You may wonder whether filing Chapter 13 bankruptcy in Massachusetts is the best debt relief option. Bankruptcy is a common relief option. In fact, there were 3,529 bankruptcies that have been filed in Massachusetts by June 30th, 2021.
The purpose of this article is to provide what you need to know about Chapter 13 bankruptcy in Massachusetts. Here’s what we will cover:
A Chapter 7 bankruptcy requires that you pass an income test to receive a bankruptcy discharge (debt forgiveness). If your income exceeds a certain amount, you may not qualify for a bankruptcy discharge under Chapter 7 unless your debts are primarily business debts. The purpose of the Chapter 7 bankruptcy process is to provide debt relief for individuals who cannot afford to repay their debts. If you haven’t checked, you may estimate Chapter 7 qualification using our Chapter 7 calculator.
However, Chapter 13 bankruptcy cases are designed for individuals who can afford to repay some of their debts, but they need help restructuring their debts into an affordable plan. Through the Chapter 13 bankruptcy process, debtors (the individuals who file the bankruptcy case) propose a plan that repays some or all of their debts. The Chapter 13 bankruptcy is a 3 or 5 year plan (with the exception of a 100% plan).
Your Chapter 13 plan payment in Massachusetts depends on your unique financial situation, which is why we built a Massachusetts Chapter 13 Plan Payment calculator below that you can use to estimate your Chapter 13 plan payment.
Factors used when calculating a Chapter 13 bankruptcy plan include, but are not limited to:
Try the Chapter 13 calculator to estimate the amount of your Massachusetts Chapter 13 plan payment.
As part of the bankruptcy process, you must complete the Massachusetts bankruptcy means test. The Means Test calculates your average monthly income (AMI), annual median income, and disposable income. Consequently, each of these figures is important for a Chapter 13 case.
Your average monthly income (AMI) is calculated using all household income received during the six months before filing a Chapter 13 case. Then, the total of all income over six months is divided by six to determine your AMI.
To calculate your annual median income, you multiple the AMI by 12. The annual median income is used in a Chapter 13 case to determine whether you are required to submit a 60-month bankruptcy plan.
If your median income exceeds the Massachusetts median income levels, you must submit a 60-month plan. Alternatively, if your median income is below the Massachusetts median income, you may qualify for a 36-month bankruptcy plan. Although, you may still choose to propose a 60-month plan based on your specific situation and needs.
The median income in Massachusetts for bankruptcy cases is based on information gathered by the United States Trustee’s (UST) Office. Also, the UST’s office revises the data periodically to ensure it reflects the current income for each state. Furthermore, you can view the current median income figures used for Massachusetts Chapter 13 cases by clicking here.
The latest figures are for cases filed on or after May 15, 2021.
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There is a second part of the Means Test that calculates your disposable income. In most cases, all disposable income must be contributed to a Chapter 13 plan to repay your unsecured creditors. Unsecured creditors typically receive a small percentage of the money owed to them through a Chapter 13 plan. Comparatively, most unsecured debts are forgiven or discharged upon the successful completion of your plan.
However, only certain living expenses may be deducted from your average monthly income. Although, most required payroll deductions are included in the allowable expenses. The United States Trustee’s Office publishes a list of the living expenses that are allowable based on the size of your household. It’s important to note, these expenses are restricted to a maximum amount. For example, these expenses include food, clothing, household supplies, and out-of-pocket health care expenses.
If your expenses exceed the maximum amount or you have special expenses, you need to request approval of those expenses and provide proof of the expenses to the court.
The process to file Chapter 13 bankruptcy is similar across the state. So, a Chapter 13 bankruptcy in Boston may be similar to Worcester. We will cover the decision to file Chapter 13 bankruptcy, locating a Chapter 13 bankruptcy attorney, credit counseling and debtor education course requirements, completing your bankruptcy forms, and filing your Chapter 13 bankruptcy petition.
Chapter 13 is a reorganization bankruptcy. Debtors who file Chapter 13 bankruptcy can afford to repay some of their debts. The amount of your debt that you must repay depends on several factors, including but not limited to:
If you cannot pay your debts and you do not meet the income qualifications for a Chapter 7 bankruptcy case, a Chapter 13 bankruptcy case might be right for you.
Even though you are not required to hire a bankruptcy lawyer, filing Chapter 13 bankruptcy without a lawyer is not recommended. Chapter 13 bankruptcy cases are very complex. Calculating a Chapter 13 plan requires a great deal of experience and knowledge. Someone who does not understand Chapter 13 bankruptcy law could pay much more than is necessary to get out of debt.
Also, the court expects you to understand and know the law the applies in your case if you represent yourself. The court will not explain bankruptcy law to you, and it will hold you accountable for the errors you make in your case. Therefore, it is best to have an experienced Chapter 13 bankruptcy lawyer handle your case.
What are the benefits of hiring a Chapter 13 bankruptcy attorney in Massachusetts?
Having a Chapter 13 bankruptcy attorney handle your case means you have someone on your side who can help you avoid mistakes and errors that could hurt your case.
