Boston Bankruptcy Lawyers
306 Dartmouth Street
Boston, MA 02116
~and~
270 Broadway
Revere, MA 02151
~and~
1 Adams Place
Quincy, MA 02169
Phone: (617) 716-0282
Email:
attorney@bkmass.com
 Experienced, Effective, and Affordable Consumer and
Business Bankruptcy Lawyers in Massachusetts
Main Office two blocks from MBTA Copley Stop in
Boston's Back Bay.
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Top Ten Questions about Filing Bankruptcy in Massachusetts
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HOW MUCH DOES BANKRUPTCY COST?
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Can bankruptcy help me?
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What is
bankruptcy?
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What is
Chapter 7 bankruptcy?
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What
is Chapter 13 bankruptcy?
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What is
the "automatic stay"?
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What are the Massachusetts
exemptions?
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What are the advantages of
bankruptcy?
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What are the disadvantages
of bankruptcy?
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Where is the Bankruptcy Court in Massachusetts and will I have to go?
1. How Much Does Bankruptcy Cost?
We charge $1,500 for the majority of cases. Visit our Bankruptcy Fees Page to learn more about
bankruptcy fees and costs in Massachusetts.
Bankruptcy helps a lot of people, and it might be able to help you too.
If you have financial problems and are looking at this page, it at least
deserves investigation.
So what is the concept of bankruptcy? The bottom line is this: Most
people with serious debt problems can make these problems go away if they go
about it the right way. All things considered, bankruptcy is pretty
generous and helpful for people who are struggling with debt. It's not a
free ride, but it can be a path to financial freedom and fresh start. I
explain the process, the pros and cons, the credit issues, and the costs of
bankruptcy on this site.
Bankruptcy can help when you simply cannot pay your debts and live reasonably
anymore. If you qualify, Chapter 7 will discharge most types of debts, and
Chapter 13 will allow an affordable partial repayment and forgiveness of the
balance.
Our firm has been representing Massachusetts consumers
and businesses in bankruptcy for 10 years. We are efficient, and most importantly, honest bankruptcy
lawyers. We get the job done for our clients--affordably and with dignity.
You can read about fees here and set up a
free consultation here. There's a lot of misinformation about bankruptcy.
Here, you'll get the honest scoop with no surprises.
Bankruptcy is a federal law. It is intended to give people a fresh start free of debt. In bankruptcy, a person
either gets released from
their dischargeable debts (Chapter 7) or reduces their debts to a manageable level and maintains
a payment plan for three to five years (Chapter 13).
Although bankruptcy certainly helps people out of some jams, the bankruptcy laws
are not
merely charity. They are meant to encourage the entrepreneurial risk taking and
the freedom that the U.S. economy depends on for growth. To encourage a
certain amount of risk taking, there must be a path to financial redemption.
Why do people file bankruptcy in Massachusetts? In my
experience as a bankruptcy lawyer, these are some common scenarios:
- You are trying to keep debts current but are
borrowing money from one card to pay other (robbing Peter to pay Paul).
This is a house of cards (excuse the pun) and most people realize quickly that
it can not last.
- You are trying to keep debts current by
using your savings but can see the day when your savings will run out (don't
wait until it does).
- You are trying to keep debts current but
your are going without the essentials of life to do so (you do not need to do
this).
- You have defaulted on credit card debt and
are dealing with debt collectors who are not willing to help you and are rude
and harassing.
- You have defaulted on credit card debt and
are being sued or already have civil judgments against you.
- You have looked into credit counseling and
found that they demanded a payment you could not afford or, worse, you have been essentially scammed out of
money.
- You have lost a job or had a reduction in
income.
- You have incurred substantial medical debt
because of illness or an accident.
- You have fallen behind on house or car
payments and are facing foreclosure or car repossession.
- You had a business that failed or is failing.
Often, people feel embarrassed and like there's no hope when they find themselves in situations like these.
Do not despair! There is usually hope. Bankruptcy sounds scary, and
it is not something to take lightly, but it is not as scary as you might think.
You owe it to yourself to at least know your options.
Where you fit in the bankruptcy process depends primarily on your
debts, assets, income, and expenses. We can tell you where you stand if
you get in touch with us.
The goal of a Chapter 7 bankruptcy is to wipe
out ("discharge") your debts. In exchange for having your debts erased,
you must give up all your property to your creditors. This
sounds rather harsh, but the reality is not as bad as it sounds. You need only give up
your "non-exempt" property, which for most people, once the proper exemptions are
applied, amounts to nothing. In other words, in many cases much or all of your property
will be exempt. This is called a "no-asset" case: Even though you may have
some assets--like a house, car, 401k, and household goods--all your assets are
exempt in a "no-asset" case. You will determine what property is exempt with your bankruptcy lawyer
before filing your bankruptcy
petition.
