Massachusetts Bankruptcy Laws
Only 18% of Massachusetts citizens chose Chapter 13, which means the rest of those filing Chapter 7 are hoping to claim exemptions for much of their property to prevent it from being liquidated. In Massachusetts, clients can choose either federal or state exemptions; however, they cannot mix them. State exemptions include:
Homestead |
Up to $500,000 (may not be doubled) |
Personal Property |
Motor vehicles up to $7,000; furniture up to $3,000; clothing, household goods, up to $200 total; cash up to $200/mo. for rent in lieu of homestead; cash for utilities, up to $75/mo.; bank deposits to $125; food or cash for food up to $300; burial plots; farm stock |
Wages |
Wages earned but not page up to $125/wk. |
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; public employees; private retirement benefits; savings bank employees; credit union employees; ERISA-qualified benefits |
Public Benefits |
Veterans’ benefits; AFDC; unemployment; worker’s comp; public assistance |
Tools of the Trade |
Up to $500 total of tools, implements, and fixtures; fishing equipment up to $500; required military arms, uniforms, and equipment; |
Insurance |
Disability benefits up to $400/wk.; some types of life insurance proceeds, dividends, interest, loan, cash, or surrender value; medical malpractice self-insurance; fraternal benefits |
Once the client and their attorney have devised the appropriate plan, prepared for filing, and completed the required credit counseling, they file a bankruptcy petition with the court, which is followed by several steps:
- The court puts a stay on all debt collection
- A bankruptcy trustee is appointed to oversee the process
- A client is required to attend a 341 meeting in order to answer questions from the trustee and creditors
Once all the requirements are satisfied, and the bankruptcy petition is granted, the debtor is free to start fresh, either with their debts discharged, or with a workable plan to repay them.
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