How does the "new" bankruptcy law affects MA Homestead Declarations
The new bankruptcy law signed into effect on April 20, 2005 by President Bush may affect the equity in a debtor's home. Substantial concern has been raised with regard to the ability of a debtor to protect his or her residence. Under present Massachusetts law, debtors can elect to use the Massachusetts Homestead Exemption to protect $500,000 of equity from creditors, either in a bankruptcy or non-bankruptcy situation. Under the present law, and effective immediately from the date the law was signed by President Bush, that figure has been reduced to a maximum of $125,000 in many situations. The ability to increase the $125,000 amount will be dependent upon the length of time that the debtor has owned the home, how long he or she has lived within the state and the source of the funds used to purchase the residence. This is a major change from the former law protecting residential property from loss when faced with financial difficulties.
What does a Homestead not protect me from?
The following are exempt from the Homestead Law:
- federal, state and local taxes, assessments, claims, and liens;
- mortgages used to purchase the residence, and in the case of the elderly homestead, first and second mortgages held by financial institutions or others;
- an execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse or minor children;
- where buildings on land not owned by the owner of a Homestead estate are attached, levied upon or sold for the ground rent of the lot whereon they stand;
- upon an execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, mistake, duress, undue influence or lack of capacity;
- debts contracted prior to the acquisition of the homestead.
Contact Mooney McGinn LLP
Mooney McGinn LLP has two Massachusetts offices to serve our clients - in Danvers and in Cambridge. We offer an initial phone consultation to all new clients.
Call our attorneys in Cambridge at 617-245-8080, in Danvers at 978-767-4221, or contact us by e-mail via the Contact Us page.
