EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0042*
HOUSE BILL 42
D3 3lr0578
HB 322/22 – JUD (PRE–FILED) CF SB 106
By: Delegate Lopez
Requested: October 19, 2022
Introduced and read first time: January 11, 2023
Assigned to: Judiciary
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 9, 2023
CHAPTER ______
AN ACT concerning 1
Courts – Judgments – Exemptions From Execution 2
FOR the purpose of exempting up to a certain amount of money in certain accounts of a 3
judgment debtor from execution on the judgment without an election by the debtor 4
to exempt the money; establishing procedures a depository institution is required to 5
follow on receipt of a writ of garnishment or other levy or attachment under certain 6
circumstances; establishing a certain limit on the cumulative value of property and 7
cash that may be exempted; requiring a writ of garnishment issued for certain 8
accounts to instruct the garnishee that it is to garnish only a certain amount; and 9
generally relating to exemptions from execution of a judgment. 10
BY repealing and reenacting, with amendments, 11
Article – Courts and Judicial Proceedings 12
Section 11–504 13
Annotated Code of Maryland 14
(2020 Replacement Volume and 2022 Supplement) 15
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 16
That the Laws of Maryland read as follows: 17
Article – Courts and Judicial Proceedings 18
11–504. 19
2 HOUSE BILL 42
(a) In this section, “value” means fair market value as of the date upon which the 1
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 2
INDICATED. 3
(2) “DEPOSITORY INSTITUTIO N” MEANS A BANK , CREDIT UNION , 4
TRUST COMPANY , SAVINGS BANK, OR SAVINGS AND LOAN ASSOCIATION , OR ANY OF 5
THEIR AFFILIATES OR SUBSIDIARIES. 6
(3) “VALUE” MEANS FAIR MARKET VA LUE AS OF THE DATE O N WHICH 7
THE execution or other judicial process becomes effective against the property of the debtor, 8
or the date of filing the petition under the federal Bankruptcy Code. 9
(b) The following items are exempt from execution on a judgment: 10
(1) Wearing apparel, books, tools, instruments, or appliances, in an amount 11
not to exceed $5,000 in value necessary for the practice of any trade or profession except 12
those kept for sale, lease, or barter. 13
(2) Except as provided in subsection (i) of this section, money payable in 14
the event of sickness, accident, injury, or death of any person, including compensation for 15
loss of future earnings. This exemption includes but is not limited to money payable on 16
account of judgments, arbitrations, compromises, insurance, benefits, compensation, and 17
relief. Disability income benefits are not exempt if the judgment is for necessities contracted 18
for after the disability is incurred. 19
(3) Professionally prescribed health aids for the debtor or any dependent of 20
the debtor. 21
(4) The debtor’s interest, not to exceed $1,000 in value, in household 22
furnishings, household goods, wearing apparel, appliances, books, animals kept as pets, 23
and other items that are held primarily for the personal, family, or household use of the 24
debtor or any dependent of the debtor. 25
(5) UP SUBJECT TO SUBSECTION (C)(3) OF THIS SECTION, UP TO $500 26
IN A DEPOSIT ACCOUNT OR OTHER ACCOUNT OF THE DEBTOR HELD B Y A BANK, 27
CREDIT UNION , TRUST COMPANY , SAVINGS BANK , OR SAVINGS AND LOAN 28
ASSOCIATION OR ANY O F THEIR AFFILIATES O R SUBSIDIARIES DEPOSITORY 29
INSTITUTION, WITHOUT ELECTION OF THE DEBTOR. 30
[(5)] (6) Cash or property of any kind equivalent in value to $6,000 is 31
exempt, if within 30 days from the date of the attachment or the levy by the sheriff, the 32
debtor elects to exempt cash or selected items of property in an amount not to exceed a 33
cumulative value of $6,000, EXCEPT THAT THE CUMU LATIVE VALUE OF CASH AND 34
PROPERTY EXEMPTED UN DER THIS ITEM AND IT EM (5) OF THIS SUBSECTION M AY 35
NOT EXCEED $6,000. 36 HOUSE BILL 42 3
[(6)] (7) Money payable or paid in accordance with an agreement or court 1
order for child support. 2
[(7)] (8) Money payable or paid in accordance with an agreement or court 3
order for alimony to the same extent that wages are exempt from attachment under [§ 4
