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The Chapter 7 Homestead Exemption

Every year, mounting debt forces countless residents in Salem and throughout the rest of New Hampshire into bankruptcy. Of the bankruptcy options available, an overwhelming majority of cases are filed under Chapter 7 guidelines. Indeed, caseload information from the U.S. First Circuit Court shows that of the 2,257 bankruptcies filed in New Hampshire from June 2014 to June 2015, over 76 percent where Chapter 7. In a Chapter 7 bankruptcy, the court appoints a trustee in order to liquidate certain assets owned by the filer to assist in repaying creditors.

When people inquire about a Chapter 7 bankruptcy, one of the most common questions that they ask is whether or not they’ll lose their homes. The answer to this question varies from case to case. Under Chapter 7 bankruptcy protection, a debtor is afforded a certain number of exemptions that allow them to maintain ownership of their property. The goal of these exemptions is to ensure that they’ll have assets to help them get a fresh start after they file.

Exemptions apply to the equity one has in his or her property. Typically, the exemption limit is sufficient to cover the equity. However, if it isn’t, then the trustee may choose to include the asset in the bankruptcy estate liquidation. In this case, after the sale of the asset, the debtor would be entitled to a cash payment equal to the amount of the exemption.

Most states have a Homestead Exemption that covers one’s home ownership. According to New Hampshire state statutes, this exemption is $100,000. That doubles to $200,000 for married couples. While some states may require one to file a declaration claiming their homestead rights, New Hampshire does not. 

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