April 13, 2005
POST-JUDGMENT EXEMPTION LAW
By: Jennifer Nelson, Legislative Intern
You asked (1) what property is exempt from a court judgment for money, (2) what money thresholds apply to those exemptions and when they were enacted, (3) how the monetary exemptions compare to inflation, and (4) what monetary exemptions New England states have.
Connecticut law exempts certain property from people who have secured a court judgment (CGS § 52-352b). The exemptions includes such things as (1) necessary clothes, bedding, food, household furniture, and appliances; (2) one motor vehicle; (3) a primary residence; (4) health and disability payments, workers' compensation, social security, veterans' and unemployment benefits, alimony and support payments and court-approved child support payments, and (5) health aids necessary to work or maintain health.
The only exemptions that have a monetary threshold are the homestead exemption that applies to the primary residence ($75,000), motor vehicle exemption ($1,500), personal property up to a value of $1,000, and interest in an unmatured life insurance policy up to $4,000.
Connecticut's exemption statute dates back to the 1700's. It was modernized in 1977. The motor vehicle exemption was established in 1983 and has not been adjusted. The homestead exemption was added in 1993. It established the amount of the exemption as $75,000 and defined a homestead as a primary residence. In 2003, the homestead
exemption was increased to $125,000 for judgments relating to a hospital bill. The provisions for an interest in personal property up to $1,000 and the interest in a life insurance contract up to $4,000 were also adopted in 1993.
We used the conversion factor of the Consumer Price Index (CPI) for the Northeast Urban Area, provided by the Department of Labor Bureau of Labor Statistics (BLS) to adjust the monetary exemptions for inflation. See http://stats.bls.gov. Applying this index, the homestead exemption would increase from $75,000 to $99,000 and the motor vehicle exemption would increase from $1,500 to $3,000.
All New England states have homestead and motor vehicle exemptions. The homestead exemptions range from a standard exemption of $35,000 in Maine to $500,000 in Massachusetts. Motor vehicle exemptions range from $700 in Massachusetts to $10,000 for one or more cars in Rhode Island.
The current Connecticut exemptions from a money judgment established by CGS § 52-352b are:
1. one motor vehicle worth up to $1,500 (fair market value minus all liens and security interests on it);
2. necessary apparel, bedding, foodstuffs, household furniture, and appliances;
3. tools, books, instruments, farm animals, and livestock feed that the individual needs for his occupation, profession, or farming operation;
4. a burial plot for the individual and his immediate family;
5. welfare payments and wages the welfare recipient earns under an incentive earnings or similar program;
6. health and disability insurance payments;
7. health aids the individual needs to work or sustain health;
8. workers' compensation, social security, veterans' and unemployment benefits;
9. alimony and support, other than child support, but only to the extent that wages are exempt from execution;
10. court-approved child support payments;
11. arms, military equipment, uniforms, and musical instruments owned by someone in the United States armed forces or militia;
12. wedding and engagement rings;
13. one residential utility deposit and one residential security deposit;
14. an individual's assets or interests in a retirement, Keogh, Individual Retirement Account, or similar plan or arrangement;
15. an award under a crime reparations act;
16. benefits allowed by any association of persons in this state for the support of its members who are incapacitated by sickness or infirmity;
17. money due to the individual from an insurance company on any insurance policy issued on exempt property, to the same extent that the property was exempt;
18. an interest in any property that does not exceed $1,000 in value;
19. an interest of up to $4,000 in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract the individual owns under which he, or someone whose dependent he is, is insured; and
20. irrevocable transfers of money to an account held by a bona fide licensed nonprofit debt adjuster for the benefit of the individual's creditors.
EXEMPT PROPERTY WITH A MONETARY VALUE ATTACHED
The homestead exemption permits the debtor to exclude his home from execution of a judgment up to the value of $75,000. The value of the home must be determined as the fair market value less the amount of any statutory or consensual lien which encumbers it (CGS § 52-352b(t)). The homestead exemption was enacted in 1993 and was amended and increased to $125,000 for debt arising out of hospital services in 2003. The homestead exemption is based upon the equity value of a primary residence.
