There are certain things that are linked to financial issues. A few common reasons include heavy debt, illness, divorce, foreclosure, or loss of a job.
In fact, the average credit card debt in Massachusetts is a whopping $5,565 per person. In addition, foreclosure rates are also as staggering, one out of every 1,791 MA homes is currently in foreclosure.
If you can relate to the scenarios above, then you are more than likely struggling with other personal problems that come with living in debt. The fear of losing your car, home or your income can drain a person emotionally & physically. You have probably even considered Filing Chapter 7 or Chapter 13 Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are surprisingly not alone. Almost 1 million people file bankruptcy each year in the US. Bankruptcy is a device provided by the US Government to help struggling Americans find relief from overwhelming debt. You may want to consider personal bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the time to get out from underneath considerable debt while still working with lenders in a legal capacity. It is initiated by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ with a fresh new start.
Throughout the bankruptcy process, a trustee is appointed to oversee the deatils of the matter. His or her responsibilities differ and depend on whether the person has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that Massachusetts ranks #41 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 154 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
People in Massachusetts, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
A Chapter 13 Bankruptcy plan is reserved for people who have the means to pay some of their debts through a restructuring. You will be allowed to retain your valuable assets over a 3- to 5-year period.
In order to decide which type of bankruptcy an individual can file, he or she will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
For those who do not qualify for a Chapter 7 filing, he or she will be able to file for Chapter 13, as described above.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- Automatic homestead for principal residence (including mobile home) to $125,000; to $500,000 if homestead declaration is recorded and complies with MA law; spouses may not double; trust beneficiaries are eligible for exemption; owners with a disability or 62 or older may each exempt up to $500,000, but aggregate cannot be more than $1,000,000.
- The spouse or children of a deceased owner may claim the homestead exemption.
- Tenancies by the entirety, regardless of value, are exempt as to the debts of one spouse, unless the debt was “incurred on account of necessaries” for either spouse or a family member.
- 2 cows, 12 sheep, 2 swine, 4 tons of hay. Beds & bedding; heating unit, stove, refrigerator, freezer & hot water heater; clothing. Bibles & books to $500 total. Burial plots, tombs, & church pew. Cash for fuel, heat, water, or light to $500 per month. Cash to $2,500/month for rent, in lieu of homestead. Cooperative association shares to $100. Food or cash for food to $600. Jewelry to $1,225. Household furnishings to $15,000. Motor vehicle to $7,500; to $15,000 if used by elderly or disabled debtor. Sewing machine, computer, TV to $300. Trust company, bank, or credit union deposits to $2,500.
- Moving expenses for eminent domain.
- Earned but unpaid wages up to 85% or 50 times the federal minimum wage.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Public employees.
- Private retirement benefits.
- Savings bank employees.
- Credit union employees.
- ERISA-qualified benefits, IRAs and Keoghs to specific limits included.
- Veterans’ benefits.
- Unemployment compensation.
- Workers’ compensation.
- Public assistance.
Tools of Trade
- Tools, implements and fixtures up to $5,000 total; materials you designed and procured up to $5,000; boats, nets, and fishing tackle of fisherman up to $1,500; arms, uniforms, and accoutrements you are required to keep.
- Disability benefits up to $400 per week.
- Life insurance proceeds if policy prohibits use to pay creditors.
- Life or endowment policy, proceeds, dividends, interest, loan, cash, or surrender value.
- Life insurance policy if beneficiary is a married woman.
- Group annuity policy or proceeds.
- Group life insurance policy.
- Medical malpractice self-insurance.Fraternal benefit society benefits.
- Business partnership property.
- $1,000 plus up to $5,000of unused automobile, tools of the trade, and household furniture exemptions.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
Current laws do not require individuals to hire an attorney to declare bankruptcy relief. People are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not recommended.
Filing Bankruptcy without an Attorney
A simple Chapter 7 case that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t require an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
For most people, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy lawyer is there to represent you and not in the interest of creditors.
An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in MA, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Massachusetts
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In MassachusettsJohn W. McCormack Post Office and Court House
5 Post Office Square
Massachusetts Bankruptcy Court
Harold D. Donohue Federal Building and United States Courthouse
595 Main Street
Massachusetts Bankruptcy Court
300 State Street
Massachusetts Bankruptcy Court
Additional Massachusetts Resources
Foreclosure Help Program
Disability SSDI Benefits