Bankruptcy is a legal process that helps individuals and businesses struggling with debt seek relief and potentially start fresh. While it can be a challenging process, understanding the specifics of bankruptcy laws in your state can make it less daunting. This article will delve into debt settlement near me and the nitty-gritty of Massachusetts bankruptcy laws, providing an essential guide for those considering this debt-relief option.
Understanding Bankruptcy
Before we dive into the specifics of Massachusetts laws, it’s essential to have a basic understanding of bankruptcy. Bankruptcy is a federal process, meaning the rules and procedures are largely the same across the country. However, state laws also play a role, particularly in determining which assets you can keep (exemptions) and how you’re affected by bankruptcy.
Massachusetts Bankruptcy Exemptions: What Can You Keep?
When you file for bankruptcy, you don’t necessarily lose all your property. There are certain assets, known as exemptions, that you’re allowed to keep, depending on the type of bankruptcy you file. In Massachusetts, these exemptions can be quite generous.
Homestead Exemption
In Massachusetts, homeowners can protect up to $500,000 of their home’s equity under the homestead exemption. This means that even after filing for bankruptcy, you can keep your home as long as its equity doesn’t exceed this amount.
Personal Property Exemptions
Massachusetts law also allows you to keep most of your personal property, including clothing, household furniture, and appliances up to a certain value. Additionally, pensions and public benefits, such as unemployment and workers’ compensation, are generally fully exempt.
Types of Bankruptcy in Massachusetts: Chapter 7 vs. Chapter 13
There are two primary types of personal bankruptcy: Chapter 7 and Chapter 13. Each has its own set of rules and benefits, and the best choice depends on your particular situation.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as “liquidation,” is typically for people with limited income who can’t pay back their debts. Under this type of bankruptcy, most of your unsecured debts, like credit card bills and medical debt, can be wiped out. However, you may have to give up some non-exempt property to repay creditors.
Chapter 13 Bankruptcy
If you have regular income and can pay back at least a portion of your debts, Chapter 13 bankruptcy might be a better option. Often called “wage earner’s bankruptcy,” Chapter 13 allows you to create a repayment plan to pay off your debts over three to five years. The advantage of Chapter 13 is that you get to keep all your property, including non-exempt assets.
Filing for Bankruptcy in Massachusetts: The Process
Filing for bankruptcy in Massachusetts involves several steps, from pre-filing credit counseling to meeting with creditors. It’s a complex process that requires careful attention to detail. Here’s a general overview of what to expect:
- Credit Counseling: Before you can file for bankruptcy, you must complete a credit counseling course from an approved agency.
- Filing the Petition: The bankruptcy process officially starts when you file a petition with the Massachusetts bankruptcy court. Along with the petition, you’ll need to file several forms detailing your financial situation.
- Meeting of Creditors: After filing, you’ll attend a meeting of creditors (also known as a 341 meeting), where your trustee and creditors can ask you questions about your finances and bankruptcy forms.
- Completion of a Debtor Education Course: Before your debts can be discharged, you must complete a debtor education course.
- Debt Discharge: At the end of the bankruptcy process, your eligible debts are discharged, or wiped out.
Conclusion
Navigating bankruptcy laws can be complicated, but with a solid understanding of Massachusetts bankruptcy laws, you’ll be better equipped to tackle the process. Whether you’re considering Chapter 7 or Chapter 13 bankruptcy, remember that seeking advice from a qualified attorney can be invaluable in making the best decision for your financial future.
FAQs
What is the means test in Massachusetts for bankruptcy?
The means test is a formula established by the Massachusetts Bankruptcy Law to determine if an individual is eligible to file for Chapter 7 bankruptcy. It considers your income, expenses, and family size to determine if you have enough disposable income to repay your debts.
What is the difference between Chapter 7 and Chapter 13 bankruptcy in Massachusetts?
Chapter 7 bankruptcy is a liquidation bankruptcy where most of your unsecured debts are discharged. On the other hand, Chapter 13 bankruptcy is a reorganization bankruptcy where you create a repayment plan to pay off your debts over three to five years.
