What You Need to Know About Massachusetts Bankruptcy Process

What You Need to Know About Massachusetts Bankruptcy Process

Filing for bankruptcy in Massachusetts can be a daunting process, but understanding the key aspects can make it more manageable. Here’s a comprehensive guide on what you need to know about the Massachusetts bankruptcy process.

Types of Bankruptcy in Massachusetts

Massachusetts residents can file for two primary types of bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy: This is often referred to as “liquidation bankruptcy.” It’s designed for individuals who cannot pay their debts. In this process, a bankruptcy trustee will sell non-exempt assets to pay off creditors. Most unsecured debts, including credit card debts, medical bills, and personal loans, can be discharged.

Chapter 13 Bankruptcy: This type enables individuals with a regular income to create a repayment plan to pay back all or part of their debts over three to five years. It’s ideal for those who want to keep their property and catch up on missed payments.

Eligibility Requirements

To qualify for bankruptcy under Chapter 7 or Chapter 13, individuals must meet certain eligibility criteria.

For Chapter 7, you must pass the means test. This test compares your income to the median income for your state. If your income is below the median, you can file for Chapter 7. If it’s above, you may have to consider Chapter 13 or explore other alternatives.

Chapter 13 requires that you have a stable income and your unsecured debts should not exceed $419,275, while secured debts should not exceed $1,257,850.

The Bankruptcy Filing Process

The bankruptcy process in Massachusetts begins with filing a bankruptcy petition in the appropriate court. Here’s a step-by-step overview:

  1. Credit Counseling: Before filing, individuals must undergo credit counseling from an approved agency within the last 180 days.
  2. Prepare and File the Petition: Fill out the bankruptcy petition and accompanying forms, detailing your debts, assets, income, and expenses. You must file these documents in your local bankruptcy court.
  3. Automatic Stay: Once the petition is filed, an automatic stay goes into effect, which halts most collection actions against you.
  4. 341 Meeting of Creditors: Approximately a month after filing, you will attend a meeting where creditors can ask questions about your financial situation.
  5. Discharge: For Chapter 7, you will receive a discharge of your debts a few months after filing, while Chapter 13 will follow a confirmed repayment plan.

Key Considerations

Before proceeding with bankruptcy, consider these important points:

  • Effects on Credit: Bankruptcy will impact your credit score, and it may remain on your credit report for up to 10 years, depending on the type of bankruptcy filed.
  • Exemptions: Familiarize yourself with bankruptcy exemptions in Massachusetts, which may allow you to keep certain assets.
  • Legal Assistance: Consult with a qualified bankruptcy attorney to navigate the process and ensure you make informed decisions.

Conclusion

Understanding the Massachusetts bankruptcy process can often alleviate some of the stress associated with financial struggles. Knowing the types of bankruptcy available, the eligibility requirements, and the filing procedure is essential. Always consider seeking professional advice to help guide you through your unique situation.