Massachusetts Bankruptcy Law: How to Cancel Your Debts
Bankruptcy can be a complex and daunting process, especially when navigating the laws specific to Massachusetts. Understanding Massachusetts bankruptcy law is crucial for those seeking relief from their financial burdens. This guide will cover the key aspects of how to cancel your debts through bankruptcy in Massachusetts.
In Massachusetts, individuals seeking debt relief typically file for either Chapter 7 or Chapter 13 bankruptcy. Each chapter has its own eligibility requirements and implications for debt cancellation.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," allows individuals to discharge most of their unsecured debts, such as credit card debts, medical bills, and personal loans. The process begins with filing a petition in bankruptcy court, including detailed financial disclosures of assets, liabilities, income, and expenses.
To qualify for Chapter 7 in Massachusetts, individuals must pass the means test, which compares their income to the median income for a household of their size in the state. If your income is below this threshold, you may qualify for Chapter 7. If not, you may need to explore Chapter 13 options.
Once the bankruptcy court approves your petition, a trustee will be appointed to oversee your case. The trustee may sell non-exempt property to pay creditors, but many filers typically retain their exempt property, such as a primary residence, vehicle, and personal belongings.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is designed for individuals with a regular income who can repay a portion of their debts over time. This option is ideal for those who wish to keep their assets while reorganizing their debts. Under Chapter 13, you propose a repayment plan that lasts three to five years, during which you make monthly payments to a bankruptcy trustee. The trustee then distributes these payments to your creditors.
To qualify for Chapter 13, you must have a steady income and your unsecured debts must be below $465,275, while secured debts must not exceed $1,395,875 (as of 2023). This structure allows you to address your debts without losing your assets.
The Bankruptcy Process in Massachusetts
To initiate bankruptcy proceedings in Massachusetts, follow these steps:
- Credit Counseling: Before filing, complete a credit counseling course from an approved provider within six months to ensure that bankruptcy is the best option for your situation.
- Filing the Petition: Prepare and file your bankruptcy petition with the appropriate court, including the necessary schedules and statement of financial affairs.
- Automatic Stay: Upon filing, an automatic stay is put in place, which halts most collection actions against you, providing immediate relief from creditor harassment.
- Meeting of Creditors: Attend a Meeting of Creditors (341 meeting), where you will answer questions about your financial situation and bankruptcy petition. Creditors can attend but often do not.
- Debtor Education Course: Complete a debtor education course before your debts can be discharged.
- Discharge: If everything goes smoothly, the court will issue a discharge, wiping out your eligible debts.
Conclusion
Understanding Massachusetts bankruptcy law is essential for anyone considering filing to cancel their debts. Whether choosing Chapter 7 or Chapter 13, being well-informed can help navigate the complexities of filing for bankruptcy effectively. Seeking advice from a qualified bankruptcy attorney may also help in ensuring that you make the best financial decision for your situation.
In summary, bankruptcy can offer a fresh financial start, allowing individuals and families to regain control over their finances and work towards a debt-free future.