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  1. Can I still file bankruptcy since the bankruptcy laws changed?
  2. What is a bankruptcy petition?
  3. Who can file a bankruptcy petition?
  4. What is a joint petition?
  5. Can a same-sex married couple file a joint bankruptcy petition?
  6. How will filing bankruptcy affect my credit rating?
  7. What is a discharge?
  8. What is a debtor?
  9. Will my friends, family, or employer know that I filed bankruptcy?
  10. How much does it cost to file bankruptcy?
  11. If I was bankrupt before, can I file bankruptcy again?
  12. Is filing bankruptcy a long process?
  13. Will I receive a better credit rating if I go through a credit counseling agency instead of filing bankruptcy?
  14. Which debts are erased in bankruptcy?
  15. What are the Massachusetts exemptions?
  16. Will I have to go to court?
  17. Who is the trustee and what is the role of the trustee?
  18. What is the 341 meeting of creditors?
  19. I owe a friend or relative money. Should I pay them before I file bankruptcy?
  20. Should I cash in my 401k or IRA retirement plan to pay my bills?
  21. How does the automatic stay affect my residential lease?
  22. Do I need credit counseling?
  23. If I own a home, should I take any special precautions before filing bankruptcy?
  24. How much are my household goods worth?
  25. How should I value my car?
  26. Which debts are considered secured?
  27. Which debts are considered unsecured non-priority debts?
  28. Which debts are considered priority debts?
  29. Does my spouse have to file bankruptcy with me?
  30. What if I've filed bankruptcy before?

Can I still file bankruptcy since the bankruptcy laws changed?

In 2005, Congress was heavily influenced by the banks and lending community and enacted sweeping changes to the federal bankruptcy laws. Under the new law, it is more difficult to erase debt and receive bankruptcy protection in Chapter 7 and Chapter 13. Two of the biggest changes to the bankruptcy code include the means test and mandatory credit counseling. However, despite the changes, the majority of people can still qualify under Chapter 7 with a little extra effort.  

What is a bankruptcy petition?

A bankruptcy petition is an official legal document filed with the court to initiate a bankruptcy proceeding. The bankruptcy petition is the document that creates an automatic stay which prevents anyone from collecting a debt from you, garnishing your wages, or suing you for a debt. In the bankruptcy petition the debtor sets out the amount of debt due, the terms upon which default has been made, and the reasons bankruptcy protection is being sought.

Who can file a bankruptcy petition?

A bankruptcy case is commenced by the filing of a "bankruptcy petition," a formal request for relief under the bankruptcy laws. An individual, a partnership or a corporation (defined as including a qualifying business trust) may file a bankruptcy petition.

What is a joint petition?

A joint petition is the filing of a single bankruptcy petition by an individual and the individual's spouse. Only people who are married on the date they file the bankruptcy case may file a joint petition. Unmarried persons do not qualify to file joint petitions. And, although married debtors may file a joint petition, they are not required to do so.

Can a same-sex married couple file a joint bankruptcy petition?

Sexual orientation should not affect how the federal bankruptcy law protects you, but it does. The U.S. Bankruptcy Code is a federal program overseen by the U.S. Department of Justice. While it is administered at the state level, the Bankruptcy Code applies federal law. This means that states are required to follow DOMA (Defense of Marriage Act). While same-sex marriage is legal in the State of Massachusetts, DOMA is a federal law passed in 1996, which bars the federal recognition of same-sex marriage in federal programs.

While it is true that a same-sex couple cannot file a joint bankruptcy petition, there are ways we can help. First, we will not charge you separate fees — this means that we will treat you and your partner as if you were filing a joint petition. Second, we will file the bankruptcy petitions together and attempt to get all court dates scheduled on the same date and in front of the same trustee and Judge. It's not a perfect solution, but we will do our best to ensure you are treated fairly and respectfully.

How will filing bankruptcy affect my credit rating?

It can stay on your credit report for seven to ten years and can make it more difficult for you to obtain financing or get a mortgage. If you are considering bankruptcy as an option, chances are your credit is already and you are having a hard time getting new credit or the credit cards you currently hold have slashed your credit line and your interest rate has skyrocketed. Initially, you will have difficulty getting a new credit card with a decent interest rate. However, many creditors know you cannot file again for another seven years and are happy to once again extend you credit.

What is a discharge?

A bankruptcy discharge is a court order that relieves a debtor from personal liability for specific types of debt. It is single-handedly the most important tool you have in a personal bankruptcy. Once you receive your discharge order, creditors cannot take action to collect discharged debts from you and, with some limited exceptions, against income and property that you acquire after you file your bankruptcy petition. When a debt has been discharged, the creditor can no longer seek repayment. Not all debts are dischargeable and a discharge can be denied or revoked.

What is a debtor?

A debtor is a person who has filed a petition for bankruptcy relief under the Bankruptcy Code.

Will my friends, family, or employer know that I filed bankruptcy?

