Making the decision to file for bankruptcy usually occurs after you realize that you simply can’t keep making payments on your regular bills and your credit accounts. This is a major decision that often introduces many questions. One of those questions might be what’s going to happen to your assets when you file.
Filing for bankruptcy in Massachusetts doesn’t mean having to lose everything. There are state and local laws that allow you to protect specific property. In Massachusetts, filers can choose between state or federal exemptions, but they can’t pick and choose points from each one.
What exemptions are present in Massachusetts?
Under Massachusetts law, the homestead exemption is one that many people look for when they file for bankruptcy. It allows you to protect up to $500,000 of equity in your private residence. If you’re married and filing jointly with your spouse, the protection doubles.
The state also provides full protection for most retirement accounts, pensions and public benefits. You can also protect up to $15,000 in household furnishings and personal items, as well as up to $2,500 in tools if the trade for your profession. Massachusetts also offers a vehicle equity exemption. This is up to $7,500 of equity in a vehicle, or double that if you’re over 60 or disabled.
It’s important to note that just because an asset is not exempt doesn’t mean that you’re necessarily going to lose it. The bankruptcy trustee has to evaluate the value of the item and what they would likely receive for it if they liquidated the asset. If the asset isn’t worth selling to pay off some of the debts, they likely won’t touch it.
Filing for bankruptcy is a major step in a person’s finances. Learning how this will affect you now and into the future is important. Working with someone who’s familiar with these matters may be beneficial, since you can find out more about how the bankruptcy will impact your life.