Maine Homestead Exemption: How much protection do the Maine bankruptcy laws provide to debtors in bankruptcy? Real or personal property (including cooperative) used as a residence is exempt to $47,500; if the debtor has minor dependents living in the home the exemption is doubled to $95,000. Debtors in Maine over age 60 or physically or mentally disabled are also entitled to the $95,000 homestead exemption (joint debtors in this category may double). In addition, the proceeds of the sale of real estate are exempt for 6 months.
How does the Maine homestead exemption work in the context of a chapter 7 bankruptcy case? Let’s say that Mr. and Mrs. Smith decide to file for bankruptcy. The Smith’s have three minor children living at home, which entitles them to a $95,000 exemption. Their home is worth $350,000 with a first mortgage lien of $300,000. In this example, the Smith’s have $50,000 of home equity, meaning they could file for chapter 7 and keep their home since Maine Bankruptcy laws allow families with children living at home to protect $95,000 of home equity.
It is important to keep in mind that exempting home equity does not relieve the obligation to make regular mortgage payments. Even with exempt home equity, your lender can institute foreclosure proceedings if you fall behind. For more information see the related posts below.