Protecting Your Home from Creditors Even if you are Bankrupt

Fiorentini Law Office,. Haverhill MA

1-978-374-0596; 1-800-834-6964

By Atty. James J. Fiorentini

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Homestead Exemption

A "homestead" or "homestead exemption" means that your home is protected from creditors up to the limit of the exemption for as long as you, your spouse or your children wish to live in the house. A homestead is an important means of protecting your home if financial disaster strikes.

Homestead Exemptions in Massachusetts

There is no automatic homestead in Massachusetts; the homeowner must file a piece of paper, called a Declaration of Homestead, in the nearest Registry of Deeds in order to obtain the homestead. There is no homestead unless the document is on file.

How to File the Declaration of Homestead

Most lawyers will be happy to file a Declaration of Homestead for you for a nominal fee, usually around $100-$150.00. If you insist upon doing it yourself, you need the proper form, which is available at any Registry of Deeds. The Essex South Registry of Deeds, which includes Haverhill Massachusetts, can be found at Essex South Registry of Deeds. You can read about homesteads and download a form from them at Homestead Questions and Answers. Please note that the form is not effective until you actually file it. You cannot do that on line, you have to mail it in with a filing fee of $10.00. If you are ready for the homestead form, you can download one at Homestead Form. If you are 62 or over, or if you are totally and permanently disabled, there is a different form at Elder Homestead Form.

What Does a Homestead Protect?

A homestead protects your interest in your primary house in Massachusetts. It works only if you own the house. If the house is owned in a trust or by a corporation, the homestead does not work. (You should be very careful before you put your house into a trust and should always consult a lawyer first.)

A homestead prevents most but not all creditors from taking the house away from you to satisfy a debt that you owe the creditor. Suppose for example that you owe credit card money and you cannot pay. Without a homestead, the credit card company can sue you, attach your home and ultimately may be able to sell your home to satisfy the debt that you own. With a homestead, your home is protected as long as you, your spouse or your minor children choose to live in it.

A homestead does not protect against some debts. Among the things that a homestead does not protect you from are taxes, debts in connection with the purchase of a home, and for regular homesteads (not elderly or disabled homesteads), judgments or executions based on fraud.

How Much Equity is Protected?

With a homestead, effective November 2, 2000 you can protect up to $300,000 in the equity in your home. If you have a very valuable home with more equity than that, not all of the equity in your home may be protected. Remember, you must file the Declaration at the Registry of Deeds before the Homestead protects you.

Homestead Exemptions and Bankruptcy

The most significant part of the homestead exemption is bankruptcy. Sometimes your debts are so great that you need a fresh start. Bankruptcy provides a way to do that. A Homestead often allows you to keep your Massachusetts home even if you are bankrupt.

Until recently, it was thought that a homestead only protected you from debts that were incurred after you filed the declaration of homestead. However, in 1999, the decision of the First United States Court of Appeals in the case Patriot Portfolio vs. Weinstein held that the Massachusetts Homestead Exemption protects your house from creditors even if the homestead is put on the house immediately prior to the filing of bankruptcy and even if the debts are pre-existing debts. If you want to read that case, just click on the name of the case above. (That case was preceded by a lower court case called In Re Mills, which an associate in our office was involved with, that held the same thing).

The combination of the Weinstein case and the amendments to the homestead law make it clear that most debtors in Massachusetts will be allowed to save their homes in a Chapter 7 bankruptcy if they go bankrupt.

To learn more about bankruptcy, read our bankruptcy primer, click here

Homesteads in New Hampshire

New Hampshire has an entirely different homestead law. In New Hampshire, the good news is that the homestead is automatic; you need not file anything in the Registry of Deeds for it to take effect. The bad news is that the protection is less, $30,000 per person, or $60,000 per couple.

If you need more information

For a list of Registries of Deeds in Massachusetts, click here

For a good article by another lawyer about homesteads, click here

To read the homestead law in Massachusetts, click here.

To download a homestead form, click here.

To go to our special bankruptcy page, click here

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