Bankruptcy

Can I Keep My Property If I File for Bankruptcy in Massachusetts?

By Cara O'Neill, Attorney
Learn about Massachusetts bankruptcy exemptions.

August 30, 2017

Because the purpose of bankruptcy is to give individuals a fresh financial start, there’s no need to worry that you’ll lose everything if you file for bankruptcy. The Massachusetts exemption statutes will help you begin your new life on stable footing by protecting the assets you’ll need to maintain a job and home.

Keeping Property in a Massachusetts Bankruptcy

You can determine what you’ll be able to protect by reviewing the Massachusetts exemption statutes. What will happen to your nonexempt property—property that isn’t covered by an exemption—will depend on the bankruptcy chapter you file.

  • Chapter 7 bankruptcy. You’ll likely choose this chapter if you meet income qualifications and don’t have nonexempt property that you want to keep. The Chapter 7 bankruptcy trustee—the official responsible for your case—will sell the nonexempt property and distribute the funds to creditors.
  • Chapter 13 bankruptcy. This type allows a Chapter 13 bankruptcy filer to keep nonexempt property. However, the filer must pay for the value of the nonexempt property in the three- to five-year repayment plan, along with other required amounts.

Choosing Between the Federal or Massachusetts Exemptions

In Massachusetts, residents can pick between the Massachusetts state exemptions and the federal exemptions. Although a filer can’t select from both lists, however, a filer who uses the Massachusetts state exemptions can use the federal “nonbankruptcy” exemptions, as too.

Massachusetts Bankruptcy Exemptions

Unless otherwise stated, references are to the Massachusetts General Laws (Mass. Gen. Laws). You’ll find the Massachusetts statutes on the Massachusetts Legislature site.

Homestead

  • Homestead—$500,000 if filer takes steps to declare the homestead by filing a homestead declaration with the Registry of Deeds. Joint filers cannot double this exemption. (Mass. Gen. Laws c. 188, §§ 1, 2, 3.)
  • Automatic homestead—$125,000 if the filer doesn’t file a homestead declaration with the Registry of Deeds. Joint filers cannot double this exemption. (Mass. Gen. Laws c. 188, §§ 1, 4.)
  • Property held as tenancy by the entirety—this exemption doesn’t protect equity; however, it protects the interests of a non-filing spouse. Consult with an attorney for more information. (11 U.S.C. § 522(b)(3)(B).)

Wages and Support

  • Wages—85% of gross earnings or 50 times the minimum wage, whichever is greater. (Mass. Gen. Laws c. 235, § 34(15), c. 246, § 28.)
  • Seaman’s wages (Mass. Gen. Laws c. 246, § 32(7).)

Vehicle

  • Automobile—$7,500. (Mass. Gen. Laws c. 235, § 34(16).)
  • Automobile of an elderly adult or an individual with a disability—$15,000. (Mass. Gen. Laws c. 235, § 34(16).)

Household Furnishings, Jewelry, and Clothing

  • Jewelry—$1,225. (Mass. Gen. Laws c. 235, § 34(17).)
  • Household furnishings—$15,000. (Mass. Gen. Laws c. 235, § 34(2).)
  • Household items—clothing, beds and bedding, heating unit, stove, refrigerator, freezer, water heater, $500 per month for utilities, sewing machine ($300 value), computer, and television. (Mass. Gen. Laws c. 235, § 34(1), c. 235, § 34(12).)
  • Books—$500. (Mass. Gen. Laws c. 235, § 34(3).)
  • Animals and feed—two cows, two swine, and 12 sheep, plus four tons of hay. (Mass. Gen. Laws c. 235, § 34(4).)
  • Provisions—$600. (Mass. Gen. Laws c. 235, § 34(7).)
  • Pew (Mass. Gen. Laws c. 235, § 34(8).)
  • Burial plot (Mass. Gen. Laws c. 235, § 34(11).)
  • Rent money—$2,500 per month if not using the homestead exemption. (Mass. Gen. Laws c. 235, § 34(14).)
  • Cash and funds in bank accounts—$2,500. (Mass. Gen. Laws c. 235, § 34(15), c. 246, § 28A.)

Tools of the Trade

  • Tools and implements needed in your trade or profession—$5,000; an additional $5,000 for stock of the trade. (Mass. Gen. Laws c. 235, §§ 34(5),(6).)
  • Fishing equipment and a boat used in trade—$1,500. (Mass. Gen. Laws c. 235, § 34(9).)
  • Military uniform and arms (Mass. Gen. Laws c. 235, § 34(10).)

Retirement Accounts, Pensions, and Other Benefits

  • Public Employees’ Retirement System (Mass. Gen. Laws c. 32, § 19.)
  • Private pension association benefits (Mass. Gen. Laws c. 32, § 41.)
  • Prison employees, justices, court officers, police, and firefighters’ pension benefits. (Mass. Gen. Laws c. 32, §§ 46, 65A, 68, 80.)
  • Veterans’ benefits (Mass. Gen. Laws c. 115, § 5.)
  • Unemployment and workers’ compensation (Mass. Gen. Laws c. 115A, § 36, c. 152, § 47.)
  • Savings bank employees’ retirement, annuity, and pension (Mass. Gen. Laws c. 168, §§ 41, 44, c. 170 § 35, c. 171 § 84, c. 246, § 28.)
  • Public assistance (Mass. Gen. Laws c. 235, § 34, c. 118, § 10.)
  • ERISA-qualified retirement vehicles or an annuity purchased with ERISA-qualified funds—check for income limitations. (Mass. Gen. Laws c. 235, § 34A, c. 246, § 28.)
  • Payroll account funds (Mass. Gen. Laws c. 246, § 20.)
  • Public employees’ payroll deductions (Mass. Gen. Laws c. 149, § 178B.)

Insurance

  • Group annuity contract benefits (Mass. Gen. Laws c. 175, § 132C.)
  • Group life insurance policies (Mass. Gen. Laws c. 175, § 135, c. 175, § 136.)
  • Some insurance proceeds—$400 per week. (Mass. Gen. Laws c. 175, § 110A, c. 175, § 36B.)
  • Various life insurance and annuity proceeds and dividends—review particular statute. (Mass. Gen. Laws c. 175, § 119A, c. 175, § 125, c. 175, § 126.)
  • Fraternal benefit society benefits (Mass. Gen. Laws c. 176, § 22.)

Miscellaneous

  • Some partnership property (Mass. Gen. Laws c. 108A, § 25.)

Wildcard

  • Wildcard—$1,000 of any personal property (anything other than real estate), and $5,000 of any unused amount of the following exemptions: vehicle, furniture, and tools of the trade. (Mass. Gen. Laws c. 235, § 34(17).)

Verifying Exemptions

This list should help you understand Massachusettes bankruptcy exemptions; however, you shouldn’t rely on it when filing for bankruptcy. Instead, take the steps necessary to independently ensure that you’re claiming all exemptions that apply in your case. Here’s why:

  • every bankruptcy case is different
  • other Massachusetts bankruptcy exemptions exist
  • the availability and value of exemptions change
  • Massachusetts bankruptcy exemption statutes often contain conditions, and
  • improperly exempting property can result in the loss of assets.

Most people find it helpful—and worth the cost—to retain a local bankruptcy lawyer.

Questions for Your Attorney

  • Can you review a list of property and tell me what isn’t exempt?
  • Can I keep my retirement account? Stock options?
  • Which bankruptcy chapter would best meet my needs?
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