On July 12th, 2021 Governor Ned Lamont signed into law An Act Concerning Property That Is Exempt From A Judgement Creditor, HB 6466. The law increases Connecticut's homestead exemption to $250,000, its motor vehicle exemption to $7,000, and creates an exemption for the cash surrender value of life insurance policies.
For individuals and families for who might not have seriously considered a bankruptcy solution, the new law offers enormous potential for a fresh start. I can't overemphasize this. It's the biggest, most favorable development I have seen in over thirty years of bankruptcy practice.
If you are like most folks, much if not most of your wealth is locked up in your home. That doesn't help much with credit card, medical debt or personal loans. Refinancing to pay such debt should be your last resort.
For the last few decades, you could protect only up to $75,000 in equity in your principal residence in bankruptcy. The new law expands that number more than three-fold. Most married couples own their homes jointly. If you file a joint bankruptcy you will now be able to protect up to $500,000 in equity in your home!
Connecticut home prices have spiked considerably lately. Even so, the new law means that in most situations the equity in your home, even if it's substantial, will not get in the way of your fresh start in bankruptcy. You may still be able to discharge credit card and other debt and keep your home.
Car values have also spiked. The new law addresses that as well. A married couple that each owns a car can exempt a total of $14,000 in equity between the two vehicles.
Exempting the entire cash surrender value of life insurance policies is brand new. Previously, Connecticut's exemption statute allowed $1,000 maximum.
The new law creates a whole new world of opportunities for preserving wealth while eliminating debt.
The law takes effect on October 1st, 2021. It's not too early to prepare for your fresh start. Please contact me to discuss whether bankruptcy now provides a solution you might not have considered before.