Massachusetts Bankruptcy Exemptions – Keeping Your Family Home


The most common bankruptcy exemption misconception is that will  not protect your family home.

The United States Bankruptcy Act allows people to keep a fairly generous amount of “exempt’ property so that they can have a “fresh start.”  Bankruptcy exemptions are an important part of the process. In Chapter 7 bankruptcy, exemptions determine what you can keep, whether it be your home, car, pension, personal belongings, or other property. In Chapter 13 bankruptcy, exemptions determine how much you will have to pay through your Chapter 13 plan. Most Chapter 7 filers lose no property. Anyone thinking of filing for bankruptcy needs to understand how exemptions work and the consequences before they file.

People In Massachusetts Can Pick The Bankruptcy Exemption System Best For Them

Since bankruptcy is a federal law there are federal exemptions. If you want to read about all of them a complete list can be found at 11 U.S.C. §522.   But, Massachusetts has it’s own special exemptions too.  Massachusetts residents have a choice of which exemption system to use. Before filing it is important to compare the effects of one system or the other. You cannot mix and match. Married couples, filing jointly, in Massachusetts, may claim the full amount of each exemption.

Massachusetts Bankruptcy Protects The Family Home

Debtor’s who are homeowners will generally elect to use the Massachusetts’ system. It allows a property owner to protect up to $500,000.00 in the equity in their home. Equity is the fair market value of the home less the balance of any mortgages. In order to obtain the full exemption they must file a written “Declaration of Homestead” document in the Registry of Deeds. It’s not hard to do. Without the written filing the homestead exemption is capped at $125,000.00. Even this amount is plenty for many people.

In addition, filers can exempt a car up $7.000.00 in value, $2,500.00 of cash in a bank account and most, if not all, of their personal household goods and furnishings. A complete list of Massachusetts exemptions can be found at M.G.L. Ch 235 §34.

There are many more smaller exemption for all kinds of property. Since the Massachusetts exemptions were passed into law many years ago there are actually, specialized exemptions for pigs, cows and military muskets still on the books!

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