Facing huge amounts of debt and the prospect of filing for bankruptcy can be extremely stressful. However, while there is nothing easy about dealing with harassing creditors and knowing that you’re financially destitute, there can be relief in filing for bankruptcy. Experienced attorney David McLoon can guide you through the bankruptcy process in Massachusetts.
1. Determine If You Need to File for Bankruptcy
The first thing that you should do is determine whether or not you need to file for bankruptcy. You should speak with your lawyer about other options, such as creating a repayment plan or consolidating debts. If you have exhausted all other debt-relief options, filing for bankruptcy may be the best course of action for you.
2. Understand the Types of Bankruptcy
The second thing you’ll need to do is learn about the two most common types of bankruptcy – Chapter 7 and Chapter 13.
- Chapter 7 bankruptcy. Also called liquidation bankruptcy, Chapter 7 forgives most unsecured debts, such as personal loans and credit cards. In order to qualify for Chapter 7 bankruptcy, one must pass a means test, described in more detail below.
- Chapter 13 bankruptcy. Chapter 13 bankruptcy is a better option for those who have some source of income and a means of repaying part of their debt. In a Chapter 13 bankruptcy, a repayment plan will be created. One of the benefits of a Chapter 13 bankruptcy is that the debtor may be able to keep more of their assets, including their home.
3. Start the Bankruptcy Process
Once you have decided to file for bankruptcy and decided which bankruptcy type is best for you, you’ll need to do the following:
- The means test. The bankruptcy means test applies to those who wish to file a Chapter 7 bankruptcy, and is used to determine eligibility. You must be able to prove that your household income is below the state’s median income, which is done by providing documentation of income and expenses.
- Credit counseling. In order to file for bankruptcy in Massachusetts, a debtor must first attend credit counseling. You must obtain a credit counseling certificate from an approved credit counseling agency; otherwise, your bankruptcy case will be dismissed.
- Paperwork. There is a lot of paperwork associated with filing for bankruptcy. This includes documentation of major financial transactions, income and expenses, debts, possessions, assets, tax returns, deeds, liens, loan documents, and more. It is strongly recommended that you partner with an attorney to complete this process.
- Filing. Once you have gathered all necessary paperwork, the next step is actually filing for bankruptcy. In addition to filing the required paperwork, you’ll also need to pay a filing fee.
- Automatic stay. Note that once you file, an automatic stay will go into effect which will prevent creditors from recovering on any debts.
Once papers have been filed, the bankruptcy process is underway. You should expect to have a meeting with the bankruptcy court trustee, to respond to creditors’ objections, and to be prepared to liquidate assets or create a repayment plan (or both).
An Experienced Massachusetts Bankruptcy Attorney Can Help
If you are considering filing for bankruptcy, an experienced attorney can help to protect your interests. Call Attorney David McLoon directly for the legal advice you need or send him a message directly today.