Maryland's New $125,000 Homestead Exemption: What SB 939 Means If You Own a Home

Maryland just made it dramatically easier to keep your house in bankruptcy. As of June 1, 2026, Maryland protects up to $125,000 of equity in owner-occupied real estate. The old figure was around $27,900. If a lawyer told you in the last couple of years that you had too much equity to protect your home in Chapter 7, that advice may simply no longer be correct. It is worth having your numbers run again. Call Middleton Legal at 240-896-3253 for a free consultation.

What Changed

Maryland Senate Bill 939 raised the state's exemption for owner-occupied residential real property to $125,000. It took effect June 1, 2026. Before that, Maryland's homestead protection was tied to the federal cap and sat at roughly $27,900, which is one of the reasons Maryland was long considered a hard state in which to protect a home.

This is a roughly fourfold increase, and it is recent enough that most bankruptcy websites, including the big national ones, still publish the old number. If you have been researching this on your own and kept seeing a figure around $27,900, that is why.

What the Exemption Covers

The $125,000 protects equity in owner-occupied real estate. That includes a house, a condominium, a co-op, or a permanently affixed manufactured home. Residential security deposits are also covered under this exemption, and a security deposit is exempt whether the bankruptcy involves the landlord or the tenant.

The relevant law is Maryland Code, Courts and Judicial Proceedings section 11-504(f)(1)(i)(2), together with Real Property section 8-203(d)(3)(ii).

Two Limits People Get Wrong

Married couples cannot double it. The $125,000 is the household total. It is not $125,000 per spouse. This trips people up because some states do allow doubling. Maryland does not.

There is no special senior amount. You may find websites claiming Maryland gives older homeowners a much larger figure. That is not the law. There is one number and it is $125,000.

Who This Newly Helps

Here is the practical version. In Chapter 7, a trustee can sell property to reach equity that the exemptions do not protect. Under the old law, a Maryland homeowner with, say, $80,000 of equity had a serious problem. That equity was far above what the exemption covered, so Chapter 7 put the house at real risk. The standard answer was Chapter 13, where you keep the house but pay the unprotected value through a three to five year plan.

That same homeowner today, with $80,000 of equity, is now comfortably inside the $125,000 exemption. Chapter 7 may be back on the table. That is the difference between a five year repayment plan and a discharge in a few months.

So if any of the following is true, come talk to us again. You were told you had too much home equity for Chapter 7. You were steered into Chapter 13 mainly to protect the house. You put off filing entirely because you were told the house was at risk. The law that produced that advice has changed.

What Did Not Change

Two things worth stating plainly, because they still surprise people. Maryland has opted out of the federal exemption system, so you cannot choose the federal exemptions even if they would help you. And Maryland still has no standalone motor vehicle exemption. Car equity is protected using the wildcard exemption, which covers up to $6,000 of cash or property of any kind and has to stretch across whatever you apply it to.

So the house got much easier to protect. The car did not change.

Frequently Asked Questions

How much home equity can I protect in a Maryland bankruptcy?

Up to $125,000 of equity in owner-occupied real estate, effective June 1, 2026. This covers a house, condominium, co-op, or permanently affixed manufactured home.

Can a married couple double Maryland's homestead exemption?

No. Maryland does not allow the homestead exemption to be doubled. The $125,000 is the total for the household, not per spouse.

Does Maryland have a larger homestead exemption for seniors?

No. There is no special senior amount in Maryland. Some websites claim otherwise. The exemption is $125,000 regardless of age.

I was told I had too much equity to file Chapter 7. Is that still true?

It may not be. If that advice was based on the old exemption of roughly $27,900, your situation should be re-evaluated against the new $125,000 figure. Many homeowners who were previously steered into Chapter 13 to protect a house may now qualify for Chapter 7.

When did the new Maryland homestead exemption take effect?

June 1, 2026, under Maryland Senate Bill 939.

Get Your Numbers Run Again

If home equity was the reason you did not file, or the reason you were pushed into a five year plan, the ground moved under that advice on June 1. A free consultation costs you nothing and the math is worth redoing. Call Middleton Legal at 240-896-3253. Sheereen E. McNair works directly with every client. Middleton Legal, 6301 Ivy Ln, Ste 700, Greenbelt, MD 20770.