The Massachusetts Homestead Exemption

If you're considering filing for bankruptcy, the Massachusetts homestead exemption will help you keep the equity in your house. This article explains how much home equity you can protect in Massachusetts using a homestead exemption and how to apply it in bankruptcy.

How Much Is Massachusetts's Homestead Exemption?

Massachusetts lets filers use either the federal exemption system or Massachusetts's state exemption system. However, you can't mix exemptions from both lists, so you'll want to select the system that will protect your most important assets.

We've listed the state and federal exemption amounts below to help you make an informed choice. We've also included links to extensive federal and state exemption lists to help you decide which set will work best.

Protecting Property With the Homestead Exemption in Massachusetts

In Massachusetts, the homestead exemption covers a home that you occupy or intend to occupy as your primary personal residence. A home can be a house, a two to four-unit multi-family dwelling, or a condominium, together with the land.

The homestead exemption also applies to mobile homes, manufactured houses, and cooperative units. Massachusetts homeowners are entitled to homestead protection whether they hold their interests as joint tenants, tenants in common, tenants by the entirety, or trust beneficiaries.

An additional benefit. If a person dies leaving a spouse in Massachusetts, the deceased's homestead exemption can be transferred to the surviving spouse. The spouse doesn't have to use that amount to pay the deceased's debts.

If you hold property as tenancy by entirety with your spouse. If one spouse files for bankruptcy—not both—the bankruptcy trustee might be prevented from using the property equity to pay off debts. However, this is a tricky area of law. Before filing, talk with a local bankruptcy attorney to ensure you don't lose valuable property.

Special rules for the elderly and those with a disability. Disabled and elderly homeowners who file declarations under Massachusetts law are entitled to homestead exemptions of $500,000 each. Exemptions for disabled and elderly homeowners can be aggregated. However, Massachusetts law is somewhat complicated when calculating the total exemption amount when one or more owners are elderly or disabled. Two spouses over 62, for example, are entitled to a declared homestead exemption of $1,000,000. By contrast, if only one spouse is over 62 and neither is disabled, the declared homestead exemption for couples who own a residence together is $750,000.

Other Requirements for Keeping a Home in Bankruptcy

If you can't protect all of your home equity, you might not be able to keep your home. Typically, the Chapter 7 trustee appointed to your case would sell the house, return the exemption amount to you, pay off the mortgage, and pay creditors with the amount remaining after deducting the trustee's fee.

In Chapter 13, the trustee doesn't sell property, so you could keep it. However, that doesn't mean Chapter 13 filers get a break regarding how much equity they can retain. Instead, you'd need to pay creditors the value of the nonexempt equity through the Chapter 13 plan.

But that isn't all. Keeping your home requires being current on the mortgage when filing for Chapter 7. Otherwise, you could lose it to the lender through foreclosure, possibly even during the Chapter 7 case. If you're behind on payments when filing for Chapter 13, you have an option not available in Chapter 7. You can catch up on the payments over time through the plan.

Learn about other requirements you must meet in Your Home in Chapter 7 and Your Home in Chapter 13. Also, find out why filing for Chapter 13 is better than Chapter 7 when you're behind on payments and don't want to lose your house.

Claiming the Homestead Exemption

When completing your bankruptcy forms, you'll do the following:

• disclose your home on Schedule A/B: Property
• list your home and the homestead exemption law on Schedule C: The Property You Claim as Exempt, and
• if filing for Chapter 7, explain whether you plan to keep or surrender the home on Statement of Intention for Individuals Filing Under Chapter 7.

Because your home is likely your most valuable asset, consider consulting with a bankruptcy lawyer to ensure you can protect it in bankruptcy.

Where to Find the Homestead Exemption Statute

You'll find Massachusetts's homestead exemption at Mass. Gen. Laws Ch. 188, § § 1–14 on the Massachusetts Legislature website (look under "General Laws"). Learn about finding state statutes in Laws and Legal Research.

When You Can Use Bankruptcy Exemptions

You can file for bankruptcy in Massachusetts after living there for over 180 days. However, you must live in Massachusetts for at least 730 days before filing to use the current state's exemptions. Otherwise, you'd use the previous state's exemptions.

If you lived in multiple states during the two years before filing for bankruptcy, you'd use the exemptions of the state you lived in for the majority of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)

Also, you must own your home in the exemption state for at least 40 months before bankruptcy to avoid the homestead exemption being capped by federal law at $214,000 (amount adjusts on April 1, 2028). Homestead exemption use is also precluded when a filer engages in certain felonious or fraudulent acts. (11 USC §§ 522(p), (q).)

Learn more about filing for bankruptcy after moving to a new state and timing your bankruptcy case. Also, spouses can double some exemption amounts if both parties own the property, but not all of them. Learn about other filing considerations for spouses.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms is on the Department of Justice U.S. Trustee Program website.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.