Can You Keep Your Car When Filing Chapter 7 Bankruptcy in Maryland?

While bankruptcy may involve liquidating assets to pay off debts, many people worry about losing essential possessions such as their cars.

Filing for Chapter 7 bankruptcy can provide individuals in Maryland with a fresh start when overwhelmed by financial difficulties. While bankruptcy may involve liquidating assets to pay off debts, many people worry about losing essential possessions such as their cars. Fortunately, Maryland law provides exemptions that allow you to keep your car in certain circumstances when filing for Chapter 7 bankruptcy. In this article, we’ll explore how you can navigate Chapter 7 bankruptcy in Maryland while retaining your vehicle.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, allows individuals to discharge their unsecured debts, such as credit card balances and medical bills, by selling non-exempt assets. The proceeds from the sale are used to repay creditors, and any remaining eligible debts are discharged, providing a fresh financial start. However, the key to keeping your car lies in understanding Maryland’s bankruptcy exemptions.

Maryland’s Bankruptcy Exemptions

Bankruptcy exemptions are legal provisions that protect certain types of property from being sold to repay creditors. Maryland has its set of exemptions that determine what assets you can retain during Chapter 7 bankruptcy, including your vehicle. The primary exemptions relevant to protecting your car include:

Motor Vehicle Exemption: Often, the amount owed on a car is more than what the car is worth. If this is the case, the car has no value in Chapter 7, and no exemption is necessary to protect the car. If the car does have some equity, the $5,000 personal property exemption or the $6,000 wildcard exemption are examples of Chapter 7 exemptions that can be used to protect the car in a Maryland bankruptcy.

Wildcard Exemption: In addition to the motor vehicle exemption, Maryland offers a wildcard exemption of up to $6,000 in any property. If your car’s equity exceeds the motor vehicle exemption, you may be able to use the wildcard exemption to protect the remaining equity in your vehicle.

Steps to Keep Your Car in Bankruptcy

To keep your car while filing for Chapter 7 bankruptcy in Maryland, follow these steps:

Determine the Equity: First, calculate the equity in your vehicle by subtracting any outstanding loan balance from the car’s current fair market value. If the result falls within Maryland’s motor vehicle exemption limit or can be covered by the wildcard exemption, you should be able to retain your car.

Maryland has specific exemptions for motor vehicles, which allow you to protect a certain amount of equity in your car. If the equity in your car is within the allowed exemption amount, you can typically keep your car.

Consult with an Attorney: Seek legal advice from an experienced bankruptcy attorney like Adam Freiman. He can help you assess your specific situation and navigate the bankruptcy process effectively. He will also ensure that you maximize your exemptions and protect your assets to the fullest extent allowed by law.

Follow the Court’s Instructions: Depending on your circumstances, the bankruptcy court will determine how to proceed with your case. If you’ve properly utilized exemptions and your car’s equity falls within the allowed limits, you should be able to retain your vehicle.


Filing for Chapter 7 bankruptcy in Maryland doesn’t necessarily mean losing your car. By understanding and utilizing Maryland’s bankruptcy exemptions effectively, you can protect your vehicle while discharging your unsecured debts. However, it’s crucial to consult with an experienced bankruptcy attorney who can provide personalized guidance throughout the process, ensuring the best outcome for your financial situation. Remember that bankruptcy laws are complex, and individual cases vary, so professional legal assistance is invaluable in securing your financial future.

The Law Offices of Adam M. Freiman can help you deal with the legal aspects involved so you can get a fresh financial start. To schedule a consultation, call (410) 486-3500 or fill out the online form.


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