Filing for Bankruptcy can:
END CREDITOR CALLS
STOP WAGE GARNISHMENTS
PROVIDE DEBT RELIEF
GIVE YOU A FRESH START
Chapter 7 Bankruptcy
A Chapter 7 Bankruptcy, sometimes referred to as “liquidation", is designed to assist people who are suffering from financial difficulty and they do not have the ability to pay their existing debts.
If your debts are primarily consumer debts then bankruptcy your filing may be subject to a "means test", which is designed to determine whether your case should be permitted to proceed under Chapter 7.
Essentially, if you make more than the median income (by family size) you must take the means test. If you make less, you do not have to.
In Massachusetts, the median income by family size (for cases filed after April 1, 2013) is:
• Family of one: $55,602
• Family of two: $67,443
• Family of three: $82,495
• Family of four: $103,624
• Add $8,100 for each additional family member.
If you are subject to the means test, you might not qualify for Chapter 7. Whether or not you can still qualify will depend on the amount of your secured debt payments, your county of residence, marital status, medical issues, and a variety of other factors. These items are factored into your means test and, in part, determine whether you "pass" the “means test”.
Even if you "pass" the means test, there is also the “totality of the circumstances tests” under Section 707(b)(3) of the Bankruptcy Code. This Section explores the basic issue of your ability to pay your debts and obligations from a less technical perspective and can, at times, require that even people below the median income file a Chapter 13 Bankruptcy instead of Chapter 7 Bankruptcy. Therefore it is can be critical for you to consult with an experienced bankruptcy attorney before filing.
Required Credit Counseling Course
You are required to take a court-approved credit counseling course prior to filing a Chapter 7 Bankruptcy. Once you have filed your bankruptcy petition, you will also have to take the ‘second’ part of the ‘credit counseling course’.
How much does it cost to file for Chapter 7 Bankruptcy?
The Bankruptcy Court charges the following fees to file for Chapter 7 Bankruptcy:
Filing Fee of $245.00, plus
Administrative Fee of $46.00, plus
Trustee Surcharge of $15.00
TOTAL FILING FEE: $306.00
The above fees are subject to change and they are in addition to any attorney's fees and/or fees for the preparation of the Bankruptcy Documents, or representation in Bankruptcy Court. Any fees for legal services must be agreed to in writing between you and your attorney prior to the commencement of any bankruptcy proceeding.
What property can I keep after filing?
As part of your bankruptcy filing, you may claim certain property as exempt under the law. Exempt property is property that you can retain. Property that is not exempt can be taken by the “Bankruptcy Trustee” and sold, with the sale proceeds going to pay your creditors. Thus, another important reason to consult with a bankruptcy attorney is to determine how best to protect you and your family’s assets.
What you can ‘keep’ is determined by which set of “exemptions” you choose to take or “elect’. You can elect to take the “Federal” or the “State” Exemptions. You can only choose one set of exemptions, so it can be critical to make the right choice.
What types of documents or information do I need?
Generally you will need at least the following documents and information:
PROOF OF IDENTIFICATION:You must provide proof that you are who you say you are, i.e. an official photo ID (such as your driver's license) and your Social Security card.
PROOF OF INCOME: You must provide proof of your average monthly gross income from all sources for the last six (6) months.
INFORMATION REGARDING THE DEDUCTIONS FROM INCOME: You must provide proof of any deductions taken from your income such as: federal and state taxes, retirement plan contributions, retirement plan loan repayments, insurance, court-ordered payments, garnishments, and all other deductions whether voluntary or involuntary.
Additionally, if you have your own business, you need to provide a complete listing of all of your monthly business expenses, and it is preferable to have a detailed a year-to-date Profit & Loss Statement for your business.
PROPERTY DOCUMENTS: You must provide documentation of all contracts and security agreements including those for mortgages and leases, refinancing, transfers of ownership, time shares, stocks, car loans and leases, furniture rental and leases, jewelry loans and any other contract or security agreement that you may have, especially within the last six (6) months.
PROOF OF INSURANCE: You must provide proof of insurance on all property that you have that is secured by a lien, such as homeowners insurance and/or automobile insurance.
YOUR INCOME TAX RETURNS: You must provide proof of your annual gross income for the last four (4) years and proof that you filed tax returns for the last three (3) years.
YOUR BANKING RECORDS: You must provide statements from your financial institutions, banks, and/or credit unions for the past six (6) months.
ANY SUPPORT OBLIGATIONS: If you are paying any child support, alimony, or separate support, you must provide all documents associated with such payments. It is also important to provide proof that you are current on these obligations and provide the name and address where those documents are required to be sent.
YOUR HOUSEHOLD EXPENSES: You must provide a comprehensive listing (with back=up documentation)of your monthly household expenses including your mortgage or rent, utility services (such as electricity, gas, fuel oil, propane, water and sewage), telephone service, cable/satellite/internet/television services, home maintenance, food, clothing, laundry and dry cleaning, health medical and dental expenses, your transportation costs, recreation expenses, clubs, entertainment, charitable contributions, insurance (homeowners or renters insurance, life insurance, health insurance and automobile insurance), taxes on property, alimony, maintenance, and/or child support.
YOUR CREDIT REPORT(S):Federal law entitles you to receive a free credit report annually from each of the three credit reporting agencies. You can request your free credit report online by visiting http://www.annualcreditreport.com. You may also request your free credit report by mail or by phone. Mail your request to Annual Credit Report Service, PO Box 105281, Atlanta, GA 30348-5281 or phone (877) 322-8228 toll free.
YOUR ACCOUNT STATEMENTS: You must provide a listing of all of your debts including those for credit cards, medical bills, personal loans, automobile loans, furniture loans, jewelry loans, lawsuits, and any other matters. (Our office asks that you provide as much documentation as you have available for the last ninety (90) days on all such debts.
OTHER DOCUMENTS: Additionally certain other documents may be important. For example if you have previously file for bankruptcy, then you should have a copy of any bankruptcy you filed during the last ten (10) years.
You may need documents showing any Educational IRAs or tuition programs, etc. and their status; You should have a list of all of your addresses for the last three years. If applicable, you should have documentation of any felony convictions. Also, if applicable, documentation evidencing any money or property received from a trust or probate estate over the last few years.
Are there certain kinds of debts that will not be discharged in a Chapter Seven Bankruptcy?
Certain debts are not discharged under the law. For example, you may still be responsible for most taxes and student loans; certain debts incurred to pay non-dischargeable taxes; alimony and child support orders and arrearages (if any) and property settlement obligations; Additionally, most fines, penalties, forfeitures and criminal restitution obligations are not dischargeable.
Debts for death or personal injury caused by operating a motor vehicle, vessel or aircraft while intoxicated on alcohol or drugs are generally not dischargeable. If you have not properly listed certain debts in your bankruptcy papers, they might not be discharged. And, if a creditor can prove that any of your debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that that debt is not discharged.
We hope that the above information has answered some of your questions regarding filing for bankruptcy. It can be a complicated process and the Bankruptcy Court is very strict on how forms are filed, what information they are required to contain, as well as, when all documents must be filed and when any issues or other filings in your case must be responded to by you/your attorney. Therefore we strongly suggest that you contact an experienced bankruptcy attorney to discuss your concerns and to assist you in filing.
Please feel free to contact our office to assist you. If you would like to become more informed about how this office can assist you in a bankruptcy filing, kindly contact this office by telephone (781-444-8888 or 888-444-8881) or by email email@example.com and schedule a confidential appointment to discuss your concerns.