Bankruptcy – Massachusetts frequently asked questions

Bankruptcy is a legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. (see Massachusetts Court Directory) Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

2. What Can Bankruptcy Do for Me?

Bankruptcy may make it possible for you to:

  • Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start. (see bankruptcy – Massachusetts exemptions)
  • Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
  • Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
  • Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
  • Restore or prevent termination of utility service.
  • Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

3. How can I get a copy of a bankruptcy filing?

The federal judiciary proves public access to federal appellate, district and bankruptcy court documents through Public Access to Court Electronic Records (PACER), an electronic public access service.

Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:

  • Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt
  • Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, some student loans, court restitution orders, criminal fines, and some taxes. (see Massachusetts Non-Dischargeable Debts)
  • Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.- Discharge debts that arise after bankruptcy has been filed.

5. How often can I file bankruptcy?

You cannot receive a discharge in a Chapter 7 case if you received a discharge under a Chapter 7 case filed in the last eight years or a Chapter 13 filed in the last six years. You cannot receive a discharge in a Chapter 13 case if you received a discharge under a Chapter 7 case filed in the last four years or a Chapter 13 filed in the last two years. If didn’t received a discharge in the previous bankruptcy filing, depending on why this is the case, you can file and receive a discharge without any time restrictions.

6. What Different Types of Bankruptcy Should I Consider?

  • There are four types of bankruptcy cases provided under the law:
  • Chapter 7 is known as “straight” bankruptcy or “liquidation.” It requires a debtor to give up property which exceeds certain limits called “exemptions”, so the property can be sold to pay creditors.
  • Chapter 11 , known as “reorganization”, is used by businesses and a few individual debtors whose debts are very large
  • Chapter 12 is reserved for family farmers.
  • Chapter 13 is called “debt adjustment”. It requires a debtor to file a plan to pay debts (or parts of debts) from current income.

Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly. (see Massachusetts Bankruptcy Law’s Chapter 7 or 13?)

7. Is Massachusetts Chapter 7 (Straight Bankruptcy) Bankruptcy Right for Me?

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. (see bankruptcy – Massachusetts exemptions) In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt. (see Massachusetts Chapter 7 Bankruptcy)

8. Is Massachusetts Chapter 13 bankruptcy (Reorganization) Right for Me?

In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind. You should consider filing a chapter 13 plan if you:

(1) own your home and are in danger of losing it because of money problems; (2) are behind on debt payments, but can catch up if given some time; (3) have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due. (see Massachusetts Chapter 13 bankruptcy)

9. What Does It Cost to File for Bankruptcy?

It now costs $306 to file for bankruptcy under chapter 7 and $281 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney you will also have to pay the attorney’s fees you agree to.

10. In Massachusetts What Property Can I Keep?

In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. Massachusetts exemptions provides list of the exemptions available for Massachusetts. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your actual equity in any property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind on payments. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy. (see Massachusetts Chapter 7 Bankruptcy or Massachusetts Chapter 13 Bankruptcy? and Massachusetts Non-Dischargeable Debts)

11. What Will Happen to My Home and Car If I File Bankruptcy in Massachusetts?

In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. (see Massachusetts bankruptcy exemptions) Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13. However, some of your creditors may have a “security interest” in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case. There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

12. Can I Own Anything After Bankruptcy?

Yes. Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after your bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt. You can also keep any property covered by Massachusetts bankruptcy exemptions through the bankruptcy.

13. Will Bankruptcy Wipe Out All My Debts?

Yes, with some exceptions. Bankruptcy will not normally wipe out:

(1) money owed for child support or alimony, fines, and some taxes;(2) debts not listed on your bankruptcy petition;(3) loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;(4) debts resulting from “willful and malicious” harm;(5) student loans owed to a school or government body, except if:– the court decides that payment would be an undue hardship;(6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor). (see Massachusetts Non-Dischargeable Debts)

14. Will I Have to Go to Court?

In most bankruptcy cases, you only have to go to a proceeding called the “meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney. To find the location of the court that serves your area visit the Massachusetts Federal Bankruptcy Court Directory page.

15. Will Bankruptcy Affect My Credit?

There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.

16. Can I Get a Credit Card After Bankruptcy?

Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.

17. Are Utility Services Affected?

Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after your bankruptcy is filed.

18. Can I Be Discriminated Against For Filing Bankruptcy?

No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.

19. Can Bankruptcy Help Get My Massachusetts Driver’s License Back?

If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.

21. I’m Married, Can I File by Myself?

Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. (see Massachusetts bankruptcy exemptions) In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses have joint debts, the fact that one spouse discharged the debt may show on the other spouses credit report.

22. Can filing bankruptcy stop bill collectors from calling?

Yes. The automatic stay prevents bill collectors from taking any action to collect debts.

23. How long after filing will the creditors stop calling?

Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.

