Top Ten Questions (continued)

Question 6.

What are the Massachusetts exemptions?

First, it is important to note that as part of a bankruptcy filing you must choose between the federal bankruptcy exemptions and the exemptions arising under Massachusetts and federal non-bankruptcy laws. This is a key decision that you and your bankruptcy attorney will make which depends on the nature and value of your property.

If the Massachusetts and federal non-bankruptcy choice is made, the most important exemption for homeowners is the homestead exemption. Filing of 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 new provisions limiting the state homestead to $136,875 (adjusted April 1, 2007, from $125,000) if the property was bought or otherwise acquired within 1215 days of the petition date. There is an important exception to the 1215 day rule in circumstances in which you buy a home in the same state and roll your equity into your new home.

There are various 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.

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