If you’re struggling with debt you can’t pay, we can help. At Common Law Associates, LLP, our attorneys can guide you through the process of filing a Massachusetts bankruptcy to get relief from credit card debt, unsecured loans, medical bills, home foreclosure, and more.
Benefits of Filing Bankruptcy in Massachusetts
There are several benefits of filing bankruptcy in Massachusetts, like:
Getting an Automatic Stay
As soon as your bankruptcy paperwork is filed, what’s known as an “automatic stay” is issued. This prevents any and all creditors from taking collection action against you. What this means is no more harassing phone calls, no more letters from creditors, and a chance to breathe and make a game plan for the future.
Avoiding Foreclosure
The automatic stay also applies to your home if you own one and the foreclosure process stops. This gives you time to catch up on missed payments or work with the bank to modify your loan. Often, avoiding foreclosure is easier when you file for bankruptcy. If nothing else, the automatic stay gives you more time to move into a rental.
Read More: How Massachusetts Homeowners Can Prevent Foreclosures
Rebuilding Your Credit
Once your bankruptcy filing is complete, you get a clean slate on which to rebuild your credit. You can start with secured credit cards and make payments on time to show positive credit history. If you filed a Chapter 7 bankruptcy and some or all of your debts were discharged, your credit score might improve right away.
Getting A Fresh Start
After filing bankruptcy, you will have a clean slate from any unsecured debt. This is what most people need during a stressful time in their lives.
Types of Bankruptcy You Can File
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as a “straight bankruptcy,” is the most common type of bankruptcy filed in the United States. To file, you need to pass what is known as a means test that shows you do not have enough disposable income to reasonably pay your debts. Many people who have lost their job or suffered from a health crisis or natural disaster find themselves in this situation.
Once you pass the means test, any unexempt property you own will be liquidated. Many people qualify for a Chapter 7 bankruptcy as they are below the median income for their family size. After Chapter 7 most of your unsecured debts will be discharged. This means you do not have to pay them back. However, this does not apply to secured debts. Depending on the type of debts you have, you may still be responsible for paying some of them.
Read More: All About Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
If you do not pass the means test and the court determines you have enough disposable income to pay some of your bills, you may need to file a Chapter 13 bankruptcy. This restructures your debt and puts you on a three- to five-year repayment plan, after which any remaining debt will be discharged. Your monthly payment is based on what you can afford to pay.
For example, if the court determines that you have $200 of disposable income per month after your other financial obligations are met, this will be sent to a trustee who will divide it between the individual debts that you owe. If your repayment period is five years, you will pay a total of $12,000. If your total debt amounted to $24,000, the remaining $12,000 is discharged once the five years are up and all your payments have been made.
You also won’t have to liquidate any property, so this type of bankruptcy is a good option for individuals with non-exempt property that they don’t want to lose.
Read More: All About Chapter 13 Bankruptcy
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a special type of bankruptcy for businesses and corporations that allows companies to restructure their debts and assets while continuing operations.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy is similar to Chapter 11 but comes with higher debt limits that are specifically designed for family farmers, fishermen, and other agricultural businesses.
Chapter 9 Bankruptcy
Chapter 9 bankruptcy is reserved for municipalities, towns, and school districts that need to reorganize debt.
Chapter 15 Bankruptcy
Chapter 15 bankruptcy is designed for international debtors who owe money to U.S. debt collectors.
Get Started Today
Don’t wait to get the relief you need from insurmountable debt. Contact Common Law Associates, LLC, today to learn more or to get a free, no-obligation consultation to discuss how bankruptcy can help you. Call now at (508) 775-0815 or complete our online form to take the first step towards a fresh start.
Frequently Asked Questions About Bankruptcy
What’s the difference between secured and unsecured debt?
Unsecured debt is debt that can be discharged in a Chapter 7 bankruptcy. This includes things like credit card bills, medical debt, and personal loans. Secured debt is debt that cannot be discharged and includes things like a mortgage and court-ordered debt.
What qualifies as an exemption?
Exempt property generally refers to property that you need to live on a day-to-day basis. For example, your vehicle would be exempt from liquidation since you need it to drive to and from work. But if you had a second car, it likely wouldn’t be exempt. Another example is clothing versus jewelry. Clothing is a necessity, but jewelry isn’t, so you’d likely need to liquidate the jewelry while you are allowed to keep the clothing.
Is credit counseling required?
In most cases, credit counseling is required for individuals filing a Chapter 7 or Chapter 13 bankruptcy. This generally includes a pre-filing credit counseling course and a separate pre-discharge education course if any of your debts will be discharged.