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Exemptions allow Chapter 7 filers to keep essential possessions

Families in Massachusetts that are struggling with debt often seek relief through a bankruptcy filing. In a Chapter 7 bankruptcy, the debtor's nonexempt assets are turned over to a bankruptcy trustee that is appointed by the court. The trustee is empowered to sell the assets to pay off the debtor's creditors. Once the assets are liquidated, those debts that are dischargeable are discharged.

Many people are concerned about what possessions they will have to give up if they file for Chapter 7 bankruptcy. Both Massachusetts and federal law exempt certain property from liquidation in bankruptcy. A Massachusetts debtor can choose either the federal or the state exemptions, depending on their individual circumstances.

Exempt property includes basic necessities as well as items that are necessary for the debtor to earn a living. The Massachusetts exemptions allow a debtor to keep, among other things, reasonable amounts of clothing, furniture and household appliances, an automobile worth up to $7,500, one television, one computer and up to $2,500 in cash or bank deposits.

The equity in the debtor's homestead is also exempt, up to a value of $500,000. If the debtor does not own a home, they may exempt the amount of the rent they pay each month, up to a maximum of $2,500.

Nonexempt property includes valuables like artwork, jewelry above a certain value, coin and stamp collections and other similar items. Second vehicles, vacation homes, cash over the exempt amount, stock and other investments are also nonexempt and may be liquidated to satisfy the claims of creditors.

Identifying, valuing and listing exempt property can be a complicated process in a Chapter 7 bankruptcy filing. Therefore, debtors should seek out help, which will assist the individual better navigate the process and protect his or her rights and interests.

Source:, "Exempt vs. Non-exempt Property Under Chapter 7," accessed Dec. 19, 2015

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