Bankruptcy

With the addition of Susan Grossberg to our Firm in September of 2016, our firm is now offering representation to clients filing chapters 7 and 13 bankruptcy. Attorney Grossberg is a renowned bankruptcy attorney who had her own private practice for 16 years prior to joining Heisler, Feldman & McCormick.

Bankruptcy is a complicated process, and we encourage you to contact us as soon as possible if you are considering filing bankruptcy. To help ascertain whether bankruptcy may be helpful in your circumstance, please review the following questions - 

If I file Bankruptcy, will I lose all my property?

The bankruptcy code allows individuals to exempt (or protect) certain amounts of various types of assets. Because of recent amendments to the laws regarding exemption allowances, (for which I provided testimony on Beacon Hill on behalf of the Boston Bar Association urging greater protection), Massachusetts has some of the greatest protections of personal property in the Nation.  Most people who file for bankruptcy protection do not lose any property at all. Those with substantial property can usually keep their property if they agree to a repayment plan of some or all of their debt.

How will Bankruptcy affect my credit?

For some people, a bankruptcy filing is the fastest, most effective way to rehabilitate their credit. A bankruptcy filing can remain on your credit report for up to 10 years.  However, banks understand that discharging your debt in bankruptcy usually enables you to stay current on living expenses and new loan obligations.  Banks also know that you are prevented from filing another bankruptcy for 8 years after receiving a Chapter 7 discharge. In the bank’s eyes, individuals once laden with debt are frequently a much better credit risk after having obtained a Discharge in bankruptcy.

Of course, a bankruptcy is not a favorable notation on one’s credit report. However, someone considering bankruptcy usually has a credit report that looks pretty bleak. Filing bankruptcy can give you a fresh start and enable you to begin rebuilding your credit. Right after obtaining your Discharge, if you are working or have other income, you may be able to obtain a credit card or even a car loan. Some clients have even bought their first home as little as a year after obtaining their Discharge. Many of these individuals would not have been able to obtain this credit without having rid themselves of their old debt by filing for bankruptcy.

Will my bankruptcy damage my spouse’s credit?

When one spouse files for bankruptcy protection, his or her spouse’s credit is generally not affected.

Will I be able to ever get credit again after filing for bankruptcy?

It is possible to rebuild your credit within months of filing bankruptcy. In many cases, clients report having an easier time obtaining credit after the bankruptcy freed them from so much debt. 

Will I lose my retirement account if I file for bankruptcy?

Moneys contributed to qualified retirement accounts are generally exempt. In almost all cases, you can keep your pension, IRA, and 401(k) in bankruptcy.

Will filing for bankruptcy make me lose my job?

Generally, employers will not find out about the bankruptcy, unless you choose to tell them. The bankruptcy code prohibits private employers from firing someone (or taking any other adverse action) for  having filed a bankruptcy. However, the courts have been eroding this law over the past few years and there are some types of jobs where a bankruptcy filing is allowed to be taken into consideration for employment decisions.

Will bankruptcy help if I owe taxes?

While it is true that some taxes can not be discharged, others can be. There are many rules about the dischargeability of taxes which an attorney can explain to you. I would be happy to review your situation and discuss your options.

How does the bankruptcy process work?

For your initial consultation, you will need to bring with you information on your debts (including your credit card debt, any lawsuits, foreclosures or repossessions, tax, student loans, or medical bills) and about property you own (bank accounts, real estate, cars, retirement accounts, etc.). We will review your financial situation with you and discuss the benefits of various options available to you including bankruptcy.

If you decide that you want to file for bankruptcy, we will prepare all the necessary documents including the Bankruptcy Petition. When your case is ready to file, we will then meet again so that you can carefully review these documents before we file them with the Bankruptcy Court.

After the Bankruptcy Petition is filed, your creditors are prohibited from harassing you and all lawsuits, foreclosures, garnishments and attachments are stopped immediately. The Bankruptcy Court will mail a notice to this effect to all of your creditors after your Petition if filed. The Bankruptcy Court also sets a date for meeting of creditors meeting (also known as a Section 341 Creditors Meeting).  This creditors meeting is scheduled about one month after your Bankruptcy Petition is filed and usually lasts only 5 to 10 minutes.  You will be required to attend the creditors meeting and we will be right next to you to guide you through it.  At the creditors meeting, the trustee assigned to your case will ask you questions about your assets and your outstanding debt. Although all of your creditors are invited to attend, in most cases, they usually do not.

A Chapter 7 bankruptcy is usually complete in about three to four months. When you complete your Chapter 7 bankruptcy, the Court will issue your Discharge and close your case. The Discharge prevents your creditors from ever collecting on discharged debts.

The process is very similar if you file a Chapter 13 reorganization, except that the Discharge is not issued until you complete all the payments required under your reorganization plan (usually between three to five years).

What should I do to prepare to file bankruptcy?

If you are considering bankruptcy, the first thing you should do is contact an attorney to discuss what options are available for your specific situation. However, there are certain things which you can do to prepare for bankruptcy before you meet with an attorney.

Stop using your credit cards - Any charges you make or money that you borrow with the intention of having the debt wiped out in bankruptcy instead of paying it can prevent you from discharging that debt or even be considered as fraud. You should consult an attorney before incurring any additional debt.

Do not sell or give away any of your property - Transferring property on the eve of bankruptcy can be considered a fraudulent conveyance and can disqualify you for bankruptcy protection altogether.

Consider which debts to pay - You should continue to pay your mortgage or rent and utilities. However, if you are considering bankruptcy, you should contact an attorney before paying your credit card and other debts. Making large payments on credit card and other types of debt just prior to bankruptcy may complicate your case and may even be a waste of money. Discuss with an attorney which debts you should pay.

Organize and gather important documents - Pull together documents that evidence your debts (credit card and loan statements, etc.) and your assets (deeds, appraisals, bank statements, etc.). Other documents that will requested by your attorney will include  six months of paystubs and the last four years of tax returns.

Take a deep breath - You are not the first person to need help handling your debt. Over 15,000 individuals and families filed bankruptcy in Massachusetts last year. Get ready to take full advantage of your fresh start and plan how to avoid the mistakes you may have made in the past.