FAQs

Can I file for bankruptcy if I don't have much debt?

Yes you can, but at some point it does not make sense given the cost of the filing fee and the legal fee. I typically would question whether it makes sense if you owe less than $10,000.00. It also depends upon how aggressive your creditors are in their collection attempts.

How do I know which bankruptcy chapter to file?

If you are behind in a secured debt such as a mortgage, or behind on your taxes you would likely file a chapter 13. Or if you have excess income, but still cannot pay back your debt you may be requirede to file Chapter 13.

How often can I file for bankruptcy?

You can file a Chapter 7 every 8 years.

Can I file for bankruptcy on some of the accounts I owe, or do I have to include all of them?

You have to include all of them.

Can I eliminate all of my debts by discharging them in bankruptcy?

Student loans, child support and alimony and taxes less than 3 years old, are some of the debts that are not dischargeable in bankruptcy. A mortgage or car loan is dischargeable in bankruptcy, however the lien survives the discharge; so if you want to keep the house or vehicle, you need to continue making the payments.

Can I wipe out all of my debts after bankruptcy?

You can voluntarily choose to pay back any creditor even if it is discharged. A discharge means you are no longer legally obligated to pay back the debt. The discharge will stay on your credit report for up to 10 years.

If I file for bankruptcy, will the cosigner of my loan still have to pay?

Yes.

What are the differences between secured and unsecured debt?

Secured debt is typically car loans and mortgages. The underlying obligation (note) is secured by a security agreement which gives the creditor a lien on property owned by you. In the event you default, the secured creditor can foreclose or repossess the property. The secured creditor will sell the property and use the net proceeds to pay down the loan. An unsecured debt is usually credit card debt, utilities and medical bills.

Can I file for bankruptcy and stop a lawsuit or wipe out a money judgement against me?

The bankruptcy will create an automatic stay that stays the lawsuit. The law suit will eventually be dismissed with the discharge. You need to report the filing of the bankruptcy to the state court. It is called a "Suggestion of Bankruptcy". If a judgment is recorded at the Registry of Deeds, you may have to file a Motion in the Bankruptcy Court to avoid the lien. Otherwise your title will still show that the lien survived the bankruptcy, and create a cloud that will become an issue when your refinance or sell the property.

What property can I keep, if anything, if I file for bankruptcy?

All exempt property. An exemption is the amount of value you are allowed to retain in various personal and real property before the Trustee has the right to liquidate the property. There are specific exemptions for residences, clothing, furniture, bank accounts, etc. and your residence up to a certain value.

Can I keep my home if I file for bankruptcy?

When you file bankruptcy you need to determine what is the fair market value ("fmv") of your home. You then determine how much remains due on any mortgages or liens on your residence. You subtract the liens from the fmv which leaves you with the net value which is either equity or negative equity. If it is equity, a positive value, you then need to determine if there is an exemption that protects that equity.
There are two types of exemptions you can claim in Massachusetts to protect your MA residence, the state exemption (homestead exemption) which protects up to $500,000 for a MA residence, or the bankruptcy exemption which protects up to $25,150.00 per debtor.

Can I keep my retirement account or Social Security payment if I file for bankruptcy?

Generally yes; but you would need to seek further advice from a bankruptcy attorney.

Please note that the above are responses to general questions. Each person filing has individual issues, and if you are contemplating filing, you should seek the advice of a bankruptcy attorney before filing.