Massachusetts bankruptcy homestead law protects some of the equity you have in your home. For most people, keeping their home is a high priority during a bankruptcy. Before you file for a Chapter 7 or Chapter 13 bankruptcy, it’s important to understand your potential homestead exemptions.
Federal and Massachusetts Bankruptcy Homestead Law Protections
In Massachusetts, you can choose between either federal or state exemption rules. While this article focuses on the Massachusetts bankruptcy homestead law, you also can elect to use the federal exemption system. Under federal law, the maximum homestead exemption is currently $23,675 (or $47,350 if married and filing jointly). If you need help deciding which exemption system to use, contact a Springfield debt attorney.
Under state law, all Massachusetts homesteads are automatically entitled to a maximum $125,000 exemption. However, if you record a “Declaration of Homestead” with the Registrar of Deeds, your homestead exemption increases to a maximum of $500,000. Since filing a Declaration of Homestead is a fairly simple process, it is typically in your best interest to file this form.
The homestead exemption also applies to a principal residence held in trust. In these cases, the trustee must file a Declaration of Homestead that identifies who has homestead protections. Anyone who resides in the home may assert homestead protections, even if they are not beneficiaries of the trust.
Additional Benefits for Disabled and Elderly Claimants
Unlike other exemptions, most married couples cannot double the state homestead exemption during a bankruptcy. However, there is an important exception to this rule. If you are an elderly (at least 62 years old) or disabled homeowner, you and your spouse can combine your homestead exemptions. For example:
- If both spouses are at least 62 years old or disabled: up to a $1,000,000 exemption,
- If one spouse is at least 62 years old or disabled: up to a $750,000 exemption.
Again, an experienced Springfield debt attorney can help you understand how to apply the exemptions to your claim.
What Is a Homestead?
A homestead is a home that you either occupy or intend to occupy as your primary residence. It can be a single family house, condominium, or up to a four-unit multifamily property. The homestead exemption also applies to mobile homes, manufactured homes, and cooperatives.
If you rent your residence, it is not eligible for the Massachusetts homestead exemption. However, you may exempt up to $2,500 per month for rental payments.
Will Filing Bankruptcy Stop a Foreclosure?
Under federal law, an automatic stay is imposed after you file for bankruptcy. While your bankruptcy is pending, your creditors (including your mortgage holder) must pause their collection or foreclosure processes. While the automatic stay is not a long-term solution, it gives you and your bankruptcy lawyer time to assess your situation and work on eliminating your mortgage and other debts.
Does the Homestead Exemption Cover my Furniture and Appliances?
Massachusetts bankruptcy homestead law only covers the residence itself, not your personal property within the home. Instead, Massachusetts provides other exemptions that cover some of your furniture, appliances, trade tools, and personal property. If you have questions about these exemptions, contact a Springfield debt attorney for more information.
A Springfield Debt Attorney Can Help You Live Debt Free
It can be difficult to understand Massachusetts bankruptcy homestead law. At the Law Office of Eric Kornblum, we use over 20 years of experience to guide our clients through the bankruptcy process. Our goal is to provide you with financial independence and peace of mind. Contact us today for a confidential assessment.