Many people in Massachusetts reach a point where debt is unmanageable. Chapter 7 bankruptcy protection is designed for honest individuals who simply need to start over. Filing for bankruptcy is a strictly regulated legal process, however, according to the federal Bankruptcy Code and Massachusetts law. If you need advice on whether bankruptcy is right for you, an attorney can help.

If you are considering filing for Chapter 7 bankruptcy in Massachusetts, understanding the step-by-step process can help reduce uncertainty and allow you to make informed decisions about your financial future.

Your Assets and Debts During Bankruptcy

In Chapter 7 bankruptcy, most of your assets are turned over to your trustee, who will sell them to pay your creditors. Once your bankruptcy is over, you are no longer responsible for those debts. Some debts, like child support, you can’t discharge through bankruptcy, and you can retain some assets like veterans’ benefits.

However, many Chapter 7 cases in Massachusetts are considered “no-asset” cases, meaning that after applying available state or federal exemptions, there may be nothing for the trustee to liquidate. Massachusetts allows filers to choose between state and federal exemption systems, which can protect equity in a primary residence, certain amounts of vehicle equity, retirement accounts, household goods, and necessary personal property.

Understanding which exemption system applies to your situation is critical to protecting your property.

Filing Requirements

Before you file for Chapter 7 bankruptcy, you need to meet certain requirements. For example, you must complete an approved credit counseling course within six months before filing and present a certificate of completion to the court. If you fail to do so, a court may reject your request.

In order to qualify for bankruptcy, you must show the court your income is below the median for a Massachusetts household of your size. This is called the “means test.” Sometimes, figuring out the size of your household is not easy, and a lawyer can help. For example, you may have children attending college who only live with you part-time. The bigger your household, the greater your income may be and still permit filing for bankruptcy. Even if your income is higher than the median, you may still qualify for bankruptcy if you prove it is not an abuse of bankruptcy protection.

The means test is one of the most important eligibility requirements for Chapter 7 bankruptcy in Massachusetts. If your income exceeds the median, additional calculations involving allowable expenses may still permit you to qualify. An experienced bankruptcy attorney can help ensure the test is calculated correctly.

Process of Obtaining Chapter 7

Because bankruptcy is complicated and has serious legal consequences, Massachusetts courts recommend individuals hire a bankruptcy attorney to assist with filing. Your lawyer will help you fill out the official bankruptcy forms and put together supporting documentation. The courthouse staff are not allowed to give legal advice, nor can the judge act as your legal counsel.

You will need to file detailed financial information with the court as part of your bankruptcy petition, including your income, assets, liabilities, expenditures and a list of creditors. Under both Massachusetts and federal law, some of your assets are exempt from bankruptcy liquidation. You may be able to keep your home, your car and most of your wages.

Once your petition is filed with the United States Bankruptcy Court, an automatic stay immediately goes into effect. This court order stops most collection efforts, including creditor phone calls, wage garnishments, lawsuits, and bank levies.

Approximately 30 days after filing, you will attend a Meeting of Creditors (also known as a 341 meeting). Despite its name, creditors rarely attend. Instead, the bankruptcy trustee will ask questions under oath to verify the information in your petition.

Bankruptcy is a scary thought for many people. But it is a sound option in the right circumstances. If you are considering filing for Chapter 7 bankruptcy in Massachusetts and want experienced guidance throughout the process, contact Konstantilakis Law P.C. today to schedule a confidential consultation.