This past Thursday, April 7, 2011, An Act Further Regulating Debt Collection became effective. The Act significantly raises personal property exemptions in Massachusetts. These exemptions limit the property that creditors can take in the execution of a lawsuit or in a Chapter 7 bankruptcy liquidation.
In a Chapter 7 Bankruptcy debtors will still have the choice between using the Federal Exemptions and the State Exemptions. In Massachusetts, these exemptions include up to $500,000 in personal residence equity (so long as certain requirements are met). And in order to get that significant residence exemption, up until April 7, 2011, debtors had to choose a significantly lower amount of personal property exemptions.
But under this new law, the personal property exemptions are similar in both schemes. There are some categories where the Federal Exemptions are higher and some where the Massachusetts Exemptions are higher. To choose the best scheme for your situation, you should consult with an experienced bankruptcy counsel who can help you evaluate your options.
For more information about the specific property exemption changes in the new law, read our section by section evaluation: New Massachusetts Property Exemptions: The Return of 2 Cows, 12 Sheep and 2 Swine.