Homestead laws are designed to protect small individual property owners, such as homeowners, from the everchanging economic climate of the United States. Often when the economy changes, small property owners are unable to meet the demands of their creditors. Homestead laws allow an individual to register a portion of his real and personal property as “homestead,” thereby making that portion of the individual’s estate off-limits to most creditors. The idea behind these homestead laws is the preservation of the family farm, home, or other assets in the face of severe economic conditions.
The items and amounts of money that can be set aside as a homestead are varied. The rules governing which property can be registered as homestead property seem to adhere to regional patterns. Real property that may be subject to the homestead exemptions vary in value from a $300 exemption from judgments in Pennsylvania to a $200,000 exemption for persons over age sixty-two in Massachusetts. They vary in character from the District of Columbia’s allowable homestead of $200 worth of tools, and, if a professional, $300 worth of furniture, and $300 in clothes per person, to Colorado’s unlimited acreage or Texas’s 200 acres. In each case, the property that may be homesteaded is designed to perpetuate the family’s estate and improve its chances for survival in hard times.
The homestead is a back-up and a type of insurance against unexpected catastrophe; it will not ordinarily protect you from a bad business deal or from ordinary bankruptcy. Nonetheless, because an unscrupulous person could manipulate the homestead protections as a shield from living up to his legal obligations, there is much case law on homesteads. Indeed, ordinary business and commercial creditors ordinarily may penetrate property set aside as homestead.