Bankruptcy laws in Massachusetts
Federal and Massachusetts bankruptcy law provide two primary types of bankruptcy protection to consumers: Chapter 7 and Chapter 13. These different chapters of the bankruptcy code provide different sorts of protections and different types of relief for debtors. If you think bankruptcy might be a solution to your financial difficulties, consult with the Law Office of Marla R. Margolis, LLC to develop the plan and strategy that best fits your unique financial circumstances.
What follows is a brief overview of Chapter 7 and Chapter 13 bankruptcy laws in Massachusetts.
Chapter 7 bankruptcy law in Massachusetts
Federal law created liquidation bankruptcy, or Chapter 7 bankruptcy, to provide relief to debtors with high unsecured debt, such as credit card debt and other personal loans. Recent legislation set a cap on the monthly disposable income debtors can have and still qualify for Chapter 7 bankruptcy, an amount determined by theoretical allowed expenses rather than your actual expenses. Under Chapter 7, a court-appointed trustee manages the sale of all of your non-exempt assets and distributes the money to your creditors. With a few exceptions, all remaining debts are discharged, or erased, by the bankruptcy.
One primary concern for people considering bankruptcy is whether they will be able to keep their home. Massachusetts bankruptcy laws create a $500,000 homestead exemption, meaning that you can have up to $500,000 of equity in your home and not risk losing it in a bankruptcy proceeding.
Liquidation bankruptcy will not discharge all debts, unfortunately. Most student loans are non-dischargeable, as are most tax debts, domestic support obligations, and judgments in wrongful death and personal injury lawsuits resulting from your own intoxication. For a complete picture of how a Chapter 7 bankruptcy might affect you, consult with an experienced Massachusetts bankruptcy lawyer.
Chapter 13 bankruptcy law in Massachusetts
Chapter 13 bankruptcy—also known as a "wage earners plan"—allows you to keep most of your assets and pay off most or all of your debt over a three- to five-year period. You and your bankruptcy attorney propose a repayment plan to the bankruptcy court. The court approves or modifies and approves your new, interest-free repayment plan to allow you to repay your debts with your current and future income. Bankruptcy law does not require the court to appoint a trustee to manage payments to creditors in a Chapter 13 bankruptcy, but in some cases it makes more sense for a trustee to manage the disbursement of money in keeping with the repayment plan.
As long as you do not miss any payments, at the end of three to five years most remaining debt is discharged. Again, the exceptions are student loans, tax debts, domestic support obligations, judgments for wrongful death or personal injury, as well as mortgages and some other secured debts. As always, it is best to consult with a Chapter 13 attorney in Massachusetts to understand exactly how a Chapter 13 bankruptcy would affect you.
Work with an experienced Massachusetts bankruptcy attorney
To decide which bankruptcy chapter filing best suits your needs, contact the Law Office of Marla R. Margolis, LLC today to arrange a free initial consultation. With almost 15 years helping Massachusetts individuals and families make a clean financial break, Marla Margolis works with you to create a personalized plan that reflects your goals and prerogatives.
