Massachusetts Bankruptcy Law: How to File for Bankruptcy and Keep Your Property

Massachusetts bankruptcy law provides individuals and businesses with the opportunity to eliminate or reorganize their debts under court supervision. If you find yourself overwhelmed by financial obligations, understanding how to file for bankruptcy while protecting your property is essential. This guide outlines the key steps involved in the process and the laws that can help safeguard your assets.

Types of Bankruptcy in Massachusetts

In Massachusetts, the most common types of bankruptcy filings are Chapter 7 and Chapter 13:

Chapter 7 Bankruptcy: Often referred to as "liquidation bankruptcy," this option allows for the discharge of most unsecured debts. However, certain non-exempt assets may be sold to pay creditors.
Chapter 13 Bankruptcy: This type allows individuals to reorganize their debts and make payments over a period of three to five years. Borrowers can keep their property by adhering to the repayment plan.

Eligibility Requirements

Before filing for bankruptcy, you must determine your eligibility:

For Chapter 7, you must pass the means test, which evaluates your income and debt levels.
Chapter 13 is available to individuals with regular income who have an unsecured debt limit of $419,275 and secured debt limit of $1,257,850.

How to File for Bankruptcy in Massachusetts

Filing for bankruptcy in Massachusetts involves several key steps:

Credit Counseling: Before filing, you must complete a credit counseling course from an approved provider and obtain a certificate.
Gather Necessary Documentation: Compile financial documents, including income statements, tax returns, bank statements, and a list of all debts.
Complete Bankruptcy Forms: Fill out the appropriate bankruptcy forms, including a petition, schedules of assets and liabilities, and a statement of financial affairs.
File with the Bankruptcy Court: Submit your forms and pay the required filing fee. If you cannot afford the fee, you may request a fee waiver.
Attend the Meeting of Creditors: After filing, you must attend a meeting where creditors can ask questions about your finances. This is typically scheduled about a month after your filing.
Complete Financial Management Course: After the meeting of creditors and before you receive a discharge, you must take a debtor education course.

Protecting Your Property During Bankruptcy

Protecting your property during bankruptcy is a priority for many filers. Massachusetts law offers specific exemptions that allow you to keep certain assets:

Homestead Exemption: You can protect up to $500,000 of home equity for your primary residence. This exemption can increase to $1 million if you filed a Declaration of Homestead before your debt issues arose.
Personal Property Exemptions: You can exempt certain personal property, including household goods, furniture, and clothing, up to a total of $1,000.
Vehicle Exemption: You can protect equity in your vehicle, up to $7,000 with certain conditions.
Pension and Retirement Accounts: Most pension plans and retirement accounts are protected from bankruptcy creditors.

Consulting a Bankruptcy Attorney

While it is possible to file for bankruptcy without an attorney, consulting with a bankruptcy lawyer is advisable. An experienced attorney can help you navigate the legal complexities involved, ensure you meet all deadlines, and maximize your exemptions.

Understanding Massachusetts bankruptcy law is crucial for anyone considering filing for bankruptcy. By following the proper steps and taking advantage of available exemptions, you can manage your debt while keeping your property. If you're facing financial challenges, consider seeking professional guidance to help you through the process.