The new Massachusetts bankruptcy exemptions, which were introduced in early April, seem to have been accepted by the bankruptcy community without much fuss. I know I filed several cases using Massachusetts bankruptcy exemptions and have had no trouble at all — the cases flew right through the system.
When the changes took effect, for the first time Massachusetts has a “wild-card” exemption, which for most individuals amounts to $6,000 in protection. Absolutely any type of property — even cash — can be kept after bankruptcy by using the wild card.
This hasn’t necessarily been the case elsewhere when new exemptions are introduced. A few years ago, Florida introduced a $4,000 wild card, and the bankruptcy trustees went nuts trying to find loopholes and poke holes in the new law. They were apparently used to collecting $1,000 commissions whenever a Floridian had non-exempt property in their bankruptcy, and were not happy to see that source of income disappear. However, after several years of litigation, the courts eventually sided with the debtors anyway.
I’m glad that hasn’t happened in Masschusetts. So far.
And by the way, the most common reason for using the Massachusetts exemptions instead of the federal ones when filing for bankruptcy? It’s to protect home equity, as up to $500,000 per person in home equity can be exempted using the Massachusetts homestead law.
By Doug Beaton