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Bankruptcy: Maine

Filing bankruptcy in Maine aims to achieve two things.  First, it gives honest debtors a chance to overcome crushing debt, and second creditors may be repaid to the extent that the debtor’s property value or earnings permit. 4,104 bankruptcies were filed in Maine in 2010, ranking Maine 38th in the country for the number of bankruptcy filings per capita. 86% of Maine’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in Maine

Federal law governs bankruptcy proceedings in Maine, and as such all bankruptcy cases are filed in the US Bankruptcy Courts located in Augusta, Bangor, Portland and Presque Isle.  Although federal courts have jurisdiction over bankruptcy proceedings, Maine law prohibits petitioners from choosing exemptions found in the U.S. bankruptcy code, permitting only the exemptions provided under Maine law. With the counsel of a bankruptcy attorney Maine debtors can fully understand what personal property the exemptions permit the petitioner to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, Maine

Chapter 7 bankruptcies in Maine are the most common bankruptcy filing.  Chapter 7 is best suited to petitioners without significant assets such as investments or substantial equity in a home, for the reason that a Bankruptcy Trustee may liquidate personal property that isn’t protected by Maine’s bankruptcy exemptions. Liquidation occurs when the Trustee converts personal assets to cash for distribution to creditors. Maine’s Chapter 7 bankruptcy law allows debtors to keep some essential property and the exempt assets are strictly off-limits to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

Maine Bankruptcy Exemptions

Maine bankruptcy law designates specific property exemptions that permit debtors to keep certain personal property and assets so they may move forward from bankruptcy as productive members of society.  In real terms, this means the creditors cannot force a debtor to sell the shirt off their back.  Bankruptcy in Maine permits petitioners to choose exemptions only from the state list.

Property exemption amounts are subject to change, so it is suggested that individuals or couples considering bankruptcy seek the counsel of a Maine bankruptcy attorney and discuss the options open to them.  Maine bankruptcy exemptions include:

Maine Homestead Exemption

  • $47,500 total: Real or personal property (including cooperative) used as residence; $95,000 if debtor has minor dependents in residence; $95,000 if debtor is over age 60 or physically or mentally disabled, (Husband and wife may double)
  • Proceeds of sale exempt for six months

Maine Personal Property Exemption

  • $200 per item: Animals, crops, musical instruments, books, clothing, furnishings, household goods and appliances
  • $5,000 total: Motor vehicle
  • $750 total: Jewelry; no limit for one wedding and one engagement ring
  • Health aids
  • Food to last 6 months
  • Seeds, fertilizers and feed to raise and harvest food for 1 season
  • Tools and equipment to raise and harvest food
  • Fuel not exceeding 10 cords of wood, 5 tons of coal, or 1,000 gal. of heating oil
  • Cooking stove; furnaces and stoves for heat
  • Military clothes, arms and equipment
  • $12,500 total: Personal injury recoveries
  • Lost earnings payments needed for support
  • Balance due on repossessed goods; total amount financed not exceeding $2,000
  • Wrongful death recoveries needed for support
  • Burial plot in lieu of homestead exemption

Maine Tools of the Trade Exemption

  • $5,000 total: Books, materials and stock
  • 5-ton (limit) Commercial fishing boat
  • One of each farm implement (and related maintenance equipment needed to harvest and raise crops)
  • Logging implements

Maine Public Benefits Exemption

  • Social Security and Public assistance
  • Workers’ and Unemployment compensation
  • Maintenance under the Rehabilitation Act
  • Crime victims’ compensation
  • Veterans’ benefits

Maine Insurance Exemption

  • $450 per month: Annuity proceeds
  • Disability or health proceeds, benefits or avails
  • Fraternal benefit society benefits
  • Death benefit for police, fire or emergency medical personnel who died in the line of duty
  • Group health or life policy or proceeds
  • Life, endowment, annuity, or accident policy, proceeds or avails
  • $4,000 total: Life insurance policy, interest, loan value, or accrued dividends for policy in name of person on whom you were financially dependant
  • Un-matured life insurance policy, excluding credit insurance policy

Maine Pensions and Retirement Savings Exemption

  • ERISA-qualified benefits
  • Judges and Legislators
  • State employees

Maine Miscellaneous Exemption

  • Alimony and child support

Maine Wild Card Exemption

  • $400 total: Any property
  • $6,000 total: Unused portion of homestead exemption or unused exemption in animals, crops, musical instruments, books, clothing, furnishings, household goods, appliances, tools of the trade and personal injury recoveries

Chapter 13 Bankruptcy, Maine

In 2010, 14% of petitioners filed for protection under Chapter 13 bankruptcy in Maine.  Filing Chapter 13 bankruptcy in Maine initiates a financial restructuring process whereby a court-appointed Trustee negotiates with creditors and implements a 3-5 year repayment plan, using the debtor’s future earnings to repay creditors.  Chapter 13 petitioners in Maine keep most – or all – of their property.

How to File Bankruptcy in Maine

Eligibility for property exemptions should play a key role in deciding whether to pursue bankruptcy as an answer to one’s financial problems. The objective should be to protect major assets and discharge debts. Because each bankruptcy case is uniquely complex, a Maine bankruptcy attorney can counsel debtors and help them weigh their options concerning Chapter 7 and Chapter 13 bankruptcies.

Bankruptcy Attorney: Maine

It is the bankruptcy petitioner’s responsibility to know their rights and duties as debtors.  A Maine bankruptcy attorney can simplify matters, particularly in terms of federal bankruptcy laws and state exemptions.  Anyone facing the complex and stressful road to personal bankruptcy will benefit from meeting with a Maine bankruptcy attorney for legal counsel and support.