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With Bankruptcy Exemptions, You Can Keep Most, If Not All, Of Your Assets

Many people delay filing for bankruptcy protection because they are afraid they will lose all of their possessions. In fact, most people who file bankruptcy do not lose any of their property, either because the property is exempt under Massachusetts or federal law, or because it is not valuable enough to take.

I am Neil Warrenbrand. In my bankruptcy practice, I help individuals and businesses throughout Boston and Massachusetts preserve their assets and their dignity by filing bankruptcy. I offer a free initial consultation to discuss your financial situation. One thing we will discuss is whether you are likely to lose any of your property by filing bankruptcy.

What Does it Mean When Property is Exempt?

In a Chapter 7 bankruptcy, the trustee appointed to oversee your case can liquidate, or sell, any non-exempt property to pay your creditors. In a Chapter 13 bankruptcy, you are generally required to pay your unsecured creditors at least the value of your non-exempt assets less certain deductions. Exempt property is property that you are allowed to keep and which the bankruptcy trustee cannot take to pay your debts. There are different exemptions under federal bankruptcy law and Massachusetts law. When you file bankruptcy, you will be allowed to choose either the Massachusetts exemptions or the federal bankruptcy exemptions. As your lawyer, I will advise you on which exemptions will provide the most protection.

Exemptions Under Massachusetts Law

Massachusetts law is relatively generous in the amount of equity you can keep in your home. Massachusetts law allows for an exemption of up to $500,000 in equity for your principal residence. This amount far exceeds the amount provided for by federal bankruptcy law, which allows each debtor in a case to exempt up to only $23,675 in homestead equity for cases filed on or after April 1, 2016.

Massachusetts law relative to personal property was recently amended to bring it more in line with that provided for by the federal bankruptcy laws. Among the more relevant exemptions, beginning April 7, 2011, Massachusetts law provides an exemption for the necessary wearing apparel, beds and bedding for the debtor and the debtor's family, customary kitchen appliances, 1 computer and 1 television; other household furniture necessary for the debtor and the debtor's family not exceeding $15,000 in value; tools of trade not exceeding $5,000 in value; materials and stock used in the debtor's trade or business not exceeding $5,000 in value; $2,500 in cash or savings; wages equal to the greater of 85 per cent of the debtor's gross wages or 50 times the greater of the federal or the Massachusetts hourly minimum wage for each week or portion thereof and the full amount owing or paid to a person as public assistance; and an automobile not exceeding $7,500 of wholesale resale value, except that if the debtor is either a handicapped person or a person 60 years of age or older the exemption is $15,000.

In addition to the foregoing, Massachusetts law provides a "wild-card" exemption for a debtor's aggregate interest in any personal property up to $1,000 in value, plus up to $5,000 of any unused dollar amount of the exemptions provided for household furnishings, tools of the trade and your motor vehicle.

Additional Property Exemptions

For cases filed on or after April 1, 2016, federal bankruptcy law, in addition to the other numerous exemptions it provides, provides for a $13,100 exemption, known as the "wild-card" exemption, that can be used to protect any type of personal property for which there is no other exemption, or for which the exemption is insufficient to shield the entire value of the asset.

Generally, retirement benefits such as 401(k) and IRA accounts are exempt under both Massachusetts and federal law.

Free Consultation With a Bankruptcy Attorney

To discuss the nature of your assets and whether they will be exempt in bankruptcy with an experienced and compassionate lawyer, call 617-720-2286 or fill out the contact form on this Web site to schedule you free initial consultation. My office is conveniently located in downtown Boston and is accessible by all T lines. I also have meeting locations throughout the Metro West and North Shore areas.

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