If a husband and wife own a house jointly, then the homestead is subject to a $150,000 exemption since each of them has an exemption valued at $75,000 (Bolduc v. Riches, 47 Conn. Sup. 590, (2003)). This court opinion was written before the amendment increasing the exemption to $125,000 for medical bills was enacted, but similar reasoning might create a homestead exemption of $250,000 for attachments for medical bills. A creditor is entitled to place a lien on the real property, but is barred from executing the lien if the equity threshold has not been reached (See Bolduc at p. 592).
The conversion factor of the Consumer Price Index (CPI) for the Northeast Urban Area, provided by the U.S. Department of Labor Bureau of Labor Statistics (BLS), would increase the $75,000 exemption to $99,000 and the exemption of $125,000 would increase to $133,000. See http://stats.bls.gov.
Motor Vehicle Exemption
The motor vehicle exemption was enacted in 1983. Using the CPI, the motor vehicle exemption would increase from $1,500 to $3,000. The consumer price index (CPI) measures the changes in prices paid by consumers for goods.
Additional exemptions with monetary thresholds
The exemptions for any property the debtor has an interest in that is greater than $1,000 (CGS §52-352b(r)) and any interest up to $4,000 for unmatured life insurance contracts (CGS §52-352b(s)) were enacted in 1993. These amounts would be increased to $1,500 and $6,000, respectively, using the same CPI adjustment.
HOMESTEAD EXEMPTIONS IN OTHER STATES
All other New England states have homestead exemptions.
In Maine, the standard homestead exemption is $35,000. But if minor dependents live with the debtor, the exemption is $70,000 and if the debtor or his dependent is at least 60 years old or is disabled, the limit is $70,000 (Maine Rev. Stat. tit. 14 § 4422). The exemption does not apply to fraudulent conveyances, claims on a mortgage or secured interest in the residence, and certain liens.
In Massachusetts, the homestead exemption is $500,000 for the land and buildings of the debtor's principal residence (Mass. Gen. L. ch. 188). The exemption does not apply to (1) sales for taxes; (2) debts prior to buying the property; (3) debts from buying the property; (4) spousal or child support orders; (5) money owed for ground rent if the homeowner does not own the underlying land; and (6) court judgments based on fraud, mistake, duress, undue influence, or lack of capacity.
In New Hampshire, the homestead exemption is $100,000 (N. H. Rev. Stat. § 480:1). The exemption does not apply to taxes; mechanics liens and liens for the construction, repair, or improvement of the homestead; certain mortgages; and certain levies of execution.
In Rhode Island, the homestead exemption is $200,000 in land and buildings of the debtor's primary residence (R. I. Gen. Laws § 9-26-4. 1, as amended by 2001 R. I. Public Laws 189). The exemption does not apply to (1) sales for taxes and certain public services liens; (2) debts prior to acquiring the property; (3) debts from buying the homestead; (4) judgments for spousal or child support; (5) money owed for ground rent if the homeowner does not own the underlying land; (6) reimbursements to the state for medical assistance; and (7) debts to banks.
In Vermont, the homestead exemption is $75,000 of the value of a dwelling, outbuildings, and the land used in connection with them owned and used by the debtor as a homestead (Vt. Stat. Tit. 27 § 101). The exemption does not apply to taxes, mortgages, or causes of action that existed at the time of acquiring the homestead.
VEHICLE EXEMPTIONS IN OTHER STATES
All other New England States have motor vehicle exemptions.
● In Maine, the motor vehicle exemption is the debtor's interest, up to $5,000, in one motor vehicle. (Maine Rev. Stat. Tit. 14 § 4422).
● In Massachusetts, the exemption is for one vehicle needed for personal transportation or for employment, up to $700 in value.
● In New Hampshire, the exemption is for one automobile, up to $4,000 in value (N. H. Rev. Stat. § 511: 2).
● In Rhode Island, the exemption is for any and all motor vehicles up to $10,000 in value (R. I. Gen. Laws § 9-26-4). Rhode Island has introduced legislation in this session to reduce the amount of the vehicle exemption to $5,000 (RI SB 578).
● In Vermont, the exemption is for one or more motor vehicles up to $2,500 in value (Vt. Stat. Tit. 12 § 2740).