Massachusetts Bankruptcy Lawyer

Preferential payments are basically payments made by a bankruptcy debtor to a creditor not listed on the bankruptcy petition. In order to determine whether debtors filing bankruptcy have given “preference” to certain accounts over the others, the Statement of Financial Affairs requires debtors to list total payments of more than $600.00 made to a single creditor within the ninety days prior to filing bankruptcy. Debtors are also required to disclose any payments made to “insiders,” who would be close family members or friends, within the past year. Any of these payments given preference over other bankruptcy debts are subject to being reversed by the bankruptcy trustee in order to pay creditors listed on the petition. Any recovery that is obtained can be shared by creditors filing a proof of claim with the bankruptcy court.

Filing bankruptcy should not be taken lightly. It is a last resort during financially difficult times that will allow you to not have to pay most of your debts if you qualify for a Chapter 7 discharge. This includes credit card debts, car loans, mortgage or other types of personal loans. If you are able to afford payments then you may be able to discharge credit card bills but keep your home and car.

The main exceptions to discharge, which means that the debts that have to paid regardless of whether you file bankruptcy are student loans, taxes and other government debts and payments arising by court order, such as family court support and criminal restitution.

Filing bankruptcy might also be the safer alternative to having bad credit and negatively affecting your employment and financial qualifications. This might damage your credit at first but is the first step toward restoring and repairing your credit.

The ‘new’ law that took effect in October, 2005 is called BAPCPA – Bankruptcy Abuse Prevention and Consumer Protection Act. This makes filing Chapter 7 bankruptcy more difficult for people whose income is above a certain level based on their family size.

One of the changes brought about by the new law is that a Credit Counseling and Financial Management class must be completed prior to and after filing bankruptcy respectively. This is debtor (those filing bankruptcy) education in the form of a class the provides Bankruptcy alternatives.

If a person has filed bankruptcy within the last 8 years and received a discharge through Chapter 7, then they cannot file bankruptcy again until 8 years after the original filing. If a person has filed Chapter 13 bankruptcy within the last 6 years, then they cannot file bankruptcy again until 6 years after the original filing.

Debtors are now also required to produce their last year’s tax return and two months worth of pay stubs to the trustee a week before their creditors’ meeting. This is to verify that the debtor qualifies to file bankruptcy under the new income guidelines. Income guidelines are based on household size and varies from state to state. However, even if the income is slightly above the median level the debtor may be able to get bankruptcy relief through means testing.

These are only some of the changes made by BAPCPA. In essence, the goal of the law is to make filing bankruptcy more ‘difficult’

This is not legal advice. Please contact an attorney in your State if you have any specific questions for your situation.

Bankruptcy is probably the right option for you if you have “bad” credit. If you don’t yet have “bad” credit but you are unable to make regular payments on your accounts, bankruptcy might be worth looking into. The reporting of the bankruptcy filing on your credit history might be a safer alternative to a drastically lowered credit score that could impact your ability to qualify for financing. A qualified bankruptcy lawyer can tell you after meeting with you whether you would qualify for a discharge and be able to keep your property.

Many consumers attempt credit consolidation to pay off their debts without harming their credit. The basic idea behind credit consolidation is similar to a Chapter 13 bankruptcy for high-income earners: all the consumer’s debts go into a “payment plan.” This “plan” would be based on the amount left over between the consumer’s regular monthly income less expenses. However, unlike the legal bankruptcy protections of the Chapter 13 court-ordered plan, including a halt to accumulating interest and late payment penalties, credit consolidation is usually handled by private companies whose profit is based on their “commission” share of the payment transaction. Because these plans are based on private negotiations, there is also no guarantee of capping total balances owed.

A bankruptcy filing will be reported on your credit history for ten years after filing. However, this initial negative effect on your credit is usually the better alternative to bad credit because of unpaid older accounts. Bankruptcy filers are usually able to obtain additional unsecured accounts and qualify themselves for car loans and mortgages within years of filing. I have been asked if a bankruptcy filing would affect a person’s ability to secure a job. The answer is that the filing might actually help when applying for a job, especially in the government or at a bank as it is the step towards regaining good credit.

You need not lose your car if you are filing a Chapter 7 bankruptcy and getting a discharge of debts. If you are not keeping your home, you are allowed a car worth up to $3,450.00 using federal law exemptions. If you have more equity in your car, you might be allowed additional amounts unused under the wildcard exemption ($11,975.00 per filer). If you are keeping your home, you are allowed a car worth up to $700.00 using state law exemptions. Your spouse in a joint petition is also allowed the same amount for their vehicle. If there is a loan on the car, you would be allowed to keep the loan out of bankruptcy by reaffirming the debt. The bank will have you sign a reaffirmation agreement that even though you filed bankruptcy, you still wish to keep the car and continue paying the loan. As long as you have enough income before other expenses to make these payments, the reaffirmation agreement would be approved by the court. On the other hand, if you cannot afford your car loan, having your car repossessed and putting the loan into a Chapter 7 bankruptcy allows you to not be responsible for any loan balance still owed after resale of the vehicle.

This is not legal advice. It is just general information on filing bankruptcy. Please see a lawyer in your area if you have questions regarding your specific situation.

Yes you can. But keep in mind that this has to be done as soon as possible and before receiving a discharge. When a bankruptcy petition is amended to add new creditors, regardless of what type (credit cards, car loans, personal loans) they are, the debtor’s motion to amend to add creditors should be allowed by a court order. In addition, the court should file a notice to add creditors giving the new creditors a reasonable time (usually approximately two months) after amendment to object to the debtor’s discharge. If this notice to add creditors is not filed by the court after the motion to amend is allowed, the subsequent filing of this notice by the court can extend the deadline for objections after an order of discharge.

The deadline for objections to a debtor’s discharge in a Chapter 7 bankruptcy is usually a time period of approximately two months after the date of the creditors’ meeting. This means that the debtor would have to wait at least this minimum two month period in order to thereafter receive an order of discharge from the court. A creditors’ meeting successfully resulting in a trustee’s report of no distribution (the debtor has no non-exempt assets and has not transferred property out of their estate) is a good indication that there would not be objections to discharge expected.

Chapter 7 bankruptcy debtors are required to list the value of their personal property on their petition, as theirs is a “no asset” case. Debtors often have questions about how to value “used” items of property that would have depreciated in amount after purchase. Bankruptcy attorneys are currently required to provide any clients they meet with as a mandatory disclosure the BAPCA required notice of instructions for providing the required information [s. 527(c) of the Bankruptcy Code]. These instructions provide further guidance specifically for personal property that serves as the collateral for a debt listed on the petition. The value would be “determined based on the replacement value of such property as of the filing date of the bankruptcy case without deduction for selling or marketing costs.” The instructions actually guide debtors to either retail stores selling such used items or “if you can’t find a store that sells similar items in similar condition, the next best source for an objective appraisal is probably eBay or a similar online market.”