DAY 15 — Will I Lose My House If I File Bankruptcy in Maryland?
Week: Week 3: Fear + Objections
Intent: High-Intent | Keep House in Bankruptcy
Most people who file bankruptcy keep their homes. Learn Maryland's homestead exemption, how to protect your equity, and which chapter is best for homeowners.
Most people who file for bankruptcy do not lose their homes. If you're current on your mortgage, you can keep your house in both Chapter 7 and Chapter 13. If you're behind on your mortgage, Chapter 13 is specifically designed to let you catch up and save your home.
The Homestead Exemption in Maryland
Maryland allows bankruptcy filers to protect up to $25,000 of home equity (or $500,000 under certain circumstances for seniors). If your equity is within the exemption, a Chapter 7 trustee cannot force a sale of your home.
Federal exemptions are also available as an alternative, and in some cases offer more protection. An attorney will determine which set of exemptions is better for your situation.
Chapter 7 and Your Home
If you're current on your mortgage and your equity is within the exemption, you can typically keep your home in Chapter 7 by reaffirming the mortgage debt (agreeing to remain personally liable). Your mortgage continues unchanged.
If your equity exceeds the exemption, the trustee may seek to sell the home and pay creditors the non-exempt portion. This is why accurately assessing equity before filing is critical.
Chapter 13 and Your Home
Chapter 13 is the superior choice if you're behind on your mortgage. The automatic stay immediately stops foreclosure, and your repayment plan includes catching up on arrears over 3–5 years. Your home is fully protected as long as you complete the plan.
Is a Loan Modification Better Than Bankruptcy?
Loan modification and bankruptcy are not mutually exclusive. Some homeowners pursue modification inside a Chapter 13 case, giving them both the protection of the automatic stay and the possibility of improved loan terms. Modification alone, without the stay, provides no legal protection against foreclosure during the process.
Maryland-Specific Insight
Maryland's $25,000 homestead exemption is modest compared to some states. If you have significant equity, speak with an attorney about whether Chapter 7 or 13 best protects that equity — and whether joint filers can double the exemption.
Reality Check
Bankruptcy doesn't take your home away — it protects it. The fear of losing your house often prevents people from filing until it's too late. The earlier you file, the more options you have.
Related Questions
→ Will I Lose My Car in Bankruptcy?
→ How Chapter 13 Stops Foreclosure?
→ Can Bankruptcy Stop a Foreclosure Sale?
→ Is Bankruptcy the Right Choice for Me?
