Frequently Asked Questions About Filing Bankruptcy in Massachusetts
Below you will find the answers to some of the most common bankruptcy questions asked at our office during free consultation meetings. If you question is not answered below or you would like more detailed information feel free to call our office at 978-452-1116.
What is a Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is also known as a “straight” or “liquidation” bankruptcy. When involved in this type bankruptcy all of a filer’s debts and assets are turned over to a Trustee who represents the creditors. According to the bankruptcy laws in Massachusetts only non-exempt property will be included in a bankruptcy. A Chapter 7 allows debtors to “start fresh” wiping away nearly all of their secured and un-secured debts.
Is it difficult to file for Chapter 7?
Prior to 2005, there were fewer restrictions about who qualified for bankruptcy. Since Congress passed the Reform Act of 2005, all debtors are required to show proof of financial hardship by either passing a means test or falling under the state median income level. If you don’t meet the requirements for a Chapter 7, our law office can help you find out if you qualify for a Chapter 13. There are more laws and additional procedures to ensure that bankruptcy benefits each individual that files. During your free consultation bankruptcy attorney, Gregory Oberhauser will help you navigate through complicated bankruptcy laws.
What is a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy is different than a Chapter 7, in that it focuses primarily on reorganizing an individual’s debts rather than discharging the bulk of them. While some of your unsecured debts will still be discharged, the purpose of a Chapter 13 lets debtors make scheduled payments on secured debts with property they wish to keep. Some individuals struggle with overdue mortgage payments, car bills, and other secured debts, but a Chapter 13 will allow them to catch up on payments without going in to foreclosure or repossession.
As you work with a Massachusetts bankruptcy attorney from Oberhauser Law, you will discuss a workable monthly payment that will allow you to have peace of mind as you pay your creditors back. Typically, the bankruptcy court will put a filer on a three or five year plan. During this time, you will make monthly payments to a Trustee who will manage your money and pay your creditors accordingly. Creditors may not contact you at any time for payments. It is vitally important that you make your scheduled payments on time in order to complete your Chapter 13 bankruptcy successfully.
Is Chapter 13 the right direction for me to go?
There are a number of financial factors that go into determining which Chapter is right for you. Our firm will work with you to find out if you meet the requirements for a Chapter 13. If you wish to keep your home, but find yourself behind on payments, a Chapter 13 might be beneficial. Some financial issues may prevent individuals from filing for bankruptcy in Massachusetts. In order to meet the requirements of a Chapter 13 bankruptcy individuals must:
- Have a source of regular income.
- Owe less than $307,675 in non-contingent, liquidated, unsecured debt by the time you file your petition.
- Must have less than $922,975 in non-contingent, liquidated, and secured debt. Note that this number may change due to inflation.
- Reside or have some type of home, a place of business, or property in the United States or municipality.
If you have tried to file for a Chapter 13 bankruptcy in the last 180 days, and it was dismissed, you may be prohibited from filing again.
Will my creditors stop harassing me?
Yes, once Attorney Oberhauser files your bankruptcy petition with the court, by law all attempts to collect debt must stop! In order to contact you all creditors must get permission from the bankruptcy court called a Relief from Stay. Often after you file from bankruptcy, creditors will seek a Relief from Automatic Stay, but Gregory Oberhauser will fight for your rights, protecting your finances.
Will my spouse be affected?
Your spouse may be affected, depending on your financial situation. For specific answers to your questions, please contact our our office at 978-452-1116. According to Massachusetts bankruptcy law, a spouse can make changes to a debt without his/her partner’s signature with the exception to a real estate sale. It is important that you discuss your legal rights with your bankruptcy attorney to see how it will affect your spouse and family.
My property has too much equity and I am worried about losing it in a Chapter 7. Could I transfer it to someone else so that it is out of my name?
No! Any transfer made around the time you file for bankruptcy can cause serious charges. If an individual is caught doing this, the court may avoid the transfer and sell the property, have the individual’s case dismissed without receiving a discharge, and possibly refer the case to the FBI for possible criminal bankruptcy fraud charges.
Will my bankruptcy filing be known to the public?
Once you file for bankruptcy, your petition made be available to the public. Depending on the county you live in, some newspapers may print notice of the individuals filing for bankruptcy.
As for the credit bureaus, a bankruptcy filing will stay on your report for ten years.
What are common reasons to file for a Chapter 7 Bankruptcy?
Individuals, families, and businesses all file bankruptcy for various reasons. Some may be for a single issue with a creditor, but others may have more complicated financial issues that cause them to file from a number of bad debts. Reasons to file for Chapter 7 include:
- Credit card debt
- Medical bills
- Business debt
- Unsecured loans
- Garnishments of wages
- Constant harassment by creditors
- Laid off
- Fired from a job
- Illness not compensated by workers compensation
- Marital problems—divorce
I filed for bankruptcy before can I do it again?
