In 2005, when the federal bankruptcy laws changed, many folks believed that they could no longer file for personal bankruptcy and no longer get a fresh start. Yet nothing can be further from the truth. While the number of bankruptcies goes up and down according to the times, bankruptcy as an option for people who cannot pay their debts and have no assets.
How Bankruptcy Works in Massachusetts
Filing for personal bankruptcy involves filing a Petition and Schedules, along with numerous other documents with the federal Bankruptcy Court in Boston. Before filing, however, we need to undertake an extensive intake, in line with the requirements for disclosure in the Petition and Schedules.
Many assets are exempt from the Trustee in Bankruptcy; you can keep them if you claim them as exempt. Many debts are dischargeable, including credit card debt, deficiencies on mortgages, repossessed vehicles, old tax bills, and judgments against you. An experienced bankruptcy lawyer will walk you through the whole process.
Some debts are not easily dischargeable such as student loans, monies owed for child support or alimony. Debts associated with fraud, drunk driving or recent taxes are not dischargeable.
The “new” law requires that the filing include a “means test.” Your family income, including all household members, is tested against a mean of all residents in Massachusetts based on household size. This does limit some families from filing, but not many.
Documents We Need Before Filing A Bankruptcy Petition and Schedules
Before we file for personal bankruptcy, we will need copies of the following documents: driver’s license or state identification, social security card, three months of payroll, one year of statements for each bank and financial institution where you have monies, an up to date credit report, each bill you are attempting to discharge, mortgage and deed for all real estate, updated motor vehicle loan balance, motor vehicle proof of value, three months of payroll, and a credit counseling certificate.
Automatic Stay in Bankruptcy
Once you file for personal bankruptcy any and all court cases in all other courts are “stayed” or stopped. In the case of a collection matter in District or Superior Court, the case is likely stopped forever, as the bankruptcy will discharge the debt. In the case of a foreclosure, the lender will likely ask for a “relief from the automatic stay” which would be granted if there were a default in your mortgage payments.
Massachusetts Homestead Exemption
Massachusetts has a more generous homestead exemption than the federal bankruptcy exemptions. In essence, it allows homeowners who live in their homes up to $500,000 in equity in their homes. That is protected from creditors and from the Trustee in the event of a bankruptcy. A homestead must be “filed” with the appropriate Registry of Deeds: Salem, for Middleton homeowners.
An Experienced Bankruptcy Attorney
Can you file without an attorney? Of course. Will you make mistakes? Maybe. But, having the benefit of an experienced bankruptcy attorney will generally save you money. For example, if you have too many assets to qualify for the exemptions allowed a personal bankruptcy, an experienced bankruptcy attorney will undertake bankruptcy planning with you and help you keep those assets.
Call Attorney Houten for a free consultation.