Massachusetts Homestead Laws

Filing for Chapter 7 or Chapter 13 bankruptcy doesn’t automatically mean you’ll lose your home. While the bankruptcy trustee may initiate a forced sale of your real estate, protections are in place to help you keep your primary dwelling. One of the most important of these is the homestead exemption.

In Massachusetts, bankruptcy filers can choose between state and federal exemptions. Those with equity in their home will likely opt for the state homestead exemption, as it’s much larger than the federal one.

This article explains how the homestead exemption works in Massachusetts, including the exemption amount. It also shows you how to claim the Massachusetts homestead exemption. If you’re thinking about filing bankruptcy but aren’t sure if it’s the best move for you, contact an experienced Massachusetts bankruptcy attorney. They’ll review your financial situation and tell you whether the state exemptions will protect the equity in your home.

What Is the Homestead Exemption and How Does It Work?

The homestead exemption protects the equity in a person’s principal residence during bankruptcy. You can claim homestead protection under either state bankruptcy laws or federal law.

When you file bankruptcy, you’ll provide the trustee with a list of your debts and assets. For each asset, you must list the current value and confirm your ownership interest in the property. For example, if you only have a life estate in a piece of real property, you must indicate this on your bankruptcy petition.

As long as you include your primary residence in your asset list, the Massachusetts homestead exemption will automatically apply to the equity in your home. The trustee will review your paperwork, including your homestead form, to see whether your home equity exceeds the Massachusetts homestead exemption amount. If it doesn’t, your home will be fully protected. If it does, the bankruptcy trustee may decide to sell your home and use the proceeds to pay your secured and, in some cases, unsecured creditors.

Overview of the Massachusetts Homestead Exemption

The Commonwealth of Massachusetts offers automatic homestead protection to debtors. The automatic exemption provides $125,000 in protection. However, under the Massachusetts Homestead Act, most people can protect up to $1,000,000 of the equity in their home.

According to Massachusetts homestead protection law (M.G.L. c. 188), to take advantage of the full exemption amount, you must record a “Declaration of Homestead” with the local Registry of Deeds before filing your bankruptcy petition. After you record your declaration, file your bankruptcy petition, and let the trustee know you’re opting for the state homestead exemption.

Homestead Exemption Limits in Massachusetts

In Massachusetts, debtors who file bankruptcy can protect up to $1,000,000 of the equity in their family home. Under Massachusetts General Laws Chapter 188, this amount increases to $2,000,000 if the individual is disabled or over 65. To qualify for this double homestead amount, the Social Security Administration must have deemed you disabled.

To determine your home equity, take your home’s current market value and subtract your mortgage balance, any home equity loan balance, and any liens against the property. As long as your total equity is below $1,000,000, your home is safe from sale.

Impact of Marital Status on the Estate of Homestead

Massachusetts has specific laws about how a debtor’s marital status will impact their homestead exemption. Married couples have a homestead exemption of $1,000,000 per residence, per family, for homeowners who file a Declaration of Homestead.

If you’re divorced and signed the deed of your house over to your former spouse, they’ll have the benefit of the homestead exemption. In this situation, you’ll lose yours. Having minor children doesn’t affect your homestead exemption.

Qualifying Property Types

Whether you live in Boston or Cambridge, you can apply the homestead exemption to almost any type of dwelling. As long as it’s your principal residence, the exemption applies.

Some of the types of dwellings that qualify for the Massachusetts homestead exemption include the following:

• Single-family homes
• Condominiums
• Mobile homes
• Manufactured homes

Massachusetts doesn’t require a residency minimum. Even if it’s a new home, you can claim the exemption as long as it’s your primary residence.

How To Claim the Massachusetts Homestead Exemption

The Massachusetts homestead exemption is automatic. When you file your bankruptcy petition, the trustee will automatically apply the base $125,000 exemption. To claim the full $1,000,000 exemption, you must record your “Declaration of Homestead” papers with the registry of deeds.

To claim the full value of the exemption in Massachusetts, take the following steps:

• Get a copy of the official homestead form from the Massachusetts Secretary of the Commonwealth
• Sign and notarize the form
• File the form with your local Registry of Deeds
• Pay the $35 filing fee
• Include a copy of the completed form with your bankruptcy petition

If your home is part of a trust, you must have the trustee or the beneficiaries of the trust sign the declaration.

Exceptions and Limitations

Aside from the requirements outlined above, there are no real exceptions or limitations to claiming the Massachusetts homestead exemption. As long as the house is your primary residence and the deed is in your name, you should have no issues claiming the exemption.

If your house was in both your name and your deceased spouse’s, you can still claim the exemption. Talk to the probate court and get proof that the house was part of your loved one’s estate.

Disclaimer: State laws change frequently because of new legislation, higher court rulings, and other factors. While FindLaw strives to provide the most current information, consult a local bankruptcy attorney to verify your state laws.

A Massachusetts Bankruptcy Lawyer Can Help Protect Your Home

If you plan to file for bankruptcy, it’s a good idea to seek legal advice before filing your petition. Unless you’re well-versed in bankruptcy law, trying to navigate the process can be difficult and frustrating. A Massachusetts bankruptcy attorney will ensure that you get the full protection offered by the homestead exemption.

Homeowners may hesitate to file bankruptcy, which is understandable. Nobody wants a forced sale of their property. A seasoned bankruptcy lawyer in Massachusetts can review your case, explain your options, and make sure you take advantage of every protection the Commonwealth offers.