15–601.1(b)(1)(ii) or (2)(i)] § 15–601.1(B)(1)(I) of the Commercial Law Article. 5
[(8)] (9) The debtor’s beneficial interest in any trust property that is 6
immune from the claims of the debtor’s creditors under § 14.5–511 of the Estates and Trusts 7
Article. 8
[(9)] (10) With respect to claims by a separate creditor of a husband or 9
wife, trust property that is immune from the claims of the separate creditors of the husband 10
or wife under § 14.5–511 of the Estates and Trusts Article. 11
(c) (1) (I) In order to determine whether the property listed in subsection 12
(b)(4) and [(5)] (6) of this section is subject to execution, the sheriff shall appraise the 13
property at the time of levy. The sheriff shall return the appraisal with the writ. 14
[(2)] (II) An appraisal made by the sheriff under this [subsection] 15
PARAGRAPH is subject to review by the court on motion of the debtor. 16
[(3)] (III) Procedures will be as prescribed by rules issued by the Court of 17
Appeals. 18
(2) (I) A WRIT OF GARNISHMENT ISSUED FOR A DEPOSIT ACCOUNT 19
OR OTHER ACCOUNT HEL D BY A BANK, CREDIT UNION , TRUST COMPANY , SAVINGS 20
BANK, OR SAVINGS AND LOAN ASSOCIATION OR ANY O F THEIR AFFILIATES OR 21
SUBSIDIARIES DEPOSITORY INSTITUTI ON SHALL INSTRUCT THE G ARNISHEE THAT , 22
SUBJECT TO ADDITIONA L EXEMPTIONS , IT IS TO GARNISH ONL Y THE AMOUNT 23
EXCEEDING THE AMOUNT EXEMPTED WITHOUT ELE CTION OF THE DEBTOR . 24
(II) A DEPOSITORY INSTITUTI ON MAY NOT BE LIABLE TO THE 25
JUDGMENT CREDITOR FO R ACTIONS TAKEN IN G OOD FAITH RELIANCE O N THE 26
INSTRUCTIONS IN THE WRIT OF GARNISHMENT REQUIRED UNDER THIS PARAGRAPH . 27
(3) (I) A DEPOSITORY INSTITUTI ON SHALL, ON RECEIPT OF A WRIT 28
OF GARNISHMENT OR OT HER LEVY OR ATTACH MENT, ANSWER THE WRIT OF 29
GARNISHMENT OR OTHER LEVY OR ATTACHMENT A ND, IF THE DEBTOR MAINTA INS 30
ANY DEPOSIT ACCOUNTS WITH THE DEPOSITORY INSTITUTION, STATE: 31
1. THAT THE TOTAL AMOUNT DOES NOT EXCEED $500; 32
OR 33
4 HOUSE BILL 42
2. THE AMOUNT OF FUNDS I N EXCESS OF $500 THAT HAS 1
BEEN HELD PENDING FU RTHER ORDER OF COURT . 2
(II) FOR ANY FUNDS IN EXCE SS OF $500, THE DEPOSITORY 3
INSTITUTION SHALL FO LLOW ALL OTHER CUSTO MARY PROCEDURES FOR HANDLING 4
A WRIT OF GARNISHMEN T OR OTHER LEVY OR A TTACHMENT , INCLUDING FREEZING 5
OF FUNDS. 6
(III) 1. IF A DEBTOR HOLDS AN INTEREST IN MULTIPLE 7
DEPOSIT ACCOUNTS AT A SINGLE DEPOSITORY INSTITUTION, THE DEPOSITORY 8
INSTITUTION MAY DETE RMINE HOW AND TO WHI CH ACCOUNT OR ACCOUN TS THE 9
$500 EXEMPTION SHOULD BE APPLIED. 10
2. THIS SUBPARAGRAPH DOE S NOT CREATE A CAUSE OF 11
ACTION AGAINST A DEP OSITORY INSTITUTION THAT COMPLIES WITH A WRIT OF 12
GARNISHMENT OR OTHER LEVY OR ATTACHMENT . 13
(IV) THE EXEMPTION UNDER S UBSECTION (B)(5) OF THIS 14
SECTION: 15
1. APPLIES SEPARATELY TO EACH DEPOSITORY 16
INSTITUTION AND TO EACH WRIT OF GARNISHMENT DIRECTED TO A DEPOSITORY 17
INSTITUTION; AND 18
2. DOES NOT PRECLUDE OR REDUCE A DEBTOR ’S 19
RIGHTS TO ANY OTHER EXEMPTION PROVIDED B Y STATE OR FEDERAL LAW . 20
(d) The debtor may not waive, by cognovit note or otherwise, the provisions of 21
subsections (b) and (h) of this section. 22
(e) The exemptions in this section do not apply to wage attachments. 23
(f) (1) (i) In addition to the exemptions provided in subsection (b) of this 24
section, and in other statutes of this State, in any proceeding under Title 11 of the United 25
States Code, entitled “Bankruptcy”, any individual debtor domiciled in this State may 26
exempt the debtor’s aggregate interest in: 27
1. Personal property, up to $5,000; and 28
2. Subject to subparagraph (ii) of this paragraph: 29
A. Owner–occupied residential real property, including a 30
condominium unit or a manufactured home that has been converted to real property in 31
accordance with § 8B–201 of the Real Property Article; or 32
HOUSE BILL 42 5
B. A cooperative housing corporation that owns property that 1
the debtor occupies as a residence. 2
(ii) The exemption allowed under subparagraph (i)2 of this 3
paragraph may not exceed the amount under 11 U.S.C. § 522(d)(1), adjusted in accordance 4
with 11 U.S.C. § 104, subject to the provisions of paragraphs (2) and (3) of this subsection. 5
