Potential bankruptcy clients are sometimes afraid that they will lose assets such as their home, furniture, automobiles, and other personal belongings.

Exempt assets are personal belongings that cannot be taken by the bankruptcy trustee and sold.  Massachusetts is one of about fifteen states where attorneys may decide to use Federal or state exemptions.  Below we explain some of the most common exemptions that you may be entitled to if you file bankruptcy.

Your Home:

The most important exemption for homeowners who wish to keep their home is the homestead exemption.  Under Massachusetts law, you must first record a homestead declaration before filing bankruptcy.  This exemption covers your home that you occupy or intend to occupy for up to $500,000 of equity.  On the other hand, the Federal exemption covers real property up to $22,975.  However, if you are filing jointly with your spouse, and both names are on the deed, the federal exemption can be doubled.  Based on your case, we will decide which laws to apply in order for you to keep your home if you choose to do so.

Motor Vehicle:

If Massachusetts exemptions are chosen, the allowed exemption for a motor vehicle is up to $7500.  In contrast, under Federal  law, you are allowed $3,675.  Further, under both state and federal law, husband and wife can each claim an exemption in their own vehicle, so long as both vehicles are not titled only in one of the debtor’s names.  The value of the exemption is based on the equity in the vehicle, not on the actual value of the car.

Household Goods and Furnishings

Both Federal and State exemption laws recognize that you do not want to part with your furniture, electronics, clothes and other household items.  Under Massachusetts law, beds, clothing, furniture and other personal belongings are able to be exempted if you file for bankruptcy.  Federal law provides the same protection and caps out at $12,250 per debtor.

Cash, Bank Accounts, IRA’s and Life Insurance

Bankruptcy exemption laws for both Federal and State allow you to keep your investments in certain retirement accounts and life insurance policies.  Also cash on hand and cash in a savings or checking account is provided protection up to certain amounts.

Wild Card Exemption

This exemption is exactly what it sounds like – a wild card.  Under Federal law an individual filer is entitled to exempt up to $12,725 for miscellaneous items and if filing jointly, the amount is doubled.  The Massachusetts state wildcard exemption is $6,000.00 (both wild cards are subject to certain limitations.)  The wild card exemption can be used on any property.

 Whether it is your home, your computer, or your IRA account, we will evaluate your case so that we can maximize your exemptions thus allowing minimal loss of your personal belongings.  Please call 978-595-1449 for a free consultation and we will be happy to answer any questions you may have.