While bankruptcy filings are considered public record, you are not obligated to tell your friends or family unless you want to. Usually, your employer will not find out that you filed bankruptcy unless you fail to provide the documents (like pay stubs) or if there is a wage assignment (deduction from your pay to pay off debts) required by the court. The law prohibits any employer from discriminating against you for filing bankruptcy.

How much does it cost to file bankruptcy?

Attorneys' fees are separate from the fees required by the court to file your case. The fee for filing a Chapter 7 bankruptcy petition is $299.  The fee for filing a Chapter 13 bankruptcy petition is $274. Unfortunately, it is impossible to quote attorneys' fees without first reviewing your individual situation.  Please call your Boston bankruptcy attorney Tameka Grantham at 978-341-5044 today.

If I was bankrupt before, can I file bankruptcy again?

A person can file Chapter 7 bankruptcy if it has been more than eight years since the previous Chapter 7 filing. An individual cannot receive a discharge in Chapter 13 if they received a discharge in a Chapter 7, 11, or 12 in the past eight years before filing the current case, or in a Chapter 13 bankruptcy in the last four years before filing the current case.

Is filing bankruptcy a long process?

Not at all. A Chapter 7 bankruptcy can be filed within days. You will have a 341 Meeting within about 40 days of filing and everything should be done within about four months. A Chapter 13 bankruptcy will have a three to five year payment plan. The initial filing and approval doesn’t take very long.

Will I receive a better credit rating if I go through a credit counseling agency instead of filing bankruptcy?

No! The truth is that it will cost you less money, and you will rebuild your credit rating faster if you file Chapter 7 or Chapter 13 bankruptcy. Debt consolidation agencies are usually sponsored by the credit card industry, and the IRS has recently taken action against non-profit credit counseling groups for widespread abuse.

Which debts are erased in bankruptcy?

Most unsecured debts such as credit card balances and medical bills are discharged in bankruptcy. However, some debts will not be forgiven unless they are paid in full. If this is the case, when your bankruptcy is over the remaining unpaid debt will not be forgiven. Some debts which are not discharged in bankruptcy include personal injury and liability debts caused by your drunken driving, student loans, income tax, child support and alimony obligations. For more on debts erased in bankruptcy click here.

What are the Massachusetts exemptions?

As part of a bankruptcy filing, your attorney will help you choose between Massachusetts state law exemptions and the federal exemptions provided under Section 522(d) of the Bankruptcy Code. Deciding which exemptions to use is one of the most important and difficult aspects of filing a bankruptcy petition. You want to use the exemptions that maximize your legal rights and protect your property the most! 

If the Massachusetts’ exemptions are used, the most important exemption for homeowners is the homestead exemption. Filing of a declaration of homestead in the proper manner and at the right registry of deeds will exempt up to $500,000 of your equity in your primary residence. This is even if the homestead exemption filing occurs just prior to your bankruptcy filing. There are new provisions limiting the state homestead to $136,875 (adjusted April 1, 2007, from $125,000) if the property was bought or otherwise acquired within 1,215 days of the petition date. There is an important exception to the 1,215 day rule in circumstances in which you buy a home in the same state and roll your equity into your new home.

There are various other exemptions under Massachusetts’ law and federal non-bankruptcy laws. Some examples include:

  • 401(k)s and certain retirement accounts
  • Death benefits
  • Social Security benefits
  • Veterans' benefits
  • Unemployment and workers' compensation benefits
  • Certain personal property and pension benefits

Will I have to go to court?

Yes. Usually you must go to court once to attend the 341 meeting

Who is the trustee and what is the role of the trustee?

In every Chapter 7 or Chapter 13 case, a trustee is appointed to represent the interests of the unsecured creditors. They are not always lawyers and are not paid by the Bankruptcy Court. Instead, they are appointed and paid by the U.S. Trustee. They report to the Bankruptcy Court and are paid out of bankruptcy filing fees and estate assets (if there are any). Their job is to administer the bankruptcy estate and make sure that creditors get as much money as possible. The trustee is always present at the 341 meeting.

Their roles are a bit different in Chapter 7 and Chapter 13 cases. 

Role of the Chapter 7 Trustee:  In a Chapter 7 case, the trustee liquidates any assets by collecting and selling non-exempt estate property. Typically, there is no nonexempt property, so the trustee’s duties are usually limited to evaluating the debtor’s schedules, statements, and exemption claims. Additionally, the trustee ensures that the debtor carries out the stated intentions with respect to properly securing consumer debts.

Role of the Chapter 13 Trustee:  In a Chapter 13 case, the trustee collects money from the debtor and distributes it to creditors according to the debtor’s repayment plan. In addition to most of the duties of the Chapter 7 trustee, the Chapter 13 trustee is required to attend all hearings on the value of property subject to liens or on confirmation or modification of the debtor’s plan. The trustee also ensures that the debtor is making payments according to the Chapter 13 repayment plan.

What is the 341 meeting of creditors?

