In fact, Massachusetts’ exemptions were so outdated that other than the homestead, you were only afforded $700 for a car, $125 in the bank, 2 cows, 12 sheep and 2 pigs.

Now, on April 7, 2011, Massachusetts moves into the 21st Century. On that date, Massachusetts residents who file bankruptcy will have the benefit of choosing to keep their house, car, and some money to pay bills. While the federal exemptions will still be available and will be the best choice for many debtors considering bankruptcy, the increase in the new state exemptions will help a lot of people. Here is a review of the new exemptions available to debtors and chose the state exemptions:

Homestead: if you own your home, you are entitled to protect up to $500,000 in equity so long as you have lived there for 3.3 years; otherwise you are only entitled to $250,000. (investment, or vacation property is not eligible) The Massachusetts Homestead statute has recently been updated…but that is a topic of another post.

Automobile: In one of the most significant changes…you can now exempt $7,500 in an automobile. If you are handicapped or over 60, then you are entitled to $15,000. This exemption represents the “equity” in the vehicle. (if the Auto is worth $20,000 and you owe $15,000, then your exemption would be $5,000 which I allowable since it is less than the $7,500 exemption). Under the old statute, you were only entitled to $700.

Jewelry: You may now exempt up to $1,225 in personal jewelry.

Clothing, beds, appliances: The New Rule – All necessary wearing apparel, beds, bedding, 1 heating unit, 1 stove, 1 refrigerator, 1 freezer, and 1 hot water heater.

Furniture: Residents can now exempt $15,000 in home furniture. Under the old statute, you could only exempt $3,000.

Computer, TV, Sewing Machine: One sewing machine, one computer and one television, in actual use, not exceeding $300 each in resale value. The old statute did not exempt a computer or TV.

Cash for Rent: if you are a renter, then you are entitled up to $2,500 of cash in the bank (not to exceed your actual rent) to pay the rent for the dwelling unit you actually occupy.

Cash for utilities: you are now entitled to have up to $500 on hand to pay utilities. This is up from $75.

Checking & Savings: Cash or savings not exceeding $2,500. (up from $125).

Wages due and payable: the greater of 85% of the your gross wages or 50 times the greater of the federal or the Massachusetts hourly minimum wage for each week or portion thereof.

Tools for Trade or Business: if you have tools that you use in your trade or business you can now protect up to $5000, up from $500.

Materials and Stock Used in Trade or Business: a debtor can now exempt up to $5,000 in materials that you use in your trade or business. (up from $500).

Fishing equipment: Boats, fishing tackle and nets of fishermen actually used in their business, up to $1,500. This is an increase from $500 under the old statute.

Wild Card: You can now use up to $5,000 of your unused tool, auto, or furniture exemption to protect any other property; so long as the value of any single item does not exceed $1,000.

This list provides a brief summary of the new changes in Massachusetts’ exemption laws as they apply to bankruptcy. However it is not an exclusive list, nor should you rely on this list to try to file your own bankruptcy. Bankruptcy is an extremely complicated area of practice and a mistake could lead to the loss of your home or car or could result in your case being dismissed.

In order to assist you in selecting the right bankruptcy attorney, you should strongly consider the following evaluation factors when interviewing or consulting with any attorney:

Experience – The knowledge and ability to successfully handle the variety of issues that may arise before or after the filing of a bankruptcy petition is the most important factor for the evaluation of a bankruptcy attorney. Each bankruptcy case in unique and your case is unique within itself. The great number and more extensive of the diversity of bankruptcy cases that your attorney has worked on, means that is more likely that your bankruptcy attorney will be able to obtain your bankruptcy discharge or have your repayment plan approved.

Your bankruptcy attorney should not have filed less than 20 bankruptcy petitions within the last six months. Beware of firms that do not specialize in bankruptcy law, or firms that have just started to practice bankruptcy within the past 12 months. Make sure that the bankruptcy attorney or Massachusetts law firm that you chose to work with has a longstanding track record of success in the bankruptcy court, and makes you feel confident that they have expertise in bankruptcy law.

Multi-disciplinary expertise – Your bankruptcy attorney should have significant expertise in real estate, tax and corporation’s law, as well as civil litigation experience. Typically, with most bankruptcy cases, issues may arise in the areas of real estate, corporations, or tax law, or sometimes lawsuits result in a bankruptcy case. A bankruptcy attorney who has experience and the resources to advise you on different areas of law and resolve potential issues that may arise in a bankruptcy case will greatly ease the progression and success of your bankruptcy case.

Communication – Effective communication from the beginning of any client- bankruptcy attorney relationship, and is essential for the success of your bankruptcy case. An experienced bankruptcy attorney will provide his/her clients with many methods of communication (phone, e-mail, web, fax), as well as a bankruptcy support staff that can quickly assist any bankruptcy client with their needs. It is important that your bankruptcy attorney not “leave you in the dark,” as the bankruptcy process can sometimes become daunting and intimidating. It is also important for any bankruptcy attorney to keep any bankruptcy client updated on the status and progress of their case, and advised if any issues with the bankruptcy trustee or creditors should arise during the process.

Professionalism - Your bankruptcy attorney should come across as professional. Does the attorney have a physical office that you can visit? What type of impression do you get from the attorney’s website, is it informative, professional looking, current? A first impression can say a lot about an attorney. Did the attorney present you with a fee agreement before he asked for money? All these things show how professional your attorney is, if you answer no to any of these questions, then you should look for someone else.

