Tuesday, January 4, 2011

Massachusetts on Verge of Modernizing Exemptions

Massachusetts has some antiquated exemptions ($700 for a car!). These exemptions allow people to keep certain property when they are in debt. The Massachusetts legislature this week passed a long-awaited update. The bill now awaits the governor's signature. These changes will affect many people but, off the top of my head, two groups will most immediately benefit:
(1) People who have home equity and other property (such as paid-off cars) who need to file for bankruptcy.
(2) And people who own a car, are subject to debt judgments, and do not want their car to be seized by creditors.

Congrats to NACA and NCLC! They worked hard to lobby for these changes.

The full list of the new Massachusetts exemptions in the bill are here:

PropertyCurrentNew
Money for utilities $75 $500
Furniture $3000 $15,000
Books $200 $500
Tools $500 $5000
Stock in trade $500 $5000
Provisions for family $300 $600
Fishing equipment $500 $1500
Sewing machine $200 $300
One computer & one TV none no stated dollar limit
Rent money $200 $2500
Cash or savings (execution) $125 $2500 on any day
Wages (execution) $125 greater of 85% of gross wages or 50 times min. wage per week
Automobile $700 $7500 wholesale, $15000 for disabled or elderly
Personal property none $1000 to $6000
Jewelry none $ 2500
Wages (trustee process) $125 greater of 85% of gross wages or 50 times min. wage per week
Bank account (trustee process) $125 $2500

7 comments:

George E. Bourguignon, Jr. Attorney at Law said...

It is my understanding that the law takes effect on 7 April 2011. It appears people will have to wait to take advantage of these protections.

Nicholas F. Ortiz said...

Yes. You're right, that's the effective date.

The new homestead law also kicks in on March 16, so a couple big changes in the pipeline.

Zoey said...

If I file chapter 13, will I be able to discharge my second mortgage on my house but leave the first mortgage in tack? The house value is $120,000 less than the two mortgage amounts owed combined.

Nicholas F. Ortiz said...

If I understand your question, the answer is "no". A home must be worth less than the first mortgage balance to strip a second mortgage, not just less than the two mortgages combined. Feel free to give us a call, though: 617-716-0282.

Zoey said...

Our house is worth about 224K. The first mortgage is 249K and the second is 74K. We should be able to discharge the second. In chapture 13, what is the value of the vehicle that we are allowed to have? I travel in sales everyday for work through MA, RI and Maine. I need a reliable safe vehicle.

Nicholas F. Ortiz said...

There are two factors with respect to cars in Chapter 13: the value and the payment amount. In Chapter 13, the car value is rarely a factor affecting the liquidation analysis (however, in Chapter 13, there is never the issue of being able to keep it--Chapter 13 is not a liquidation chapter). On the other hand, the payment amount on the car loan can be a factor, especially if it is very high and you are below the median income (and not subject to the means test allowing for a deduction for secured debt payments regardless of amount). This may sound complicated, but that's because you're getting the inner workings of a general analysis about cars and Chapter 13. If we knew your income, car payment, and car value, you would simply get an answer without all the moving parts. If you want this, call or email us--or another bankruptcy attorney. Even though you are anonymous, this is the sort of thing that's best done in private.

Zoey said...

Thanks! I will get my facts and figures together and reach out for a consultation very soon!