As part of a bankruptcy filing your bankruptcy lawyer will advise you to choose between (1) the federal bankruptcy exemptions and (2) the exemptions under Massachusetts and federal non-bankruptcy law. This is an important decision that depends on the type of (and value of) the personal property that you have. A Massachusetts bankruptcy lawyer with our office will advise you so that you make the most informed and best decision for your situation.
Here’s a little bit of basic information. If your bankruptcy lawyer chooses the Massachusetts exemptions for you, it is usually because you own a house or have a mortgage and thus want to take advantage of the Massachusetts 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 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.
In the past, if your bankruptcy lawyer chose the Federal exemptions for you it was usually because of the higher value of the personal property exemptions. But, in January 2011, the State of Massachusetts finally increased and modernized the value of the personal property exemptions. These changes went into effect on April 7, 2011 and now make the Massachusetts exemptions better for consumers–while the federal exemptions stay as they are.
For a FREE bankruptcy consultation from one of our Massachusetts bankruptcy lawyers just fill out the Free Evaluation form above, or call (508) 655-6085 today.