Declaration of Homestead Massachusetts

You mentioned that your friend filed bankruptcy, and in bankruptcy, the only exemptions and limitations on the homestead exemption are in the bankruptcy code. Provided that there is a properly prepared Homestead Declaration recorded prior to the filing of the petition, the Declaration will protect the homeowners interests up to the amount of exemption. To get this benefit, the Declaration must be recorded prior to the filing of the bankruptcy protection - not after.

If you have additional specific questions or concerns about your rights and obligations in bankruptcy, or about your ability to protect your home in bankruptcy, you should speak to an experienced bankruptcy attorney.

Good luck,

Bill McLeod

Your reading of the homestead statute is correct. In non-bankruptcy circumstances, a later homestead will not protect your home from earlier debt contracts.

Filing a homestead declaration is never the wrong thing to do, however, unless there's a previous one since a later homestead terminates an earlier one. You'll get protection from later debt contracts and personal injury judgments.

Federal bankruptcy law changes the effect of the state homestead statute. At first, a 1995 Massachusetts bankruptcy court decision (Van Rye) ruled that a later recorded homestead did not protect a home from earlier contracted debts. But another Massachusetts bankruptcy judge went the other way in a 1996 decision (Boucher), ruling that only Congress, through the Bankruptcy Code, could determine which debts were discharged in a bankruptcy, and Congress did not say that pre-recording debts were not discharged. I was one of the 20,000 or so attorneys who fell out of our chairs over the shock of this ruling.

The other two Massachusetts judges then ruled in favor of the 1996 Boucher decision. The Van Rye judge stood firm in his 1997 decision (Fracasso). A number of the cases went up on appeal and the First Circuit held in 1998 in favor of that 1996 Boucher decision (Patriot Portfolio, LLC v. Weinstein). The U.S. Supreme Court refused to accept a further appeal.

So it's fine to record a homestead declaration before you file a bankruptcy petition (but not after; my friend and colleague Bill Mcleod is absolutely correct) and protect up to $500,000 of home equity.

Massachusetts bankruptcy filers have a choice of protections, federal or state. Only the state list includes the $500,000 homestead but protections of other assets might be limited. You'll need legal counsel to determine which list is best for you.

I hope this helps. Please seek counsel if you have additional questions, especially about protecting as many of your assets as possible.