If you have filed for Chapter 7 Bankruptcy before, you will have to wait eight years before filing another Chapter 7 bankruptcy. Different rules apply to the filing a Chapter 13 bankruptcy. Please contact Oberhauser Law Office to discuss this alternative, at 978-452-1116.
Can I keep my credit cards?
Typically a credit card company closes your credit account if your debts are discharged through a bankruptcy. If you reaffirm (keep) some debts, creditors may allow you to keep you credit open, but there may be significant changes to your credit terms. Please discuss your options our bankruptcy attorney Gregory Oberhauser about which credit you should request to keep.
When will I be discharged from bankruptcy?
After you have filed for bankruptcy, the court will give you notice of your hearing in about 10 days. You should receive a discharge notice around 90 from the date of your hearing.
Will I ever get credit in the future?
Yes! Numerous options exist. However, our office encourages you to throw away your credit cards and attempt to pay with debit cards or cash. Start by establishing a budget and learn to stick to it. Some banks may extend secured credit card to you, right away, but they will require money to be in the bank before credit is extended. Past clients have been able to secure credit cards soon after filing; however, the interest rates are higher.
After two years from your bankruptcy discharge you will be eligible for mortgage loans at similar terms you were offered before your bankruptcy.
How do I begin to build up my credit after bankruptcy?
Debts that are not included in the bankruptcy such as utilities, school loans, payments on your home or car will help you build up your credit. Making these payments on time every month will show the credit bureaus you are keeping track of your finances and living within your budget.
What property am I allowed to keep?
Massachusetts and Federal Law allow you to keep a certain amount of physical property and cash assets. To see what property you are allowed to keep when you file bankruptcy in Massachusetts please see the exemption laws that will apply to you.
May employers or governmental agencies discriminate against persons who file bankruptcy?
No. According to bankruptcy law, any employer is prohibited from discriminating against you because of your bankruptcy filing. Please talk to our Massachusetts bankruptcy attorney right away if you feel this has happened to you!
What debts will not be discharged in bankruptcy?
The following debts typically are NOT discharged:
- Child support and alimony
- Debts due to personal injury death caused by drunk driving or willful and malicious conduct
- Student loans
- Income tax debt
- Debts you did not list on your petition;
- Fines and penalties for violating the laws, traffic or parking tickets and criminal restitution
- Recent income tax or tax debts
- Debts due to fraud, lying on a credit card application;
- Purchases of luxury goods made within 90 days of filing your petition
- Debts from embezzlement or larceny
- Debts owed under a divorce decree or settlement (please contact us about this issue)
This is not a complete list of non-discharged debts. Call our office for a full list and a free evaluation of your financial situation. 978-452-1116
How much does it cost to file bankruptcy?
The type of bankruptcy Chapter you qualify for changes the amount of fees that must be given to the bankruptcy court for filing your petition. Typically filing for bankruptcy costs approximately $300 in court fees. Additional fees will apply depending on the complexity of your case. We provide an initial free consultation and will answer any questions you may have about filing for bankruptcy. Please see our testimonials to learn how bankruptcy has helped other Massachusetts residents.
Will I be able to keep my home?
You may be able to, depending on your financial situation. If you do not qualify for a Chapter 7 or 13, you may be able to use a Homestead Exemption on your primary residence.
If you have been given notice of foreclosure, our Massachusetts bankruptcy attorney will need to work fast in order to keep your home. Please call us immediately at 978-452-1116 so we may be able to assess your financial circumstances.
In a Chapter 7 you must be current with your mortgage to keep you home. If you are your mortgage company will want this debt to be current before you file. Many struggle with making overdue mortgage payments current, as the amount is typically too high for a debtor to pay off in a short amount of time.
Don’t despair as other methods are available, such as filing for a Chapter 13 bankruptcy. In a Chapter 13, we can stop a foreclosure until your mortgage company attempts to obtain Relief from Automatic Stay. our office will then formulate a plan that will allow you to make up those missed payments by paying the amount back over time. This has allowed many clients to breathe easy, knowing their home has been saved. It is important that you make your payments to the Trustee on time once you are in the Chapter 13 plan.
Will I be able to keep my car?
If you are behind on your payments you may lose your car to repossession, unless you file for bankruptcy. Once you have filed for a Chapter 7 or 13 bankruptcy, your creditors will be required to seek relief from Automatic Stay in order to repossess your vehicle. Attorney Oberhasuer will work with you and the bankruptcy court to prevent repossession.
If you are current with your payments, and wish to keep your car, you will be allowed to reaffirm (keep) the vehicle debt in a Chapter 7 bankruptcy. As long as you make your payments on time, you should not be in any danger of repossession.
If you have a Chapter 13 bankruptcy and are behind on payments, we may be able to put the unpaid balance into the plan so that your vehicle finance company can be paid over time. You will still need to make your payments on time in order to keep your vehicle. Please call Oberhauser Law at 978-452-1116 to discuss your vehicle options in regards to filing bankruptcy in Massachusetts.