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Which of your stuff is protected from Creditors in Massachusetts?

When a creditor sues you for not paying on a debt and then obtains a judgment, they have the right to try to collect on that judgment, by asking the Court to take some of your things away and give the Creditor the right to sell them in order to recoup part or all of their financial losses.

In order for a creditor to come after you assets, the creditor must instruct the Sheriff in the county where you assets are being held to levy an execution on your items.  However, prior to being able to do so, certain things you own under Massachusetts state law are protected or in legal terms, “exempt” from the levy.  What this really means is that you get to hold a big stop sign up and say to your creditors, “back off!”   The law does protect you so that a creditor can not simply come and take everything away from you.  Perhaps most importantly, in Massachusetts, if you had filed a Declaration of Homestead on your property before you were sued, they you can protect up to $500,000 in equity of your home.  Even if you did not file the proper paperwork, as of March, 2012, $125,000 of equity in your home is protected from unsecured creditors.  That is the good news.  The bad news is that if you sell your home and reduce the equity to cash in a bank account, the bank account only has limited protection.  You can also protect up to $7,500 in equity in your car.  So even if you are driving a Lexus that is worth $40,000 and you owe $35,000 on it, you can keep that luxury vehicle.

With respect to things you may have in your home that are necessary to live, you can protect your clothing, beds and bedding for you and your family, 1 heating unit, 1 stove, 1 refrigerator, 1 freezer and 1 hot water heater used primarily for the personal, family or household use.  You are also allowed to protect the first $500 worth of income so that you can purchase utilities.   With respect to the furniture in your home, you can protect everything so long as the yard sale value of it is less then $15,000.

In the event you are self employed or need to have your own tools for work, you are allowed to protect up to $5,000 worth of tools and equipment.  You can even protect books, and educational materials valued at up to $500.  It should be noted that the value is based upon a liquidation value, so that means what would you get for it if you held a garage sale or a booth at a flee market.  The law goes so far as to protect up to $600 in value for groceries to be held in your home for emergencies.  The law even protects burial plots that you have previously purchased for yourself.

With respect to actual funds and money, you are allowed to have up to $2,500 in the bank. The Courts do not want you to stop working, however, they do allow a Creditor to demand a certain amount of your pay from your employer, but that is limited to only $15%.

With this said, it should still be noted, that if a Creditor does come after these items, you as a Debtor have the burden to inform the court that your property is exempt and the Creditor is over reaching.