First, as part of a
bankruptcy filing you must choose between (1) the federal bankruptcy exemptions and
(2) the exemptions under Massachusetts and federal non-bankruptcy law. This
is a key decision that you and your bankruptcy attorney will make together that
will depends on the nature and value of your
If the Massachusetts exemptions are chosen, it is usually because of the homestead
exemption. This is a very important exemption for
homeowners with equity in their homes. Filing a declaration of homestead in the
proper manner and at the right registry of deeds will exempt up to $500,000
of your equity in your primary
residence, even if the filing occurs just prior to your bankruptcy filing.
There are some new rules that limit the amount of the homestead in bankruptcy to $146,450 (adjusted
April 1, 2010 from $136,875) if the
property was acquired within 1215 days of a bankruptcy petition date.
This so-called "1215 day rule" does not apply if you bought a new home in the same state and rolled
over your equity from your old home into your new home.
For cases filed after March 16, 2011 homeowners will get an automatic $125,000 of
homestead protection in Massachusetts for their primary residence even without filing a homestead
for the full $500,000.
There are a number of other exemptions under
Massachusetts law and federal non-bankruptcy laws. Some examples include:
401(k)s, certain retirement
accounts and death benefits,
social security benefits, veterans'
benefits, unemployment and workers' compensation benefits, and certain personal
property and pensions.
In January 2011, Massachusetts modernized the personal property exemptions.
These went into effect on April 7, 2011. As I wrote above, we will still have a choice
here between the federal and state exemptions.
The 2011 law just makes the state exemptions better for consumers--while the federal
exemptions will stay as they are. A table of the old versus
new state personal property exemptions is right here:
|Money for utilities||$500|
|Stock in trade|| $5000|
|Provisions for family|| $600|
|Fishing equipment|| $1500|
|Sewing machine|| $300|
|One computer & one TV || no stated dollar limit|
|Rent money || $2500|
|Cash or savings (execution) || $2500 on any day|
|Wages (execution)||greater of 85% of gross wages or 50 times min. wage per week|
|Automobile|| $7500 wholesale, $15000 for disabled or elderly |
|Personal property|| $1000 to $6000|
|Jewelry|| $ 2500|
|Wages (trustee process) || greater of 85% of gross wages or 50 times min. wage per week|
|Bank account (trustee process)|| $2500|