General Information

Bankruptcy is a legal status of a person or other entity that cannot repay debts that are owed to creditors. In many jurisdictions, including the United States Bankruptcy Court for the District of Massachusetts (hereinafter “Bankruptcy Court”), bankruptcy is imposed by a court order that is often initiated by a debtor. In some unfortunate situations, including a substantial amount of debt or inability to meet one’s financial obligations, bankruptcy may be the best option for an individual.

Asset Protection
Many individuals fear that bankruptcy will result in a loss of their income, assets or property.  Bankruptcy, however, is not intended to take away all of the individual’s personal income, assets or property.  Instead, in many cases an individual is able to keep property after filing a bankruptcy petition.  As a result of an individual’s ability to keep property, bankruptcy is actually used, in some cases, for asset protection.

Bankruptcy is Not a Sign of Failure
Rather than an indication of one’s financial failure, bankruptcy is, instead, a legal tool that allows individuals to find a solution to permanently escape debt and gives such person a second chance to start over.

Bankruptcy Mistakes
There are several mistakes that are often made by individuals filing for bankruptcy that can make the bankruptcy process much more complex than it needs to be.  One of these mistakes is that individuals should not avoid pending lawsuits but instead should respond to all legal actions to prevent any liens or judgments that might arise from potential collection lawsuits.  Another common mistake is transferring property out of the individual’s name to relatives or friends that is both unnecessary and could actually put ownership of assets or property at risk.  A third mistake is that individuals often are unaware that some debts incurred within ninety days of filing for bankruptcy cannot be discharged.   Individuals also often make the mistake of treating some creditors with preference over other creditors, which is not permitted.   Instead, if a person experiences difficulty meeting his or her debt obligations on an ongoing basis, a consultation with a bankruptcy attorney may be due.  In the course of such consultation, an attorney may advise the client how to avoid these common mistakes and set up a plan how to re-gain one’s financial independence.

Chapter 7 – Liquidation
Filing a petition pursuant to Chapter 7 of U.S. Bankruptcy Code (Title 11 of the United States Code) allows individuals to do a number of things including, but not limited to, obtain discharge of most or all unsecured debt obligations, eliminate some tax problems and court judgments, end wage garnishment, remove (or “avoid”) liens placed on real estate as a result of debt collection lawsuits and, in all cases, immediately stop the communication from creditors, which at times may be quite harassing.

Chapter 13 – Reorganization
Petition under Chapter 13 of the U.S. Bankruptcy Code allows individuals the option to make reasonable monthly payments based on their income and expenses, prevent homes from being foreclosed, and retain one’s assets and property. Chapter 13 bankruptcy petition is often used as an advantageous tool in saving homes that are in danger of foreclosure.

The Importance of Bankruptcy
A decision to file for bankruptcy can be a difficult one, but doing so is often better than the alternative of not addressing the ongoing problems with one’s finances. Bankruptcy offers the opportunity for an individual to begin reclaiming financial stability and, with that, a peace of mind.

Bankruptcy Resources

FAQS for Debtors