Massachusetts Bankruptcy Lawyer

Filing bankruptcy should not be taken lightly. It is a last resort during financially difficult times that will allow you to not have to pay most of your debts if you qualify for a Chapter 7 discharge. This includes credit card debts, car loans, mortgage or other types of personal loans. If you are able to afford payments then you may be able to discharge credit card bills but keep your home and car.

The main exceptions to discharge, which means that the debts that have to paid regardless of whether you file bankruptcy are student loans, taxes and other government debts and payments arising by court order, such as family court support and criminal restitution.

Filing bankruptcy might also be the safer alternative to having bad credit and negatively affecting your employment and financial qualifications. This might damage your credit at first but is the first step toward restoring and repairing your credit.

The ‘new’ law that took effect in October, 2005 is called BAPCPA – Bankruptcy Abuse Prevention and Consumer Protection Act. This makes filing Chapter 7 bankruptcy more difficult for people whose income is above a certain level based on their family size.

One of the changes brought about by the new law is that a Credit Counseling and Financial Management class must be completed prior to and after filing bankruptcy respectively. This is debtor (those filing bankruptcy) education in the form of a class the provides Bankruptcy alternatives.

If a person has filed bankruptcy within the last 8 years and received a discharge through Chapter 7, then they cannot file bankruptcy again until 8 years after the original filing. If a person has filed Chapter 13 bankruptcy within the last 6 years, then they cannot file bankruptcy again until 6 years after the original filing.

Debtors are now also required to produce their last year’s tax return and two months worth of pay stubs to the trustee a week before their creditors’ meeting. This is to verify that the debtor qualifies to file bankruptcy under the new income guidelines. Income guidelines are based on household size and varies from state to state. However, even if the income is slightly above the median level the debtor may be able to get bankruptcy relief through means testing.

These are only some of the changes made by BAPCPA. In essence, the goal of the law is to make filing bankruptcy more ‘difficult’

This is not legal advice. Please contact an attorney in your State if you have any specific questions for your situation.

Bankruptcy is probably the right option for you if you have “bad” credit. If you don’t yet have “bad” credit but you are unable to make regular payments on your accounts, bankruptcy might be worth looking into. The reporting of the bankruptcy filing on your credit history might be a safer alternative to a drastically lowered credit score that could impact your ability to qualify for financing. A qualified bankruptcy lawyer can tell you after meeting with you whether you would qualify for a discharge and be able to keep your property.

Many consumers attempt credit consolidation to pay off their debts without harming their credit. The basic idea behind credit consolidation is similar to a Chapter 13 bankruptcy for high-income earners: all the consumer’s debts go into a “payment plan.” This “plan” would be based on the amount left over between the consumer’s regular monthly income less expenses. However, unlike the legal bankruptcy protections of the Chapter 13 court-ordered plan, including a halt to accumulating interest and late payment penalties, credit consolidation is usually handled by private companies whose profit is based on their “commission” share of the payment transaction. Because these plans are based on private negotiations, there is also no guarantee of capping total balances owed.

A bad credit score means that you have unpaid accounts reported on your credit history. A credit score can range from 300-900 points. A score in the 500′s or below would mean bad credit. Anything above 750 might be considered good credit. Such a score can affect your ability to qualify for financing a home or car, getting an apartment and may even make you a security risk in your place of employment. This score can be improved by removing delinquent accounts and continued good use of credit. If you have a bad credit score, filing for bankruptcy would be the first step towards fixing it.

A bankruptcy filing will be reported on your credit history for ten years after filing. However, this initial negative effect on your credit is usually the better alternative to bad credit because of unpaid older accounts. Bankruptcy filers are usually able to obtain additional unsecured accounts and qualify themselves for car loans and mortgages within years of filing. I have been asked if a bankruptcy filing would affect a person’s ability to secure a job. The answer is that the filing might actually help when applying for a job, especially in the government or at a bank as it is the step towards regaining good credit.

You need not lose your car if you are filing a Chapter 7 bankruptcy and getting a discharge of debts. If you are not keeping your home, you are allowed a car worth up to $3,450.00 using federal law exemptions. If you have more equity in your car, you might be allowed additional amounts unused under the wildcard exemption ($11,975.00 per filer). If you are keeping your home, you are allowed a car worth up to $700.00 using state law exemptions. Your spouse in a joint petition is also allowed the same amount for their vehicle. If there is a loan on the car, you would be allowed to keep the loan out of bankruptcy by reaffirming the debt. The bank will have you sign a reaffirmation agreement that even though you filed bankruptcy, you still wish to keep the car and continue paying the loan. As long as you have enough income before other expenses to make these payments, the reaffirmation agreement would be approved by the court. On the other hand, if you cannot afford your car loan, having your car repossessed and putting the loan into a Chapter 7 bankruptcy allows you to not be responsible for any loan balance still owed after resale of the vehicle.

This is not legal advice. It is just general information on filing bankruptcy. Please see a lawyer in your area if you have questions regarding your specific situation.

The short answer is – Yes, as long as you are current on your mortgage and are able to keep up with the payments. If the homeowner can afford the mortgage terms but cannot afford to pay off other debts, such as credit cards or medical bills you may be able to keep your house under a Chapter 7 case by filing a Declaration of Homestead which protects the interest in the house you live in up to $500,000 in Massachusetts. What this means is, as long as your home value is below $500,000 & payments current you can keep your home and still file bankruptcy to deal with other debts.

There are several scenarios and conditions that we should consider.

These days there are many who try a last ditch effort to stop a foreclosure by filing bankruptcy. Even if an emergency bankruptcy petition is filed, this only buys you more time before the bank gets around the automatic stay protection of bankruptcy to foreclose on the house unless you are able to refinance your mortgage, able to work things out with the bank and somehow come up with the balance owed. This would be your ideal, best case scenario and everything works out for all parties involved. Unfortunately, this is not as easy as it sounds. You can see my post here about how the foreclosure process works.

If the house does go to foreclosure, then a Chapter 7 bankruptcy discharge will protect the homeowner from having to pay the mortgage deficiency. This is why it is very important to take a look at your credit report as the bank may not immediately go after you for this balance, but wait until your financial situation is more secure and then try to collect the money owed. This scenario is possible if your house went to foreclosure or you had a short sale.

Like always, this does not constitute legal advice. It is just general information. If you think you need help, please contact a bankruptcy attorney in your area to address your specific situation.