How to File for Bankruptcy in Massachusetts

Massachusetts shows an unemployment rate of just over half the national rate.  Yet there were nearly 21,000 bankruptcy filings in the state last year.  It is likely there will be many more also considering that move this year, which means they need to carefully examine their options.  They can find help to make this important decision by consulting a bankruptcy attorney who will examine their circumstances and help them determine the best course.

Finding a Bankruptcy Attorney

There are several ways to find a qualified and committed lawyer, including:

• Recommendations from state bar associations, reliable legal web sites, word-of-mouth
• Research into the track record and experience of candidates
• Interviews and a written statement of costs and services
• Personal interviews

Bankruptcy Options

Determining which of the six bankruptcy options is the next important step.  There are two options generally chosen by individuals and families, including:

• Chapter 7, which allows the debtor to discharge, or write off, much of their unsecured debt.  This is a good option for those with few assets, since some may be liquidated in the bankruptcy process
• Chapter 13, which is a good choice for those who have enough monthly disposable income to pay smaller payments and want to protect their property.  The bankruptcy reorganizes their finances and debts and creates a plan to repay all debts within three to five years

Massachusetts Exemptions

Only 18% of Massachusetts citizens chose Chapter 13, which means the rest of those filing Chapter 7 are hoping to claim exemptions for much of their property to prevent it from being liquidated.  In Massachusetts, filers can choose either federal or state exemptions; however, they cannot mix them.  State exemptions include:

Filing the Petition

Once the filer and their attorney have devised the appropriate plan, prepared for filing, and completed the required credit counselling, they file a bankruptcy petition with the court, which is followed by several steps:

• The court puts a stay on all debt collection
• A bankruptcy trustee is appointed to oversee the process
• A filer is required to attend a 341 meeting in order to answer questions from the trustee and creditors

Once all the requirements are satisfied, and the bankruptcy petition is granted, the debtor is free to start fresh, either with their debts discharged, or with a workable plan to repay them.