Can I Have Equity in My House and also File Bankruptcy?

November 12, 2009

by Attorney Kara O’Donnell, O’DONNELL LAW OFFICES

In this age of housing prices being LOWER than the mortgage balance, it isn’t too often that I get a bankruptcy client who has alot of equity in their house.

For those who have already done basic research on Chapter 7 bankruptcy, you will already know that Federal exemptions allow you to keep a little over $20,200 of equity in your home. As this exemption is per individual, the amount of equity that can be protected per couple is just over $40,400.

What happens if an individual has more than $20,200 in equity in their home, is he out of luck?
Not at all! In such a case, the individual could use the Massachusetts state exemptions as opposed to the Federal exemptions.
The MA state exemptions protect property that the debtor occupies or intends to occupy, including mobile home up to $500,000. (MGL 188-1) There are special provisions for owners over 62 or disabled, but the same total exemption. (MGL 188-1A)

The only catch is . . .
The Debtor must record a homestead declaration before filing for bankruptcy in order to take a MA homestead exemption (unless the title to the property already contains a statement of homestead). (MGL 188-2)

How do I know if I have a homestead declaration on my house?
Easy. Just call or visit the website of your county’s Register of Deeds. They can tell you if you have one already filed and how to file one if you don’t.

If you are a MA resident and considering filing for bankrupcty, call Attorney Kara O’Donnell at (857)526-1355 for a free consultation.

O’DONNELL LAW OFFICES, Quincy, MA

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