24. Can I erase my student loans by filing bankruptcy?

Generally, student loans are not discharged in bankruptcy. In 11 U.S.C. sec. 523(a)(8) there are two exceptions to this general rule:

  1. The student loan may be discharged if it is neither – Insured or guaranteed by a governmental unit, nor

– Made under any program funded in whole or in part by a governmental unit or nonprofit institution.

  • The student loan may be discharged if paying the loan will “impose an undue hardship on the debtor and the debtor’s dependents.”
  • Student loans more than 7 years old used to be dischargeable under certain circumstances, but this provision was removed by an appropriations bill passed in October of 1998.

    Whether an exception applies depends on the facts of the particular case and may also depend on local court decisions. Even if a student loan falls into one of the two exceptions, discharge of the loan may not be automatic. You may have to file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.

    25. Where do I file if I haven’t lived in the same state or district for the last two years?

    If you haven’t lived in your current state for 91 days you must wait until you have lived there for 91 days and then file in your current state. If you lived in your current state for more than 91 days but less than two years, you will file in your current state but use the exemptions from where you lived for majority of the 180 day period immediately previous to the 2 year period before you filed. If you bought your home within the last 40 months and/or haven’t lived in your current state for the last 2 years then your homestead exemption may be limited.

    26. If I am going through a divorce how will my ex-spouse filing bankruptcy affect our divorce settlement?

    Alimony, maintenance, and/or support are protected from discharge. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15). This section states that these debts are not dischargeable unless:

    (A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or

    (B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.

    will bankruptcy affect my student loans

    Peoria, IL 61612

    The court mails all of your creditors a notice saying that the case is dismissed. The automatic stay is terminated, and your creditors are free to resume calling, coming to your home and or work, and they are free to pursue their recovery in the state courts.

    Probably not. Illinois:- You get to keep $15,000 dollars in equity in you home; $30,000 dollars if you are married and both own the property.

    Probably not. Illinois – You get to keep $2,400 dollars in equity in any one motor vehicle. $4,800 dollars if you are married and both own the property.

    Probably not. Illinois: You get to keep $4,000 dollars in personal property. $8,000 if you are married.

    NO. Employment discrimination is illegal. Federal law prohibits any discrimination based on bankruptcy on your credit status.

    In a Chapter 7, No. In Chapter 13 Yes, you can but only by paying the entire loan.

    Yes, your bad credit can affect your new spouse.

    Q: If I am married, does my spouse have to file also?

    No, married people can file separately but your spouse’s income and expenses will be reviewed by the court to determine eligibility for bankruptcy.

    Q: Will filing bankruptcy stop any lawsuit, or a warrant for my arrest?

    Yes, if it is debt related. Criminal proceedings, including fraudulent check writing, is not included.

    Q: Will bankruptcy wipe out unpaid federal income taxes?

    Chapter 7 Yes, but they must be 4 years overdue and you must have filed a tax return in the year it was due. In Chapter 13 Yes, all taxes if you pay them in the plan.

    Q: Will a bankruptcy affect my ability to get future student loans?
    Q: Do I have to be an American citizen to file bankruptcy?

    The hiring of an attorney is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. The information on this website is for general information purposes only. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney client relationship.

    Address: PO Box 10407 Peoria , IL 61612-0407

    Phone: (309) 689-0116 (309) 689-0787 1-800-461-9402

    Will bankruptcy affect my student loans

    Will bankruptcy affect my student loans

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    Nowadays, credit scores are very important for everyone. This is because the rising volatility of the economy today is likely to cause financial uncertainties down the grass root level. Therefore, you are a bit more protected from any financial implication if you get a high credit score.

    However, maintaining a high credit score isn’t an easy task to do. There’s a point in which you may even find it hard to pay for your credit cards. As a result, you will need to apply for a credit card debt consolidation loan in order to keep your credit record clean. Otherwise, your last option is to file for bankruptcy.

    What Will Happen If I file for Bankruptcy?

    If you think you are no longer able to pay your debt, there’s no point in going through a collection period in which collection agencies will have to harass you in order to force you to pay your debt. Moreover, your interest will only continue to blow up.

    To stop collection agencies from harassing you, you can resort to filing for bankruptcy. This will help you start over and recover from bankruptcy in general depending on the type of bankruptcy you are filing. There are two types of bankruptcy, which are chapter 13 bankruptcy and chapter 7 bankruptcy.

    Will bankruptcy affect my student loans

    When you aren’t capable to pay your debt based on your current loan structure, you can file for chapter 13 bankruptcy. This is for people who still have a regular income but is not enough to pay all their debt in a short period of time.

    After filing for chapter 13 bankruptcy, your debt will be dispatched. This means you will be considered to restructure your payment according to your capability to pay. You will be given a much longer period to pay the debt without interest. In this period, collection agencies should stop contacting you.

    On the other hand, there is another type of bankruptcy you can choose to file if you don’t have a regular income, but you have some non-exempt assets. Instead of paying the remaining debt through your regular income, creditors may repossess your non-exempt assets to sell them. The proceeds will be given to the creditors.

