Filing for bankruptcy is a big step in a person’s life, but it’s one that’s sometimes necessary when they have more expenses than income. Making this decision is never easy. It’s important for you to have all the information possible so you can make the decision that’s best for you.
One thing that matters to many people is how the bankruptcy will affect their assets. The good news is that bankruptcy allows exemptions that can protect certain assets.
Common exemptions
In Massachusetts, you can choose whether you want to use the state exemptions or the federal ones. These vary some, but you can’t pick and choose from each set. These include:
- Homestead or home equity: Up to $125,000 of home equity is allowed under state exemptions with the possibility of increasing to $500,00 if there’s a homestead declaration. Up to $25,150 is allowed under federal exemptions
- Motor vehicles: Up to $7,500 of equity is allowed under state exemptions or up to $4,000 under federal exemptions
- Wildcard: Up to $6,000 is allowed under state exemptions or up to $13,400 under federal exemptions
- Personal property: Up to $20,000 based on as-is cash value is allowed under state exemptions or up to $15,000 under federal exemptions
Other exemptions also apply to certain wages, retirement accounts, and public benefits. Determining how these will apply in your case can help you to make a decision.
Just because an asset isn’t exempt, that doesn’t mean it will automatically be seized. It’s up to the trustee to determine if liquidating the asset to pay off some of the debt is worth the time it will take.
Every step in the bankruptcy process must be handled precisely to ensure that it’s done correctly under the law. Because these cases are sometimes complex, it’s critical for you to have experienced legal guidance so you can learn about the options and move forward in the way you feel is best for your needs.
