Unemployed and in Debt? Your Bankruptcy Options in Maryland

 Posted on July 08, 2025 in Uncategorized

As if losing your job is not stressful enough, watching your bills pile up with no income to cover them can make the pressure feel overwhelming. Maryland residents facing unemployment and mounting debt may find that bankruptcy offers a much-needed lifeline. Whether you are dealing with credit card debt, medical bills, or a potential foreclosure or repossession, understanding your legal options is crucial.

Fortunately, being unemployed is not an automatic disqualification from filing for bankruptcy. In fact, Chapter 7 bankruptcy may be even more accessible because of your financial situation. It is important to speak to a knowledgeable Montgomery County, MD bankruptcy attorney if you are considering filing for bankruptcy while unemployed.

Bankruptcy Eligibility in Maryland

Chapters 7 and 13 are the two most common types of consumer bankruptcy. Chapter 7 bankruptcy is typically for individuals with lower income and assets, while Chapter 13 is designed for those who have a regular income and can repay debts over a period of three to five years.

Chapter 7 bankruptcy has a means test that compares average monthly income over the past six months to the median income for the same household size in Maryland. For 2025, the median income for a one-person household in Maryland is $82,646, and for a two-person household, it is $109,054. The annual income goes up for each additional person in the household.

If a potential filer’s income is below the state’s median for their household size, the filer is likely eligible for Chapter 7 bankruptcy. Chapter 7 requires a regular income to support a repayment plan that lasts three to five years.  As of March 31, 2025, the amount of debt a person can have when filing Chapter 13 is: unsecured debt less than $465,275 and secured debt less than $1,395,875.

Some debts, such as tax debts, student loans, and certain types of support obligations, are not dischargeable in Chapter 7. Federal or state exemptions can help protect some assets, but individuals who have lived in Maryland for more than two years must utilize state exemptions.  While unemployment benefits are considered income, they are unlikely to exceed the allowable income in the state for Chapter 7.

Maryland or Federal Exemptions?

A lack of a regular income can make Chapter 7 bankruptcy more accessible and eliminate certain debts. Most unsecured debts, such as credit card debt, medical bills, payday loans, personal loans, and past-due rent or utility bills, can be discharged in Chapter 7 bankruptcy, as well as some secured debts, including car loans and mortgages. When you file for bankruptcy in Maryland, you can use certain federal exemptions if you have lived in the state for less than two years.

• Homestead exemption: $27,900 equity exemption for Maryland or $31,575 federal equity exemption (the federal homestead exemption is doubled for a married couple; the Maryland homestead exemption is not)
• Disability or health benefits, including court awards and settlements
• Life insurance when the beneficiary is the individual’s dependent, child, or spouse
• Tools of your trade up to $5,000
• Professionally prescribed health aids
• Household furnishings and goods up to $1,000 ( Maryland Code, Courts, and Judicial Proceedings Section 11-504(b)(4))
• Personal property wildcard exemption: Up to $5,000 (cannot be used to exempt real estate)
• A burial plot
• Court-ordered child support payments
• Public assistance benefits
• Retirement benefits
• Wildcard exemption of $6,000 for cash or other personal property, including a vehicle, or added to the homestead exemption

Contact a Prince George’s County, MD Bankruptcy Lawyer

If you are financially struggling and overwhelmed by debt, you do not have to face it alone. Consulting a qualified Bowie, MD bankruptcy attorney from Bloc One Services, LLC can significantly impact the outcome, as they can help you explore your options and determine the best path forward.

Our attorneys provide the local community with high-quality legal services at a fair and reasonable price, helping you "Rebuild Your Future with Hope." Call 240-200-0076 for a free initial 30-minute consultation.