Massachusetts Bankruptcy Frequently Asked Questions
Answers from seasoned attorneys in Orange, Fitchburg and Gardner
The world of bankruptcy law is complex. The stakes are high, and the rewards can be life-altering if the bankruptcy filing is done properly. If you are considering bankruptcy as a debt relief option, read our FAQs below for an introduction to the field.
What is bankruptcy?
A bankruptcy is a legal declaration that an individual or a business cannot pay its creditors or debts. Bankruptcy allows individuals or businesses to either restructure their debt and pay a portion of it back within a payment plan (Chapter 13) or have most of their debts wiped out completely (Chapter 7).
What Chapter of bankruptcy should I file?
Consumers typically file under Chapter 13, in which repayment is made to creditors, or under Chapter 7, in which the debts are discharged. Each chapter of bankruptcy spells out:
- What bills can be eliminated
- How long payments can be stretched out
- What possessions you can keep
The type to file depends on your particular circumstances and whether or not you have the assets available to repay all or part of your debts. Bankruptcy laws can be tricky, so these decisions should be made with the input of experienced bankruptcy lawyers. Many factors go into deciding what Chapter a person should file. Call 978-632-1633 for a free consultation. During this consultation, Attorney Paul A. LaRoche will personally analyze your financial situation and advise you on how to proceed.
Who can file bankruptcy?
With few exceptions, any person or business owing money to a creditor can file a bankruptcy petition.
What do I need to begin the bankruptcy process?
Make a list of your past and present debts. The petition in a bankruptcy filing includes schedules of assets and liabilities as well as a statement of financial affairs. These documents are filed with the bankruptcy court, along with payment of the filing fee.
Do you need to have a certain amount of debt to file?
No. However, some situations may not warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due.
Does my divorce decree protect me from creditors if my ex files for bankruptcy?
No. If you co-signed with your ex-spouse on a debt, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should he or she default on the loan obligations.
Can all types of debt be discharged?
No. The debts that cannot be discharged vary slightly, depending on the Chapter under which you are filing for bankruptcy. Generally, the following cannot be discharged:
- Debts for taxes owed to local, state or federal agencies
- Debts for money, property or services obtained fraudulently
- An extension, renewal or refinancing of credit that was obtained fraudulently
- Debts owed to a spouse, a former spouse or a child of the debtor for alimony, maintenance or support of such spouse or child, in connection with a separation agreement, divorce decree or other court order
- Debts owed for willful and malicious injury by the debtor to another person or property owned by another
- Debts for government-sponsored educational loans, unless it can be shown that repayment will cause an undue hardship
- Debts for death or personal injury caused by the debtor's driving while under the influence of alcohol, drugs or other substances
- Debts incurred after a bankruptcy was filed
Will I lose my retirement accounts or payments from Social Security?
No. Retirement accounts that are ERISA-qualified are not considered property of an estate and cannot be taken. These include an IRA or a 401(k) account.
Social Security benefits are generally protected from assignment or garnishment for debts in bankruptcy. The Social Security Administration's responsibility for protecting benefits against legal process and assignment usually ends when the beneficiary is paid. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For example, suppose you have a bank account for which the only deposits are direct deposits of Social Security benefits. The Social Security benefits in this case are clearly identifiable and are generally protected.
When do I have to stop using my credit cards if I'm planning on filing for bankruptcy?
As soon as you anticipate filing bankruptcy, you must stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If a purchase is made 90 days or less before filing or cash advances are taken within 70 days of filing, that debt may be excluded from the bankruptcy.
Call today to learn more about your rights in bankruptcy
If you face financial difficulties and want sound legal advice, call your dedicated bankruptcy attorney in Orange today. Paul A. LaRoche personally meets with each client and guides you throughout the bankruptcy proceeding. We can stop harassing creditors, garnishments, foreclosures, lawsuits and repossessions. If you want to learn more, contact us online or call 978-632-1633 today to set up a free consultation.