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Bankruptcy Court Gives Broader Exemptions in Massachusetts Bankruptcy

For many specific reasons, many folks filing for bankruptcy in Massachusetts choose to file personal bankruptcy using the Massachusetts, rather than the federal, bankruptcy exemptions.  Usually this is because they have significant equity in their home and the Massachusetts Homestead  gives residents who own their own home, up to $500,000 in exempt equity in their home, and possibly more.

In a case decided by the United Stated Bankruptcy Court several weeks ago, the Massachusetts exemptions were used for two assets:  monies in the form of bank account deposits and a motorcycle.   See In Re:  Southerland, USBC Chapter 7 Case Number 13-40282-MSH.

Massachusetts Exemptions for Bank Deposits, Cash, Wages and Public Assistance

Massachusetts General Laws, Chapter 246, Section 28A, exempts bank deposits up to $2,500 in a Massachusetts bankruptcy.  Another part of the exemption law in Massachusetts, Chapter 235, Section 34 (fifteenth), which includes cash, wages and public assistance in addition to bank and financial deposits.

Mr. and Mrs. Southerland had $5,768 in cash and bank accounts.

The Judge decided that these two separate laws were separate exemptions and gave the debtor here up to $5,000 in exemptions under these laws.  The Judge pointed out that in 2011 Massachusetts legislature amended those laws and did not tie them together as to having one exempt amount.  Furthermore, the Court pointed out that it was “longstanding policy to construe exemption statutes liberally in favor of debtors” the debtors have the right to exemptions under both laws!

Harley Davidson Motorcycle Exempt From Bankruptcy

The debtor in this case had a Harley Davidson motorcycle which he attempted to exempt.  The value of the motorcycle was $12,000.  Massachusetts General Laws, Chapter 235, Section 34 (sixteenth) exempts automobiles with up to $7,500 in value.  The Trustee here argued that since the motorcycle was not an automobile, it was not exempt.  There was apparently significant litigation over this issue.  However, the second clause of that section of the law, allows a handicapped person or a person over 60 to exempt a vehicle up to $15,000.  In this case, the judge decided that because the debtor was over 60 and a motorcycle “may or may not be an automobile but it certainly is a vehicle” the motorcycle could be exempt under Massachusetts law.

Bankruptcy Trustee v. Bankruptcy Court

In the Southerland Case it is clear that the Trustee was zealously attempting to knock down the Southerland’s claimed exemptions.  In fact, some of the Trustee’s argument was dropped to focus on the above issues.  That’s the Trustee’s job.  On the other hand, the Court, which has the job of balancing the two sides, the Trustee and the debtor, used the law to liberally find in favor of the debtor

A skilled and experienced Massachusetts bankruptcy lawyer will protect you from losing those few assets that you have left and keep them exempt from the Trustee’s reach.  Bankruptcy planning by an experienced Massachusetts bankruptcy lawyer is what many folks need.

If you have a question, call experienced bankruptcy lawyer Neil Burns at 617.227.7423.

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