On January 7, 2011, Governor Patrick signed into law legislation updating the personal property exemptions for debt collection. The new law increases the value of property, earnings and savings exempt from seizure during debt collection. The law replaces an antiquated version that exempted from seizure things like: $700 of equity in an automobile; and two cows, twelve sheep, two swine and four tons of hay. The significance of the state personal property exemption is enormous. To maintain employment, housing and their general welfare, people need their vehicle, clothing, computers and work tools at today’s values.

The changes made to the law include an increase in the automobile exemption from $700 to $7,500 (wholesale value) and $15,000 for the disabled and elderly; jewelry from zero to $1,225; bank accounts from $125 to $2,500; furniture from $3,000 to $15,000; cash or savings from $125 to $2,500; and rent money from $200 to $2,500.

These updated exemptions can also be used in the proper circumstances to benefit individuals filing bankruptcy. When state exemptions are elected, the Massachusetts Homestead provides up to $500,000 of protection in a residence. The new exemption statute will also provide protection for the debtor’s personal property. Previously, when state exemptions were used to protect equity in a debtor’s home, jewelry including the engagement ring was exposed to turnover since no state exemption existed. Now, $1,225 of fair market value can be protected. Similarly, automobiles that had more than $700 in equity were exposed. Now, a debtor can own a car with $7,500 in equity (wholesale) and protect it.

I won’t be able to joke about protecting a client’s two cows, twelve sheep, two swine and four tons of hay anymore, but I will be able to more efficiently help them keep their property while getting a fresh start.