Income also affects your eligibility for Chapter 7. If you make more than the median income based
on household size, you will have to contend with something called a bankruptcy "means test."
This test helps determine if you can receive a Chapter 7 discharge or would be better suited
to be in a Chapter 13 bankruptcy. Even if you fail the means test, special circumstances
may still sometimes allow you to be eligible for a Chapter 7 discharge.
The means test only applies to people who have
family income greater than the median income.
In Massachusetts, here's the median income by family size (for cases filed after November 1, 2011):
- Family of one: $53,496
- Family of two: $64,174
- Family of three: $80,337
- Family of four: $99,067
- Add $7,500 for each additional family member.
However, even if the means test is inapplicable to you because your family makes
less than the median, a "totality of the circumstances" abuse test still
applies. This test is more vague but essentially means that if you have
the ability to fund a reasonable Chapter 13 repayment plan out of your income
you must do so. This common-sense nugget at the heart of the bankruptcy
system states that if you can afford to pay none of your debts, you pay none of
your debts, but if you can afford to pay some of your debts, you pay some of your
debts.You can read more about Chapter 7
bankruptcy here.
Bankruptcy under Chapter 13 allows you to create a plan that you will pay into on a
regular basis. Initially, a Chapter 13 bankruptcy sounds less attractive than
a Chapter 7 filing: Chapter 13 requires you to pay money into a plan whereas a Chapter
7 just wipes out your dischargeable debts. It is true that Chapter 7
will be better in many cases. However, Chapter 13 has many benefits.
Some are:
- It can be used to defend against foreclosure, allowing you to satisfy unpaid mortgage bills (or tax bills)
over time when your lender is
demanding that you pay in one lump sum in order to stop foreclosure.
- The cost to file Chapter 13 is often lower than Chapter
7, especially under the new bankruptcy law. People often want to file a
bankruptcy case quickly; Chapter 13 can often be the way to do this.
- Chapter 13 bankruptcy stays on your credit report for three fewer years than Chapter 7 does (seven
instead of ten).
- There is no reaffirmation in Chapter 13.
This avoids a sometimes sticky situation related to car loans in Chapter 7;
you do not need to potentially undergo a cumbersome reaffirmation process to
keep cars for which you have a loan in Chapter 13.
- No one ever looses property in a Chapter 13. It is not a "liquidation" chapter, it is a "reorganization"
chapter.
- Chapter 13 payments are often quite low,
allowing a debtor to pay pennies on the dollar to unsecured creditors.
There is more you can read about Chapter 13 Bankruptcy
and about
choosing between Chapter 7 and Chapter 13 Bankruptcy.
The automatic stay is one of the most important aspects of the bankruptcy
process. Once you file a bankruptcy petition, the automatic stay stops all
collection efforts and proceedings against you, all harassment, lawsuits, and
any foreclosure proceedings. It gives you breathing room to deal with your
financial affairs without interference from your creditors.
When clients retain us we work with them to immediately reduce or eliminate debt
collection calls by providing them with a special phone number to give out to
callers even before their case is filed. Ask us about this
important benefit. It is one of the things that makes our firm different
than others.
First, as part of a
bankruptcy filing you must choose between (1) the federal bankruptcy exemptions and
(2) the exemptions under Massachusetts and federal non-bankruptcy law. This
is a key decision that you and your bankruptcy attorney will make together that
will depends on the nature and value of your
property.
If the Massachusetts exemptions are chosen, it is usually because of the
Massachusetts Homestead Exemption. This is a very important exemption for
homeowners with equity in their homes. Filing a declaration of homestead in the
proper manner and at the right registry of deeds will exempt up to $500,000
of your equity in your primary
residence, even if the filing occurs just prior to your bankruptcy filing.
There are some new rules that limit the amount of the homestead in bankruptcy to $146,450 (adjusted
April 1, 2010 from $136,875) if the
property was acquired within 1215 days of a bankruptcy petition date.
This so-called "1215 day rule" does not apply if you bought a new home in the same state and rolled
over your equity from your old home into your new home.
Effective March 16, 2011 every homeowner will get an automatic $125,000 of
homestead protection in Massachusetts for their primary residence even without filing a homestead
entitling them to the full $500,000.
There are a number of other exemptions under
Massachusetts law and federal non-bankruptcy laws. Some examples include:
401(k)s, certain retirement
accounts and death benefits,
social security benefits, veterans'
benefits, unemployment and workers' compensation benefits, and certain personal
property and pensions.
In January 2011, Massachusetts modernized the personal property exemptions.
They will go into effect on April 7, 2011. As I wrote above, we will still have a choice
in Massachusetts between the federal and state exemptions.
