When a person is struggling with large amounts of debt and facing the prospect of filing for bankruptcy, one of their biggest fears may be losing their home. Indeed, debtors who own their homes are often behind on their mortgage payments and are worried about foreclosure, and even those who own their homes outright may worry that selling their home is the only way they’ll have the cash to pay creditors. While losing your home is a possibility during bankruptcy, there is protection via the Massachusetts Homestead Act. To learn more about the Homestead Act in Massachusetts and for help with your bankruptcy case, call Deborah Gold-Alexander Attorney at Law today.
What Is the Homestead Act?
The Homestead Act is used to protect debtors who would otherwise be at risk of having their homes sold to pay creditors claims that are in the form of unsecured debts. Unsecured debts are those types of debts that are not protected by any form of collateral, such as credit card debt or utility bill debt. Via the Homestead Act in Massachusetts, a certain, limited value of one’s home is protected against unsecured creditor claims.
How Much of My Home Is Protected?
Under the Homestead Act, homeowners who file for the homestead protection are eligible to protect $500,000 in home equity against creditors’ claims. Even for those who do not file for the protection, though, $125,000 in home equity is automatically protected under the state’s law.
How It Works: Process & Eligibility
In order to qualify for the Homestead protection, all owners of the home must occupy or intend to occupy the home as their principal residence, which means that the Homestead Act cannot be used to protect the equity in second homes/vacation residences. The Homestead Protection can be used to protect a variety of home types, including property that’s held in a trust and mobile homes and manufactured homes.
Remember, the first $125,000 in home equity is automatically protected–homeowners do not need to file anything. By filing a Declaration of Homestead form, though, homeowners can benefit from $500,000 in equity protection. The Declaration of Homestead form must be signed by all of a home’s owners, as well as notarized. A small filing fee will also need to be filed.
While the Homestead Act can protect your home from forced sale for payment for non-exempt debts, there are a number of debts that are exempt from Homestead Protection, which means that the Homestead Act cannot protect your home from all debt types. Exempt debts include taxes and liens, probate court orders for child support or spousal support, some debts existing prior to the filing of a Declaration of Homestead, and more.
Talk to Our Bankruptcy Attorney Today
To learn more about protecting your home during bankruptcy, the Homestead Act, and other bankruptcy considerations, contact the office of Deborah Gold-Alexander Attorney at Law today. Deborah Gold-Alexander has over 30 years’ experience working on bankruptcy cases for clients in Massachusetts.