a home can be protected by utilizing the tenancy by the entireties exemption.

Car loans are handled through secured debt options that align with your budget and goals. Here are the tools your Chapter 7 bankruptcy lawyer will evaluate with you:

• Reaffirmation (§ 524) You keep the vehicle and continue payments sometimes with improved terms so long as the agreement is properly executed and filed. Because a reaffirmation agreement is not automatically granted, the bankruptcy courts review whether the reaffirmation is in your best interest under the disclosures required by § 524 and Rule 4008. If your budget is tight or the court beliecves that the reaffiramtion poses an undue hardship, the bankruptcy judge may deny it.
• Redemption (§ 722): You can pay the current replacement value of the car in a lump sum and discharge the remainder of the loan. If the vehicle is significantly upside down, redemption can be the fastest route to a lower effective balance.
• Surrender: If payments are unworkable even after discharge, giving up the vehicle eliminates personal liability and frees cash flow for housing and essentials.
• Pay and Retain: Even if you keep your vehicle, your personal liability on the loan is discharged unless you reaffirm. If you choose to keep the vehicle and continue to make payments on the vehicle.  This means that even if you do not reaffirm and the car is later repossessed, the lender cannot sue you for the leftover balance.

Passing the means test remains an important threshold, but being over the median income doesn’t end the analysis. Many above-median filers may still pass on the second form once standardized expenses, taxes, health insurance, and secured debt payments are applied. The U.S. Trustee Program publishes the Maryland median-income figures that apply based on your filing date. When Chapter 7 works, the Chapter 7 discharge process eliminates qualifying unsecured balances and ends creditor harassment after chapter 7, giving your mortgage and car budget breathing room.

Two practical points complete the Chapter 7 picture. First, accurate equity estimates matter: use realistic market values and subtract first and second mortgages plus ordinary sale costs to see where you truly land under the Maryland state exemption stack and the homestead exemption. Secondly, if you are behind on a mortgage, a Chapter 7 can pause the foreclosure timeline via the stay, but it cannot force a lender to accept long-term cure payments. That’s where Chapter 13 shines.

To see how straight debt relief is implemented at our firm, speak with our Maryland Chapter 7 bankruptcy lawyers about exemptions, reaffirmations, and redemption before you decide to file.

Saving the Home and Restructuring the Car in Chapter 13

Chapter 13 is a court-approved repayment plan, generally 36 to 60 months, that preserves the home and reorganizes debt with court oversight (11 U.S.C. § 1322, § 1325). For Maryland homeowners, the central power is cure-and-maintain: you resume your regular mortgage payments and spread past due (arrears) amounts over the life of the plan (11 U.S.C. § 1322(b)(5)). That tool, combined with the automatic stay, can stop a foreclosure and bring the loan current by your final plan payment. Federal Rule of Bankruptcy Procedure 3002.1 requires lenders to provide timely notices of escrow and payment changes, which reduces surprise arrears mid-plan.

Vehicles often fare even better in Chapter 13. If the car was purchased for personal use more than 910 days before filing, you can pay only the present replacement value of the vehicle with a reasonable interest rate while treating the remaining balance as unsecured, a legal tool often called a “cramdown” (11 U.S.C. § 1325(a)(5)). For newer loans (inside 910 days), you generally pay the full balance, but a plan can still lower interest and catch up missed payments. This is where the best Chapter 13 bankruptcy lawyer in Maryland builds a Chapter 13 payment plan that fits your income and necessary expenses.

Because plan math drives outcomes, your Chapter 13 bankruptcy attorney will balance disposable income, secured claims, and priority debts (like taxes or domestic-support obligations) within confirmation standards. Maryland filers frequently choose Chapter 13 when they need to: (a) reinstate a mortgage after missed payments, (b) retain a vehicle with past due amounts, (c) manage tax debt, or (d) protect nonexempt equity by paying its value over time rather than risking liquidation.

To clarify how this chapter helps in practice, here are the core advantages your Chapter 13 bankruptcy attorney leverages:

• Home protection with cure-and-maintain. You can stop a foreclosure before a foreclosure sale, and pay the mortgage arrears over time. This is a primary reason many homeowners choose Chapter 13 bankruptcy in Maryland.
• Vehicle retention with structured payments. Plans can reduce interest, address arrears, and, where eligible, value the secured claim to the vehicle’s present replacement value for loans older than 910 days.
• Administrative guardrails. Rule 3002.1 forces transparency on mortgage changes; missed notices can bar lenders from claiming undisclosed amounts later, which helps homeowners finish current.

Where do exemptions fit in Chapter 13? They still matter. They play a significant role in shaping your minimum required plan payment. But the bigger levers are income, plan feasibility, and secured claim treatment. Many families with equity that would be difficult to protect in Chapter 7 instead preserve their home through plan payments while capturing the benefits that Chapter 13 bankruptcy offers on interest and arrears.

Keep Your House and Car in Maryland Bankruptcy with Chambers Law Firm, P.C.

Your house and car are within reach of real protection. Maryland exemptions and federal tools: reaffirmation, redemption, and cure-and-maintain—work together to keep families in their homes and on the road while unsecured balances are discharged or repaid on terms the court approves. Chambers Law Firm, P.C. aligns those rules with your income, equity, and deadlines so you can finish with a deed you remain proud of and transportation you can afford; contact us today to map the next step toward a confirmed plan or a clean Chapter 7 discharge.