What are the credit counseling requirements for bankruptcy in Massachusetts?
Massachusetts bankruptcy laws require that individuals must receive credit counseling from a government-approved organization within six months before they file for any bankruptcy relief.
What exemptions are allowed under Massachusetts bankruptcy laws?
Massachusetts allows you to use either the state or federal bankruptcy exemptions. These may include homestead exemption, personal property, insurance, pensions, public benefits, tools of your trade, and wages.
How often can I file for bankruptcy in Massachusetts?
You can file for Chapter 7 bankruptcy once every eight years. For Chapter 13 bankruptcy, you can file at any time, but you can only get a discharge every two years.
Is it possible to keep my home and car if I file for bankruptcy in Massachusetts?
Yes, with the Massachusetts homestead exemption, you may be able to protect some or all of your equity in your home. Similarly, the motor vehicle exemption may allow you to keep your car, depending on its equity.
What is the role of a bankruptcy trustee in Massachusetts?
A bankruptcy trustee is appointed by the court to handle your case. Their role includes reviewing your bankruptcy papers and supporting documents, selling your non-exempt property to repay creditors in Chapter 7, or overseeing your repayment plan in Chapter 13.
How long does a bankruptcy stay on my credit report in Massachusetts?
In Massachusetts, a Chapter 7 bankruptcy can stay on your credit report for up to 10 years, while a Chapter 13 bankruptcy can stay for up to 7 years.
How much does it cost to file for bankruptcy in Massachusetts?
As of 2022, the filing fee for Chapter 7 bankruptcy is $338, and for Chapter 13 bankruptcy, it’s $313. This does not include attorney fees, which vary.
Can student loans be discharged in a bankruptcy filing in Massachusetts?
Generally, student loans are not dischargeable in bankruptcy. However, if you can prove that repaying the loan would cause you “undue hardship,” the Massachusetts court might allow it. This is, however, extremely difficult to prove and rarely granted.
Glossary
- Bankruptcy: A legal status that involves a person or business that cannot repay their outstanding debts.
- Chapter 7 Bankruptcy: This type of bankruptcy involves the liquidation of a debtor’s non-exempt assets to pay off as much debt as possible.
- Chapter 13 Bankruptcy: A type of bankruptcy where the debtor proposes a repayment plan to make installments to creditors over three to five years.
- Credit Counseling: A mandatory session that potential filers must attend before filing for bankruptcy to understand all the available options and consequences.
- Creditor: An individual or institution that lends money or services to another entity under a repayment agreement.
- Debtor: An individual or business who owes money to another entity or person.
- Discharge: The release of a debtor from the obligation to repay their debts.
- Exemptions: Certain property that a debtor can keep when filing for bankruptcy, such as a home or car, within certain limits.
- Homestead Exemption: In Massachusetts, this law allows homeowners to protect a certain amount of the value of their primary residence from creditors and bankruptcy proceedings.
- Insolvency: The state of being unable to pay the money owed, by a person or company, on time.
- Liquidation: The process of converting assets into cash to repay creditors.
- Means Test: A method used to determine if an individual qualifies for debt relief under Chapter 7 bankruptcy.
- Non-Exempt Assets: Assets that are not protected under bankruptcy exemptions and can be sold off to pay creditors.
- Personal Bankruptcy: The type of bankruptcy (either Chapter 7 or Chapter 13) filed by an individual, as opposed to a business.
- Proof of Claim: A document submitted by a creditor in a bankruptcy case setting forth the basis of their claim to receive payment.
- Reaffirmation Agreement: An agreement made during bankruptcy proceedings in which the debtor voluntarily agrees to pay off a debt.
- Repayment Plan: In Chapter 13 bankruptcy, this is the debtor’s plan to pay off their debts over a period of time.
- Secured Debt: Debt backed by an asset, such as a car loan or a mortgage.
- Trustee: A person appointed by the court to manage the debtor’s property and distribute it among the creditors in a bankruptcy case.
- Unsecured Debt: Debt that is not backed by any collateral, for example, credit card debt and medical bills.
