Sometimes people can find debt overwhelming, especially since the costs of many essential items have been affected by years of inflation. For example, in the 1950s, the average family income was $3,300, but the median cost of a home was $7,354. Buying a house would only cost a family 2.2 times its yearly income. Now, the average household income is $51,017, while the median home price is $188,900. If a couple wants to buy a house today, they would have to pay 3.7 times the cost of their yearly combined income. More consumers are filing for bankruptcy than businesses because it’s become increasingly difficult to buy what people could only 60 years ago without credit.
If you’re facing bankruptcy, it’s more important than ever to ensure that you keep two of the most valuable possessions you have—your home and your car. Without both of these, it would be almost impossible for you to recover from financial difficulties. You require a car to get to work and to accomplish day-to-day errands, and you need your home to provide a safe place to care for yourself and your family.
Your ability to keep your home will vary by state and marital status. However, if you have more equity in your home than in the amount of your state’s exemption, you will have to sell your house to pay off your other debts. In Massachusetts, you can file a “Declaration of Homestead” with the Registry of Deeds, which allows you to exempt up to $500,000 in the value of your house. If you don’t file, you can exempt up to $125,000. If your equity exceeds $500,000, however, you will have to sell your home. The court allows elderly and disabled homeowners an exemption of up to $500,000 regardless of whether or not they filed a Declaration of Homestead. If you rent, you can also exempt an amount of money for each rental period—up to $2,500 a month.
Keeping your car is very similar to keeping your home. However, if you’re behind on car payments in a Chapter 7 proceeding, the lender may require your vehicle to be repossessed if you can’t make all back payments. A Chapter 13 proceeding, however, could allow you to prevent repossession. Massachusetts allows automobile exemptions up to $7,500 in one vehicle used for personal transportation or to go to work. If the vehicle is owned or mostly utilized by a disabled or senior individual, you can exempt up to $15,000.
Bankruptcy law is extremely complicated. If you want the best chance of recovering from overwhelming debt, talk to one of our Worcester bankruptcy attorneys. We offer free case evaluations. Let us help you regain your financial stability. Contact us today!