    If you still have a remaining balance after the proceeds are given to the creditors, the remaining balance will be forgiven. Non-exempt assets are anything except your personal assets you use for your daily life.

    What Is the Effect of Bankruptcy to My Credit Score?

    Definitely, bankruptcy will greatly affect your credit score, whether you file for chapter 13 bankruptcy or chapter 7 bankruptcy. You will notice a decrease from 160 points to 220 points. This can reverse a good credit score into poor one.

    On the contrary, this is much better than not filing for bankruptcy at all because allowing your debt to be in the hands of collection agencies will further hurt your credit score, and paying these agencies will damage your score any ways.

    With bankruptcy, time will help increase your credit score. When your bankruptcy expires, it will increase your score again. Later on, the bankruptcy will disappear from your credit record, and this will further lift your credit score.

    We try our best to keep our credit scores high; however, there are times when we all face challenges, whether it’s from a medical emergency to loss of employment. Whatever your circumstances you have to remember that bankruptcy isn’t the end of the world, and your credit score will eventually recover.

    What can I do if my parent's bankruptcy affected my credit? - Bankruptcy Law Questions and Answers-

    I'm a college graduate. I have major credit cards under my name, car loan, student loans and other. Make all my payments on time, never been late. I have one student loan who my parents co-sign for me. They filed for bankruptcy and all of a sudden I stop getting a bill from them, never a phone call or anything. I tried applying for something and got denied. That's when I found out that the student loan they co-sign for me it's on 120 days late. It really messed up my credit score. Now I don't know what do nor what my options are. That's the only thing showing on my report as a negative. It only shows major late not as bankruptcy. I didn't know it would affect me even though they were just the co-signers. I don't know what to do. It would be much help if anybody can give me some advice or what can I do.

    The problem is the 120 day late. Once a bankruptcy is filed the creditor is required to stop billing the debtor. You on the other hand should have continued to receive statements. You can put an explanation on your credit report.

    The bankruptcy did not affect your score. The non payment of the loan is what affected the credit score. You will need to make sure it is paid from now on and rebuild your score.

    Pay the bill. Until the bankruptcy is over, you will not receive statements. You should have received notice of the bankruptcy filing and would have been listed as a co-debtor. The bankruptcy does not show up on your credit report unless a debt is discharged. Student loans are not usually discharged and the debt will survive the bankruptcy. You can try and convince the student loan lender to remove the late derogatories but you knew about the loan and should have noticed that you were not receiving statements. Probably the best you can do is get caught up and continue to pay on time.

    Call the student loan servicer and tell them you want to get this loan caught up or started back with payments. They may require authorization from your parent's attorney to do so, so that they don't violate the automatic stay which may be in place.

    As there is too little information to give a firm opinion I would suggest payment of the student loan, bringing it current and then some efforts to mitigate the effect it has had one your credit rating.

    Student loans are not discharged in bankruptcy, however, the student loan companies generally will not bill anyone while a bankruptcy is pending as they do not want to even remotely violate 11 U.S.C. 1301 (the cosigner Stay). Only thing you can do is to continue making payments, even if not being billed, and catch up any back payments owing immediately. Then, you can also send in a brief written statement to the three credit reporting agencies explaining what happened- they are obligated to place this explanation on your credit report if someone requests it. Also request that the student loan organization report to your credit report that you are current on all loans and you never filed bankruptcy.

    I'm sorry to hear about your situation, but as both you and your parents agreed to pay the loan, you are both equally responsible. The fact that your parents were paying for the loan and then stopped does not affect your responsibility (in the eyes of the lender) of making the payments. It certainly is not fair that your parents defaulted on the payments and didn't tell you, but there is not much you can do about it. The first thing you need to do is contact the lender, explain the situation and find out how you can remedy the arrearage amount. As student loans cannot be discharged through a bankruptcy, your parents will continue to be responsible for the loan after bankruptcy, so you may want to communicate with them on this issue. Next, draft and send a letter to the three credit bureaus explaining the situation. This will not change the reporting of late or missed payments, but when a creditor pulls your credit and sees your explanation, it may help in their decision making.

    When any borrower, whether primary or a co-signer files bankruptcy, the creditor will stop sending statements as that is a violation of the automatic stay in the bankruptcy and will do so forever, or at least until the end of the bankruptcy case if you contact them and tell them you are a borrower and will keep making the payments and re-start the statements. You need to send in the payments whether or not you receive a statement and get the arrears brought current.

    The bankruptcy of your parents should not affect your credit. What has affected your credit is the non payment on the student loans. A bankruptcy only affects the person filing. But the late payments affect you. You should get this account current and keep making the payments on time.

    You need to keep your debts current or else your credit report will be affected. Contact the lender to determine how much is owed and pay the back payments. Also ask that you are sent a bill. Since you are not in bankruptcy you should be receiving your monthly statements.

    Disclaimer: The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or should be formed by use of the site. The attorney listings on the site are paid attorney advertisements. Your access of/to and use of this site is subject to additional Supplemental Terms.