Bankruptcy FAQ

Chapter 13 Bankruptcy

Bankruptcy FAQ

FAQ about Massachusetts Bankruptcy

Find answers to questions about student debt relief and car repossession. Below are FAQs from Massachusetts bankruptcy lawyers. For answers to your particular case, Call us at (781) 558-5172

What is Bankruptcy?

Bankruptcy can be used to get debt relief. Bankruptcy is a long process that allows consumers to consolidate their debts with a court trustee, pay as much as possible through bankruptcy proceedings, then discharge the rest. This will enable people to clear their debt and start a new financial future.

The process begins with the preparation of the bankruptcy petition. This can be done in any one of three ways:

  • An attorney
  • A bankruptcy petition preparer
  • You personally

A bankruptcy petition preparer is someone that takes your information and prepares your petition. However, they do not offer legal advice and only ensure that your petition is filed according to court procedures. You are responsible for complying with the Bankruptcy Codes and Rules, and you could lose your case if you make mistakes.

A lawyer is your best chance of filing a successful bankruptcy case. Their knowledge of the court process will ensure that your petition is not dismissed, just like a bankruptcy petitioner. Their legal counsel is more valuable than that. An experienced bankruptcy attorney can help protect your assets and assert your rights to creditors. They can also help you get rid of debt in the fastest, most efficient way possible.

Are Bankruptcy and Reorganization Right for You?

Consumers can use bankruptcy to avoid financial ruin. Although bankruptcy is an option for almost anyone, it can have long-lasting repercussions. You can keep a bankruptcy record for many years, so it is not something you should take lightly.

Individuals have two options for bankruptcy: Chapter 7 bankruptcy or Chapter 13 bankruptcy. Chapter 7 bankruptcy will discharge most of your debts. However, you might be required to sell some assets to repay your creditors. Chapter 13 bankruptcy is a wage-based repayment plan consolidating all of your debt into one monthly payment.

Your debt will be largely unsecured if you earn less than the average wage in Massachusetts. If you have a qualifying exemption for your car, home, and credit cards, as well as medical bills and personal loans, then you may be a good candidate for Chapter 7. You’d probably walk out of bankruptcy with only unsecured debt and exemptions.

Can Bankruptcy Help With Tax Debt?

It all depends on what tax debt you have. Only tax debt can be discharged under Chapter 7 bankruptcy if it is income taxes and you have not committed fraud.

Chapter 7 bankruptcy is unlikely to be of any assistance if your tax debt does not meet all requirements. You could be eligible to file for Chapter 13 bankruptcy to repay your tax debt over three to five-year periods. Although it won’t eliminate any obligation, this will allow you to make smaller payments.

Indirectly, bankruptcy might be able to help with tax debt. If you owe back taxes or have a lot of unsecured debt, bankruptcy may help you get rid of your unsecured debt and allow you to pay back the taxes. If most of your debt is due in back taxes, bankruptcy might not be an option.

My Car was Repossessed. Bankruptcy Can Help?

Yes!¬†Chapter 13 bankruptcy allows borrowers to consolidate all their debt under the supervision of a court-appointed trustee. The trustee takes one monthly payment from the borrower and distributes it among the borrower’s creditors and lenders.

Even after the car is repossessed, this applies to vehicle loan lenders. Keep in mind, however, that the lender can sell your vehicle after 20 days. You must declare bankruptcy within 20 days after losing your car to get it back.

Talk to our Massachusetts Chapter 13 bankruptcy lawyers for a free consultation about your financial options!

Can student loan debt be forgiven in bankruptcy?

The short answer to your question is yes. Yes, although it is difficult and rare to do so. Many borrowers can file for Chapter 13 bankruptcy and organize their student debt, allowing them to receive relief from a lower loan payment. Although this isn’t a debt “forgiveness,” it can be used to provide relief from debt.

Chapter 7 bankruptcy is one thing, but debt discharge and debt discharge are another. Massachusetts law requires petitioners to prove that student loan debt would cause “undue hardship” to discharge it, and this is a demanding standard, often called the “Brunner test.”

Three requirements are required for the Brunner test:

  • You can’t maintain a minimum living standard if you have to pay the loan.
  • It is unlikely that your financial situation will change shortly
  • You have made reasonable faith efforts to repay your loans

A recent case involved a 60-year-old borrower who failed the Brunner test despite receiving a $1,000 monthly payment and being in poor health. The court determined that she was too old, had a lot of debt, and was suffering from chronic illness to be able to discharge her debt.

She would have sold her home if it wasn’t for the skilled bankruptcy attorney who appealed on her behalf. Instead, she won her appeal and could wipe away her student debts, which saved her home.

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  • Revere
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