Filing for bankruptcy can be a difficult decision, especially when you have personal property like a boat that may not be considered essential. Many Maryland residents wonder whether they will be able to keep recreational assets such as boats when they file. The answer depends on several factors, including the type of bankruptcy you file, the value of the boat, and how bankruptcy exemptions apply to your situation. If you live in Baltimore or Dundalk and are considering bankruptcy, it is important to understand how your property will be treated.
Answering the Question: Will I Lose My Boat If I File For Bankruptcy?
Protecting Assets in a Bankruptcy Filing
When you file for bankruptcy, all of your assets must be disclosed. This includes homes, vehicles, financial accounts, and yes—even boats. These assets are then evaluated to determine what you can keep and what may be used to repay creditors. The goal is to find a fair balance between giving you a fresh start and ensuring that creditors recover as much as possible.
Understanding Bankruptcy Exemptions and Boat Ownership
Exemptions are legal protections that allow you to keep certain property during bankruptcy. In Maryland, you must use state exemptions, which include protections for homes, vehicles, personal property, and retirement accounts. However, boats are not specifically listed as exempt under Maryland’s exemption laws.
That said, Maryland does allow for a general personal property exemption and a wildcard exemption, which you may be able to use to protect part or all of your boat’s value—if the value is low enough.
For example, if your boat is worth $3,000 and you have not used up your wildcard exemption on other property, you may be able to fully protect it.
How to Determine if Your Assets are Protected or at Risk in a Bankruptcy?
To find out whether your boat is protected, you will need to:
1. Determine the boat’s fair market value.
This is the amount it would sell for today, not what you paid for it.
2. Check if you owe anything on it.
If there is a loan on the boat, you will also need to consider whether you want to continue paying that loan.
3. Evaluate available exemptions.
Your attorney will help you see whether any state exemptions can be used to protect the boat or if it will be considered nonexempt.
4. Consider the type of bankruptcy you are filing.
Chapter 7 and Chapter 13 handle assets differently, which can affect whether you keep the boat.
Weighing the Options: Chapter 7 vs. Chapter 13 for Boat Owners
In Chapter 7 bankruptcy, nonexempt property may be sold by the trustee to repay your creditors. If your boat is valuable and not protected by exemptions, it may be at risk of being sold. However, if the boat has minimal value or can be covered by your exemptions, you may be able to keep it.
In Chapter 13 bankruptcy, you can often keep your nonexempt property, including a boat, as long as you agree to pay its value over time through a court-approved repayment plan. This makes Chapter 13 a better option for some boat owners who want to retain their recreational assets.
Negotiating with the Bankruptcy Trustee: Finding Common Ground
In some Chapter 7 cases, it may be possible to negotiate with the trustee if your boat is not fully protected. For example, you may be able to buy back the boat by paying the value that would have been recovered through a sale. This is often less stressful and more efficient than having the trustee take and sell the asset.
Negotiations depend on your financial situation and the cooperation of the trustee, but they can offer a path forward for those who want to keep items like boats or motorcycles that are not easily exempted.
Protecting Other Recreational Assets in Bankruptcy
Boats are not the only recreational assets that might come under review in a bankruptcy case. Jet skis, ATVs, RVs, and motorcycles are also considered nonessential and are subject to the same exemption rules. The process for protecting these assets is similar—evaluate their value, check what exemptions apply, and determine which bankruptcy chapter provides the best protection.
Ready to Speak With an Experienced Bankruptcy Lawyer in Baltimore? Contact The Law Offices of Nicholas J Del Pizzo.
If you are concerned about what will happen to your boat or other personal property when filing for bankruptcy, The Law Offices of Nicholas J Del Pizzo is here to help. Serving clients in Baltimore and Dundalk, we provide experienced and personalized legal guidance to help you protect your assets and make informed decisions about your financial future.
Whether you are exploring Chapter 7 or Chapter 13 bankruptcy, our team will walk you through every step of the process and help you develop a strategy that fits your goals. Call today for a free consultation and get the clarity you need to move forward.
