Can I File Bankruptcy And Keep My Home In Massachusetts?
Massachusetts bankruptcy laws provide for a $500,000 homestead exemption. This means that if you file bankruptcy and have less than $500,000 of home equity, you can retain ownership of your home through the bankruptcy process.
Home equity is calculated by subtracting the amount of any mortgages from your home’s appraised value. In addition to bankruptcy proceedings, the Massachusetts homestead exemption applies to state court collection actions as well. Be aware, however, that the Massachusetts homestead exemption is not automatic, a declaration must be recorded to obtain homestead rights. All Homesteads must be filed in the county in which the residence is located. To acquire a claim of Homestead for a mobile home, you must file at the city or town clerk’s office in the city or town in which the mobile home is located. If you have questions about how to properly claim your homestead rights in Massachusetts, contact an attorney.
How does the Massachusetts homestead exemption work in the context of a chapter 7 bankruptcy case? Assuming the declaration has been properly recorded, Massachusetts bankruptcy laws will allow for a significant amount of home equity to be protected. For example, a home owned free and clear, worth $475,000, could be retained through the bankruptcy process. Massachusetts generous homestead exemption of $500,000 would shield the home from forced sale by the bankruptcy trustee. Because the Massachusetts homestead exemption is so large, most homes will be protected. It is important to note, however, that exempting home equity will not relieve the obligation to pay the mortgage. Your lender can still foreclose on your home after bankruptcy if you fail to maintain normal monthly mortgage payments.