FACTORS THAT YOU SHOULD NOT USE WHEN CHOOSING THE RIGHT BANKRUPTCY ATTORNEY

Cost – The legal fees charges by your bankruptcy attorney should not be your primary decision factor when selecting the right bankruptcy attorney for you. Many attorneys who charge their clients lower attorney’s fees than the industry average have less experience and a short track record of success in the District of Massachusetts Bankruptcy Court. Naturally, the more qualified, diverse, and well experienced attorneys charge greater legal fees than inexperienced attorneys new to the bankruptcy practice in Massachusetts. The old adage applies here:”You get what you pay for.”

Location – Selecting a bankruptcy attorney in your town or city, or a bankruptcy attorney who is within short distance to you place of employment is not always the best decision factor. Many bankruptcy clients who look for a bankruptcy attorney within the Boston-metro area of Massachusetts or outside of their immediate location are likely to find bankruptcy attorneys who meet the important criteria discussed above.

Any prospective client considering bankruptcy should interview several attorneys before making a final decision on who will assist them in putting in place their financial future. Asking questions about experience, multi-disciplinary expertise, and capabilities to communicate will help you determine the right attorney for you. Also you may want to ask yourself during the initial consultation whether you have developed a comfort level with your bankruptcy attorney and feel confident in hiring that individual to assist you in your bankruptcy needs. Selecting the right Massachusetts bankruptcy attorney is an important life decision, and we hope that these important factors assist you in your search for legal representation.

1. Under the new Bankruptcy Laws Everyone has to repay their creditors. False: In 2005, the bankruptcy laws were changed to provide a test to see who can qualify for a Chapter 7 Bankruptcy. Essentially, if someone has sufficient income, and the ability to repay a portion of their debt, then they will have to file a chapter 13 which will require them to enter into a court supervised repayment plan with their creditors. The new law does not prevent people from filing and in most situations people are still able to get the same relief now as before the law changed.

2. Once I file Bankruptcy my credit is ruined for life. Not Quite…while bankruptcy is a blow to your credit rating; it is not permanent. Because most people have numerous charge offs and sometimes even a collections lawsuit on their credit report before they decide to file, most people will actually seen an increase in their credit score within 1-2 years. Moreover, most of our clients report that they are able purchase cars and homes within 2 – 3 years.

3. Only deadbeats and losers file for bankruptcy. False…Most people file for bankruptcy after a life-changing experience, such as a divorce, unemployment or a serious illness. They’ve struggled to pay their bills for months and just keep falling further behind.
Moreover, some famous people who have filed bankruptcy who were (or are) successful include: Walt Disney, three US Presidents, Larry King, Donald Trump, and Henry Ford.

4. All debts can be discharged in a bankruptcy filing. False…certain debts cannot be discharged through bankruptcy. For example, child support, student loans and most taxes, and debts incurred by fraud (to name a few) cannot not discharged. This list has exceptions and is not exhaustive. If you have questions, contact a bankruptcy lawyer.

5. You can’t get rid of back taxes through bankruptcy. Generally speaking, this is true. However, under some circumstances income taxes are dischargeable. The rules concerning discharging taxes are complicated; so if you owe income taxes, an experienced bankruptcy lawyer can tell you if you can discharge the taxes.

6. Filing bankruptcy could cost you your job. No. The current bankruptcy code prohibits discrimination against an individual who is in bankruptcy or who has bankruptcy in the past.

7. You will never be able to own property again. Not True. Once you receive your bankruptcy discharge, you bankruptcy if finished. You can continue to live your life and can purchase and sell property like everyone else. Creditors will eventually lend to you again to help you with large purchases and you are able to purchase whatever you can afford.

8. Everyone will know I filed for bankruptcy. False. Bankruptcies, like all court records are public; however, in order to see the records, one has to actually go to the court and look for them. Bankruptcy is not published generally the only people who are going to know are those who you tell. Some people think that newspapers carry bankruptcy filing information, this is simply not true.

9. I will lose everything I own. Again this is false. Once you file bankruptcy, you will be able to keep certain property up to a certain value; this property is known as exempt. Most bankruptcies are known as “no asset” bankruptcies, meaning that you get to keep all of your property and all of your unsecured debts are discharged. Exemptions vary from state to state, so it is important to speak with an experienced bankruptcy attorney in your area.

10. Creditors can still harass me if I file for bankruptcy. Not Legally. When the bankruptcy is filed, automatic protection is put onto you and all of your property instantly. Creditors are not allowed to contact you for any reason, which includes calling or even billing you. If they persist in harassing you, you do have remedies available through the Federal Bankruptcy laws.

11. I can be turned down for filing bankruptcy. Mostly False. So long as you are honest on your petition, don’t try to conceal assets and don’t lie about your income an experienced bankruptcy will be able to file you in the proper chapter bankruptcy and your debts will be discharged. The bankruptcy statute is designed to help ALL honest debtors who need help. If you lie on your petition, or try to conceal assets, then the justice department will seize your assets to repay your creditors and you will not have your debts discharged. Moreover, you could end up in jail.

12. Bankruptcy is easy; I don’t need an attorney. False. The bankruptcy code is extremely complex; so complex that a lot of attorneys choose not to practice in the field. If you fail to take all the proper steps leading up to filing bankruptcy, then you risk losing your home, and/or all of your assets. We have represented several clients who wanted to save money and who filed bankruptcy without an attorney and messed up on their petition and/or filed under the wrong chapter. They ended up paying us three or four times more in legal fees to fix the mess that they made than they would have paid us to file their bankruptcy in the first place.

By no means is this an exhaustive list and there are many more misconceptions out there. If you have any questions, then you should contact us and schedule a free appointment. You have nothing to lose and we can provide you with the facts you need to make an informed decision.