(2) An individual may not claim the exemption under paragraph (1)(i)2 of 6
this subsection on a particular property if: 7
(i) The individual has claimed successfully the exemption on the 8
property within 8 years prior to the filing of the bankruptcy proceeding in which the 9
exemption under this subsection is claimed; or 10
(ii) The individual’s spouse, child, child’s spouse, parent, sibling, 11
grandparent, or grandchild has claimed successfully the exemption on the property within 12
8 years prior to the filing of the bankruptcy proceeding in which the exemption under this 13
subsection is claimed. 14
(3) The exemption under paragraph (1)(i)2 of this subsection may not be 15
claimed by both a husband and wife in the same bankruptcy proceeding. 16
(g) In any bankruptcy proceeding, a debtor is not entitled to the federal 17
exemptions provided by § 522(d) of the federal Bankruptcy Code. 18
(h) (1) In addition to the exemptions provided in subsections (b) and (f) of this 19
section and any other provisions of law, any money or other assets payable to a participant 20
or beneficiary from, or any interest of any participant or beneficiary in, a retirement plan 21
qualified under § 401(a), § 403(a), § 403(b), § 408, § 408A, § 414(d), or § 414(e) of the United 22
States Internal Revenue Code of 1986, as amended, or § 409 (as in effect prior to January 23
1984) of the United States Internal Revenue Code of 1954, as amended, shall be exempt 24
from any and all claims of the creditors of the beneficiary or participant, other than claims 25
by the Maryland Department of Health. 26
(2) Paragraph (1) of this subsection does not apply to: 27
(i) An alternate payee under a qualified domestic relations order, as 28
defined in § 414(p) of the United States Internal Revenue Code of 1986, as amended; 29
(ii) A retirement plan, qualified under § 401(a) of the United States 30
Internal Revenue Code of 1986, as amended, as a creditor of an individual retirement 31
account qualified under § 408 of the United States Internal Revenue Code of 1986, as 32
amended; or 33
(iii) The assets of a bankruptcy case filed before January 1, 1988. 34
6 HOUSE BILL 42
(3) The interest of an alternate payee in a plan described under paragraph 1
(1) of this subsection shall be exempt from any and all claims of any creditor of the alternate 2
payee, except claims by the Maryland Department of Health. 3
(4) If a contribution to a retirement plan described under paragraph (1) of 4
this subsection exceeds the amount deductible or, in the case of contribution under § 408A 5
of the Internal Revenue Code, the maximum contribution allowed under the applicable 6
provisions of the United States Internal Revenue Code of 1986, as amended, the portion of 7
that contribution that exceeds the amount deductible or, in the case of contribution under 8
§ 408A of the Internal Revenue Code, the maximum contribution allowed, and any accrued 9
earnings on such a portion, are not exempt under paragraph (1) of this subsection. 10
(i) (1) In this subsection, “net recovery” means the sum of money to be 11
distributed to the debtor after deduction of attorney’s fees, expenses, medical bills, and 12
satisfaction of any liens or subrogation claims arising out of the claims for personal injury, 13
including those arising under: 14
(i) The Medicare Secondary Payer Act, 42 U.S.C. § 1395y; 15
(ii) A program of the Maryland Department of Health for which a 16
right of subrogation exists under §§ 15–120 and 15–121.1 of the Health – General Article; 17
(iii) An employee benefit plan subject to the federal Employee 18
Retirement Income Security Act of 1974; or 19
(iv) A health insurance contract. 20
(2) Twenty–five percent of the net recovery by the debtor on a claim for 21
personal injury is subject to execution on a judgment for a child support arrearage. 22
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to 23
apply only prospectively and may not be applied or interpreted to have any effect on or 24
application to any writ of garnishment or writ of execution issued before the effective date 25
of this Act. 26
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 27
October 1, 2023. 28