There are several types of bankruptcy for which individuals or married couples can file, the most common being Chapter 7 and Chapter 13.


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Bankruptcy: A Fresh Financial Start

Does your cell phone ring and ring with bill collectors on the other end of the line?  DO you dread going to the mailbox each day to see what new bill is arriving in the mail that you cannot pay? Have you tried to dig yourself out of debt for several months and you just keep getting deeper and deeper in debt? If the answer is yes, then maybe you should consider filing for bankruptcy in MA.


What Is Bankruptcy?

In general terms, bankruptcy is a legal process by which individuals who cannot repay their debts to creditors may be granted relief from some or all their debts. It is a federal law that is in place for when someone has no other alternative. Bankruptcy is something that should not be taken lightly and can have serious consequences.  However, based on an individual’s situation, filing for bankruptcy can be the best option for relief and having a fresh financial start.


2 Different Kinds of Bankruptcies for Individuals

There are to main types of bankruptcies that an individual can file, a Chapter 7 bankruptcy and a Chapter 13 bankruptcy.

A Chapter 7 Bankruptcy has the potential to eliminate all if not most of an individual’s debts in roughly three or four months.  An individual seeking to file a Chapter 7 Bankruptcy must meet certain income and financial requirements. In a Chapter 7 the Trustee for the case will seize all property that is non-exempt and liquidate it to pay the creditors.  IN most cases the individual who files a Chapter 7 can keep the majority if not all their assets.

A Chapter 13 Bankruptcy allows the individuals to keep all their assets but the individual needs to pay a portion of their income to the Trustee for distribution to the creditors for a certain length of time.  This time period is usually three to five years.  During this time the Bankruptcy case stays open and if the individuals does not complete the plan then the debts are not discharged.  The income and financial requirements for a Chapter 13 generally allows someone to have an income greater than what is allowed to file a Chapter 7 and usually none of the individual’s assets are at risk.


I Don’t Want to Lose My House!

When someone is considering filing for Bankruptcy, one of the main concerns is what is going to the home they own. In Massachusetts there is a law under which a homeowner is protected by an Estate of Homestead also known as the Mass Homestead Act.

There are two kinds of homesteads in Massachusetts, an “Automatic Homestead Exemption” and a “Declared Homestead Exemption”. The automatic homestead exemption provides protection of up to $125,000 of the home’s value against unsecured creditors’ claims.  The declared homestead exemption provides protection of up to $500,000 of the home’s value against unsecured creditors’ claims.  Often this law will enable someone who files bankruptcy to keep their home as long as the home is secured as collateral by a creditor.

What About My Stuff

After worrying about their home, one of the next things most individuals worry about losing is their possessions.  When and individual files for bankruptcy, the individual is required to turn all their property over to the Trustee unless under the Bankruptcy law that property is exempt.  This is commonly referred to exempted property.

The property that is considered exempt varies from state to state.  Many states have their list of exemptions and the federal government has its own list of exemptions. In Massachusetts an individual who files Bankruptcy can choose between the State exemptions and the federal exemptions.

Some examples of the State exemptions are

  • Homestead Exemption- up to $500,000.00 in vale of home if declared.
  • Motor Vehicle- up to $7,500.00
  • Jewelry- Up to $1,225.00
  • Tools of the Trade- Up to $5,000.00
  • Wildcard- $1,000.00 plus up to $5,000.00 of certain unused other exemptions


Some examples of the current Federal property exemptions are:

  • Homestead Exemption- up to $25,150.00 in value of home ($50,300 if married and filing jointly.
  • Motor Vehicle- up to $4,000.00
  • Jewelry- Up to $1,700.00
  • Tools of the Trade- Up to $2,525.00
  • Wildcard- $1,325.00 plus up to $12,575.00 of unused homestead exemption


Is Bankruptcy Right for Me?

Filing for bankruptcy is a serious decision and one that should not be made lightly.  Anyone considering filing bankruptcy should consult with an attorney to determine if it is the right thing to do for their particular situation.  A number of different factors needed to be considered and weighted when someone is deciding if they should file bankruptcy or not.  Filing for bankruptcy can have longlasting and serious consequences in an individual’s life but given the right circumstances filing for bankruptcy can be the right step for an individual to get a fresh financial start.


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