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8. Stay put! — at least for the time being: I know America is a mobile society now, and unemployeds and under-employeds are often restless to move on to “the next town” in search of better prospects. But if you own a home in Massachusetts or New Hampshire (or are newly arrived here from another state), pause before you move and talk to a bankruptcy lawyer.

A new twist to the bankruptcy law “caps” the homestead exemption for people who move within 1215 days of their bankruptcy filing. (That’s about 3 years and 3 months). This was intended to curb debtors from moving to states with enormous homestead exemptions like Florida and converting all their assets into real estate there. (If you remember, this is what OJ Simpson did when he was hit with a big civil judgment by Ron Goldman’s estate).

The cap is presently about $137,000.

The problem is that the rule does not discriminate between people who move to Florida and people who just move down the street. It’s easy to inadvertently see a $500,000 Massachusetts homestead exemption chopped down to $137,000.

The worst part is that you don’t even have to move to have your homestead sliced: this rule applies to any “transfer” of property, so that setting up a trust, changing names on a deed, or even some refinancings can trigger it. You really need to be careful with your house!

9. Think about getting a checkbook, a pen, a roll of stamps, a box of envelopes, and a calendar: The retro way of paying bills is going to be a big part of life after you file. More and more, large creditors are cutting off access to electronic bill-pay and statements through their web-sites once a bankruptcy is filed. Officially, they are afraid that of getting sued for electronically billing customers after bankruptcy — a big no-no.

Unofficially, it’s little passive-aggressive dig at the debtors. They know your addicted to paying on-line, and want to see if they can make it hurt for you, since you just blew away their debt.

But this isn’t really a bad thing — going back to writing out checks will slow down your spending, make you think about what you buy, and in the long run, help your bankruptcy experience be a successful way of turning your finances around.


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