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How does the Massachusetts homestead exemption work?

For Massachusetts homeowners facing serious financial challenges, one of the most important concerns is the possibility of being forced to sell the house to pay off creditors. For homeowners in this situation, the Massachusetts Homestead Act can provide important protections.

The Homestead Act exempts the home from attachment or forced sale to pay unsecured, non-exempt debts. As long as the homeowner lives in the home as their primary residence, or intends to do so, there is an automatic homestead exemption for the value of the property up to $125,000. If the homeowner files a Declaration of Homestead with the County Registry of Deeds, the exemption amount can be increased to the value of the property up to $500,000. An elderly or disabled homeowner may be entitled to exempt a greater amount.

The homestead exemption does not apply to certain debts, known as exempt debts. These include state and federal tax debts, child and spousal support debts and some mortgages. If a mortgage company is threatening foreclosure or has commenced foreclosure proceedings, it is often possible to prevent foreclosure by using the homestead exemption in conjunction with a Chapter 7 or Chapter 13 bankruptcy filing.

The law is currently unclear as to whether the available homestead amount should be calculated on the overall value of the property or the value after deduction of any exempt mortgages and other liens. Some recent court decisions indicate the value should be calculated based on the equity over and above exempted mortgages and liens.

The Massachusetts homestead exemption can provide important relief for debtors who own their own home. Figuring out how it applies to any particular situation can be a complex legal question, however. A homeowner facing overwhelming debt can benefit from consulting an experienced debt relief attorney to determine the best course of action in their case.

Source: Norfolk County Registry of Deeds, "Homestead," accessed April 24, 2016

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