Doubling Exemptions in Bankruptcy

Like all states, Massachusetts has its own set of exemptions that you may use when filing for Chapter 7 or Chapter 13 bankruptcy.  Bankruptcy exemptions determine what you are allowed to keep during and after Chapter 7 bankruptcy. If property (such as your home, car, or jewelry) is exempt, you may keep it. In Chapter 13 bankruptcy, exemptions determine how much you must pay certain creditors through your payment plan.

Some states “opt-out” of the federal exemptions, thereby prohibiting a debtor from applying federal exemptions.  However, in Massachusetts, an individual may choose from either the federal exemptions or the exemptions provided by state law.  Last year, Massachusetts modernized their state exemptions, making them broader and more beneficial to the average consumer, however there are times when choosing the federal exemptions is in the individual’s best interest.  For example, § 522(d) of the Code may be a better choice if you have expensive jewelry that you would like to keep, or if you expect a sizable recovery from a personal injury claim.  However, you cannot mix and match exemptions from Massachusetts state and federal law. Which exemptions will best work for you depends on the type of property you wish to protect.  Your attorney will determine which exemption scheme is better in your personal situation.

In cases where a joint petition is to be filed by a married couple, both spouses must agree to use the same exemption scheme; one cannot use federal law while the other uses state law. If you and your spouse cannot agree, you will be deemed to have chosen the federal law. You may also choose to file separately, in which case you will both be required to pay separate court filing fees. But, if you can agree to use the same law and you file a joint petition, it is generally possible to stack or double the amount of state law exemptions. Stacking or doubling an exemption is allowed in a joint bankruptcy case, but only if the property is jointly owned by both you and your spouse.  Filing for bankruptcy is a lot easier with the help of a local bankruptcy attorney.

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