Also called the “creditors meeting,” it usually occurs between twenty and forty days after filing your bankruptcy petition. The meeting is conducted by the trustee, and the judge is not permitted to attend. Creditors generally do not attend this meeting. The goal of this face-to-face meeting is to allow the trustee to review your petition and schedules and ask you some very basic questions. It also gives the trustee an opportunity to get to know you and understand your circumstances. The 341 meeting is usually short and informal for typical consumer debtors. You are required to attend. If you fail to appear, the trustee may request the Bankruptcy Court dismiss your case and you could be held in contempt of court for willful failure to cooperate.

I owe a friend or relative money. 
Should I pay them before I file bankruptcy?

NO! Payment of $600 or more to a relative, friend, or business associate within one year before you file bankruptcy can be seen as a preference and voided by the trustee. This means that the trustee may take that money back from your relative, friend or business associate and divide the money among all your creditors. Don’t create a stressful situation among you and your relatives, friends or family members. There is nothing stopping you from paying them back after you receive your discharge.

Should I cash in my 401k or IRA retirement plan to pay my bills?

No. In addition to the fact that you will be taxed heavily, those taxes may not be discharged in bankruptcy. Retirement plans are exempt from creditors in bankruptcy, unless you recently put a large amount into the account or have more than one million dollars in one of these accounts. If you don’t use these funds, you are very likely to have them to draw on after your bankruptcy.

How does the automatic stay affect my residential lease?

While back rent is dischargeable (i.e., forgiven and not to be repaid) in bankruptcy, your landlord does have options when you declare bankruptcy. Timing is everything in this situation!

If you are current on your rent, your landlord cannot evict you solely because you filed for bankruptcy. However, filing bankruptcy does not mean you can stop paying your rent. You must continue to pay your rent while you are in bankruptcy or your landlord may start eviction proceedings without the court’s permission.

If your bankruptcy petition is entered before your landlord gets a judgment of possession, the automatic stay kicks in and your landlord cannot evict you until they file for relief.

If you stay current on your rent after you file bankruptcy, the landlord cannot evict you unless they request relief from the court.

This process can be very complicated, especially when your landlord already has a court order evicting you from the property. Call your Boston bankruptcy attorney at 978-341-5044 today!

Do I need credit counseling?

Yes. One of the most significant changes in the 2005 bankruptcy reform is a mandatory credit counseling course. Now, every person filing bankruptcy must complete two separate credit counseling courses.

The first is required to be completed at least 180 days prior to filing your bankruptcy petition. Your credit counseling takes about sixty to ninety minutes and will include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. You can attend the counseling session by phone, in person, or online. When you complete the course, you will receive a certificate of completion, which is required to be filed with your bankruptcy petition. The credit counseling agency generally charges a fee of $50.

After you have filed your bankruptcy petition, but before you receive your bankruptcy discharge, you will be required to attend a second credit counseling course. At this course you will receive information on creating a budge, managing your money and using credit wisely, among other things. The length of this course may be a little longer than the first course, and the fee is between $50 and $100. Again, you will receive a certificate of completion, which is required to be filed with the court.

A list of approved credit counseling agencies can be found here.

If I own a home, should I take any special precautions
before filing bankruptcy?

Yes. Homeowners should file a Declaration of Homestead with the Registry of Deeds located in their county. The Suffolk County (Boston) Registry of Deeds is in the Edward Brooke Courthouse on New Chardon Street. A blank form is available here. The filing fee is $35.

How much are my household goods worth?

Generally, you should consider the value of your possessions to be what you would expect to receive for them at a tag sale. Keep in mind that used household goods often have very little value. You should be fair, honest and objective when assessing the value of your belongings. Ask yourself, “What would you pay for this at a tag sale?”

How should I value my car?

Visit the Kelley Blue Book online. Use the trade in value feature to determine the value of your car.

Which debts are considered secured?

If any of your property is used as collateral for a loan, then the debt is one of your secured debts. An example would be a mortgage. Your house is considered collateral towards the debt. If you default on repayment, the bank can take your house, sell it and use the proceeds to pay back the debt. Other examples of secured debts include loans, car loans. Also, if someone you owe money has recorded a lien against your property (because they obtained a court judgment against you,) then that debt is also secured.

Which debts are considered unsecured non-priority debts?

The most common unsecured non-priority debts are taxed owed more than three years ago, credit card debt, medical bills, or your personal loans.

Which debts are considered priority debts?

Your priority debts include taxes that are less than three years old, spousal and child support, wages which you may owe your employees if you have a small business, and certain debts incurred through drunk driving.

Does my spouse have to file bankruptcy with me?

You can file alone. The real question is whether it will make sense in your particular situation. For example, if all of the debts are in the name of only one spouse, it might make sense for just that spouse to file.

What if I've filed bankruptcy before?

Your stay may not be automatic if you have filed a previous bankruptcy within the prior year. The granting of the stay depends on how many bankruptcies you have filed within one year. If your stay is not automatic because of a previous bankruptcy, your bankruptcy attorney can help you file a motion for additional stay protection.

Call 978-341-5044 today to schedule your free, no-obligation consultation or send us an email.
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