Exemption Planning

The following chart lists exemptions by jurisdiction. This chart, and similar information, are a crucial part of any determination of whether to file for bankruptcy protection. While the chart is handy to provide a general idea of the concepts at play here, nothing can take away the importance of speaking to a knowledgeable attorney about the risks and benefits of filing for bankruptcy protection.

Can income taxes be discharged? Maybe. Some taxes can be discharged, others cannot. Generally, you have to answer the following questions:

  1. Were your taxes due at least 3 years prior to filing your bankruptcy petition? Federal taxes are normally due around April 15 each year. However, be sure to add tolling events, such as extensions. This will add time to this 3 year rule.
  2. Did you file your taxes more than 2 years prior to filing your bankruptcy petition? This normally applies to late-filed returns.
  3. Were your taxes “assessed” by the IRS (or other governmental entity) more than 240 prior to filing your bankruptcy petition? Generally the date of assessment is fairly close to the date you filed your return BUT you don’t want to guess. Order a transcript from the relevant taxing authority to make sure that you time your filing correctly.

Will I be able to keep my car/ring/house/etc? Maybe. This depends on largely on the equity that you have in your vehicle (the value of your vehicle minus any liens) and the applicable law. If Maryland law is applicable to your filing, you will be using Maryland exemptions. Maryland has opted out of the federal exemptions listed in 11 U.S.C. Sec. 522(d). Maryland bankruptcy exemptions can be found in Md. Cts. & Jud. Proc. Code Ann. Sec. 11-504. If District of Columbia law is applicable, debtors have the option of selection either federal or state bankruptcy exemptions. District of Columbia bankruptcy exemptions can be found in D.C. Code 15-501.

MarylandDistrict of Columbia
Home$22,9755 Owner-occupied residential home (exemption does not double if both spouses file) MD Code Ann. C & JP Sec 11-504100% protected* *if obtained more than 1,215 days prior to filing.
Wild Card$6,000 Cash or property of any kind exempt if within 30 days of levy or attachment$850 (or an additional $8,075 if homestead exemption is not used)
Qualified retirement plan100% protectionSame.
Personal Property100% protection Health aidesSame.
$1,000 Clothing, household goods, furnishings, books, and pets$8,625* *also includes crops and musical instruments
VehicleNone.$2,575* *for use on one vehicle.
$5,000 Tools of the trade$1,625
Wages(earned but unpaid) 75% OR $145 (whichever is greater) in PG and Montgomery counties.Minimum of 75% of earned but unpaid wages or pension benefits* *a judge could award more.
Insurance100% protection Proceeds of insurance or annuity payable to spouse, children, or dependents of insuredSame.
100% protection Money payable in the event of sickness, accident, injury or death.Same.
Public Assistance100% protection Worker’s compensationSame.
100% protection Unemployment benefitsSame.
Certain Court-Ordered PaymentsTo the extent wages are protected Alimony100% protected.
100% protection Child supportSame.

In addition to bankruptcy exemptions, debtors (regardless of jurisdiction) may avail themselves of non-bankruptcy exemptions as well. These non-bankruptcy exemption are located in 11 U.S.C. 522(b)(3).

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