The 2011 law just makes the state exemptions better for consumers--while the federal
exemptions will stay as they are. A table of the old versus
new state personal property exemptions is right here:
| Property | Current | New | | Money for utilities | $75 | $500 | | Furniture | $3000 | $15,000 | | Books | $200 | $500 | | Tools | $500 | $5000 | | Stock in trade | $500 | $5000 | | Provisions for family | $300 | $600 | | Fishing equipment | $500 | $1500 | | Sewing machine | $200 | $300 | | One computer & one TV | none | no stated dollar limit | | Rent money | $200 | $2500 | | Cash or savings (execution) | $125 | $2500 on any day | | Wages (execution) | $125 | greater of 85% of gross wages or 50 times min. wage per week | | Automobile | $700 | $7500 wholesale, $15000 for disabled or elderly | | Personal property | none | $1000 to $6000 | | Jewelry | none | $ 2500 | | Wages (trustee process) | $125 | greater of 85% of gross wages or 50 times min. wage per week | | Bank account (trustee process) | $125 | $2500 |
The advantages of bankruptcy are usually obvious. When it comes down to it,
bankruptcy is sometimes the only thing that can provide significant relief from
crushing debts. Discharging or substantially reducing credit card and
other debt can dramatically improve your finances and quality of life. If
you qualify (which you can find out by contacting us for a consultation),
bankruptcy can provide a tax-free, legal forgiveness of debts and a fresh start.
Bankruptcy is also sometimes the only way to save your home from foreclosure
or prevent the tax authorities from taking action against you. If this is
your situation, you shouldn't procrastinate: significant harm can come from
waiting (like the filing of a tax lien or an encroaching foreclosure date.)
Some people worry a lot about credit when considering to file bankruptcy.
This doesn't make a lot of sense when credit is already severely damaged.
In this situation, bankruptcy can be used to clear up credit balances, qualify
for new loans, and re-build credit history by making timely payments.
However, bankruptcy does have a long-lasting impact of your credit.
A Chapter 7 bankruptcy will stay on your credit
report for 10 years, and a Chapter 13 will remain on your credit report for
seven years. The clock starts on these time periods once the case is
filed, not after the case is concluded or discharged.
As I wrote above, many people already have severely damaged credit before
they file for bankruptcy. Any missed debt payments, law suits,
foreclosures, etc. will themselves stay on your credit report for seven years
from the occurrence. So, it's important to deal with the question
honestly. What will the net result of a bankruptcy filing really be on my
credit? It will have a negative impact, but usually this is overstated.
People routinely rebuild credit quickly after bankruptcy even during the time
period when the bankruptcy still appears on their credit report. The
presence of a bankruptcy on a credit report is just one factor making up your
credit score. It is a significant factor, but it can be outweighed by
other positive data. We have heard from many, many people who report that they are surprised by the easy
availability of credit after bankruptcy.
One of the things we do is work with clients after bankruptcy to ensure that their
credit reports are accurate. The result is often an improved credit score which
facilitates access to new credit on favorable terms.
Read more about this new service here.
There are additional downsides to bankruptcy. There is the cost of the
process, which you can read about here.
There is also the fact that you will have to appear in court with us. This is
not as painful as it seems, but people still get justifiably nervous about it.
There is also the fact that you may lose property in a Chapter 7 case if you own
more than is protected by the exemption limits. See
answer number 7 above.
Bankruptcy will also not discharge some debts like student loans. However,
despite what some people believe, filing bankruptcy will not stop you from getting student loans in the
future that are guaranteed by the government (such as the Stafford, Perkins, and
PLUS loans that most students get).
We talk to Massachusetts consumers and small business owners every day about
debt. Often bankruptcy is the cheapest and best solution to debt problems.
However, that's not always true. There are
non-bankruptcy alternatives, and
you can get the honest scoop about them
here.
Yes, at least once. After the court receives a
Chapter 7 or 13 bankruptcy filing, it schedules a meeting of your creditors.
In the vast majority of cases no creditors attend the meeting and it is just
you, your bankruptcy attorney, and the bankruptcy trustee for about a ten minute meeting. This is called the section 341 meeting.
There are two bankruptcy courts departments in
Massachusetts, one in Boston and one in Worcester (although 341 meetings are also held in Brockton, Springfield, and Pittsfield).
Note that at this time we only handle cases for people who live in or own property in
Suffolk, Middlesex, Norfolk, Essex, Worcester, Plymouth, Bristol, Barnstable, Nantucket,
Dukes counties. Where you are assigned is based on your city of town of
residence. A complete list (for Eastern Mass.) can be viewed
here.
| Boston: |
Worcester: |
United States Bankruptcy Court
John. W. McCormack Post Office and Court House
5 Post Office Square, Suite 1150
Boston, MA 02109-3945 |
United States Bankruptcy Court
Donahue Federal Building
595 Main Street, Room 211
Worcester, MA 01608-2076 |
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Chapter 7
Nicholas Ortiz on MoneyMatters Radio