Financial difficulties are a reality of life. However, bankruptcy can help if you’re one of the millions in Massachusetts who are having financial difficulties as a result of a job loss, sickness, or other circumstances.
How Does the Massachusetts Bankruptcy Law Operate?
In most ways, declaring bankruptcy in Massachusetts is similar to declaring bankruptcy in another state. In order to provide you with a fresh start, the bankruptcy procedure dissolves the contracts between you and your creditors, which is governed by federal law rather than Massachusetts state law.
How Do I Choose the Best Type of Bankruptcy in Massachusetts?
Most people choose Chapter 7 or Chapter 13 when they file. You’re not the only one who is unaware of the distinctions between the two.
For a number of reasons, Chapter 7 is frequently chosen as the first bankruptcy option. It moves quickly; it is finished in a few months. You don’t pay any money to the creditors. Thus, it is also inexpensive. It works nicely for those of us who own only the necessities for living and working.
But those with more resources can lose them, particularly if they possess superfluous luxuries. You can be required to give up your RV, baseball card collection, timeshare in the Bahamas, or even your home or automobile if you owe money on it or have too much equity in it. In contrast to Chapter 13, Chapter 7 does not offer a payment plan option to make up missed automobile or mortgage payments. As a result, if you file late, you risk losing your house or automobile.
In contrast, those who apply for Chapter 13 must use a three- to five-year repayment plan to pay back some or all of their debts to creditors. However, the payment schedule enables Chapter 13 to provide advantages not present in Chapter 7. For instance, you can prevent your home from going into foreclosure or your automobile from being repossessed while still keeping all of your possessions. You can utilize this chapter to compel a creditor into a payment plan if you need more time to pay back a debt that you cannot dismiss in bankruptcy. The most significant drawback of this chapter? It might be pricey. The monthly price is unaffordable for many people.
Will Bankruptcy Discharge My Debts?
Numerous debts, including credit card balances, past-due utility bills, medical expenses, personal loans, and more, are discharged in bankruptcy. If you’re ready to part with the home or vehicle used to secure the loan, you may even be able to cancel your mortgage or auto payment. If you pledge property as collateral, you are creating a “secured debt”; if you default on your obligations, the lender has the right to repossess the asset.
However, not all debts are dischargeable. Student loans are difficult to dismiss (you would need to prevail in a separate litigation), and nondischargeable debts, such as past-due taxes and arrearages for child support, won’t go into bankruptcy. You should make sure that filing for bankruptcy will discharge (get rid of) enough debt for it to be worthwhile.
How Do I Know if I am Eligible?
If you’ve never filed for bankruptcy before, you’ll be able to meet the initial criteria. If not, see if enough time has gone by for you to submit another application. Depending on the chapter that has already been filed and the chapter that you intend to file, different waiting periods apply. Additionally, you must fulfill certain chapter requirements.
If the gross income of your family is less than the median income for families of the same size in your state, you may be eligible for Chapter 7 bankruptcy. Adding up all of the gross income from the previous six months, multiply it by two.
It can be costly to qualify for Chapter 13 because the additional benefits have a high cost, and many people cannot afford the monthly payment. To be eligible, you must pay the greater of the following:
- your highest-priority unsecured debt
- a non-exempt item’s value, or
- your available cash.
Seek Help from a Bankruptcy Lawyer in Massachusetts!
Most people think seeking advice is worthwhile. A bankruptcy lawyer can assist you with:
- eligibility for the chapter of your choice
- select the appropriate filing date
- helping you maintain the desired property
- make sure you avoid fraud or other problems, and
- In your scenario, specify when you can cease paying the invoices you’ll be erasing.
Until you file, creditors will likely call. The best course of action is typically to ignore them because informing your creditors of your bankruptcy may prompt them to seek more aggressive collection measures before losing their ability to do so altogether. However, they will have to stop calling you if you acquire legal advice and recommend your attorney.