As part of your Chapter 13 case in Massachusetts, it is a requirement to complete two bankruptcy courses. The bankruptcy courses are available online from approved companies for a small fee. Moreover, the courses typically take between 90 minutes and two hours to complete.
Here are the approved providers in Massachusetts:
Accordingly, it’s a good idea to check to make sure you are using the most recent list of approved providers.
The Credit Counseling Course needs to be complete before you file a Chapter 13 bankruptcy. Also, you need to complete the Debtor Education Course after filing the Chapter 13 bankruptcy petition. It is a good idea to complete the second bankruptcy course as soon as possible after filing the Chapter 13 case so that you do not forget about the course and lose your bankruptcy discharge.
A typical Chapter 13 bankruptcy package could be 100 or more pages. When you file Chapter 13, you must complete the approved bankruptcy forms and any local bankruptcy forms required by the bankruptcy court. Your bankruptcy lawyer completes the forms and reviews each form with you to ensure accuracy and completeness before the attorney files the forms with the court.
The forms for a Massachusetts Chapter 13 case includes information about your:
The Statement of Financial Affairs is a form with almost two dozen questions about your received financial transactions. It includes income for the past two years, recent payments to certain creditors and insiders, a list of lawsuits, gifts, contributions, leases, transfers, and other information. Your bankruptcy attorney assists you in gathering information and completing your bankruptcy forms.
Your bankruptcy lawyer files your bankruptcy forms and obtains a case number. The bankruptcy court schedules a First Meeting of Creditors and a Confirmation Hearing. In most cases, these are the only two hearings that most bankruptcy debtors attend. Your bankruptcy lawyer prepares you for the hearing and attends the hearings with you.
Once your Chapter 13 bankruptcy plan is confirmed, you continue to pay your Chapter 13 bankruptcy payments until your case is complete. If you have any problems or questions, you contact your Chapter 13 bankruptcy attorney immediately. Your attorney is there to direct and guide you so that you can complete your bankruptcy plan to get a fresh start, free from the debts that are weighing you down and preventing you from achieving your financial goals.
Massachusetts bankruptcy exemptions protect the net equity in the property from repaying your debts. In a Chapter 13 case, non-exempt equity increases the amount of money you must pay each month to your unsecured creditors. Therefore, it is important to claim all allowable bankruptcy exemptions.
Net equity is calculated by subtracting a valid lien (i.e. mortgage, title loan, etc.) and the allowable bankruptcy exemption from the fair market value of an asset. If the result is zero or negative, the asset does not impact your Chapter 13 plan payment.
This exemptions list appears to outline most Massachusetts bankruptcy exemptions. The specific amounts used for Massachusetts bankruptcy exemptions are revised periodically. As a result, you must use the most current information available here. See some of the most common Massachusetts bankruptcy exemptions below.
The homestead exemption is often broken down by age and whether you are married.
Massachusetts specific homestead bankruptcy exemption text: “Mass. Gen. L. Ch. 188 §§ 1, 1A. $500,000 and $500,000 for each age 62+ or disabled person. Record a Declaration of Homestead with the county Registry of Deeds.” (Source)
The automobile bankruptcy exemption in Massachusetts is $7,500.
The jewelry bankruptcy exemption in Massachusetts is $1,225.
The tools of the trade bankruptcy exemption in Massachusetts is $5,000.
The wildcard bankruptcy exemption in Massachusetts is $1,000.
The personal property bankruptcy exemption in Massachusetts is $15,000.
Below is specific special handling of bankruptcy exemptions in Massachusetts.
Here are other common exemptions. There may be limits to the amount of the bankruptcy exemption, so please be sure to check each one individually.
Again, bankruptcy exemptions in Massachusetts change from time to time, so please check the current list for updates or find the government statutes.
Federal bankruptcy exemptions are located in the Bankruptcy Code under 11 U.S.C. §562. You can also view a list of the federal bankruptcy exemptions published by NCLC. The amounts of the bankruptcy exemptions periodically change.
However, the Bankruptcy Code permits states to “opt out” of using federal bankruptcy exemptions. Most states choose to enact state-specific bankruptcy exemptions. Some states require debtors to use state-specific exemptions, while other states allow debtors to choose between federal and state bankruptcy exemptions.
Massachusetts is a state that allows you to use federal bankruptcy exemptions. If not allowed, with very few exceptions, you must use Massachusetts bankruptcy exemptions if you have resided in Massachusetts for at least 730 days before filing a Chapter 13 bankruptcy in Massachusetts. If you have not resided in Massachusetts for at least 730 days, you must follow the rules of the state you resided in for the greater portion of 180 days before the 730 day period.
Some Massachusetts exemptions may not be not as generous as federal bankruptcy exemptions or other state bankruptcy exemptions. If you are considering a move to Massachusetts soon or recently moved to Massachusetts, you may want to contact a bankruptcy lawyer to discuss the exemption laws that apply in your case.
The Chapter 13 bankruptcy process in Massachusetts is similar for all Chapter 13 cases in the state. There are bankruptcy district(s) that represent where you file. Your current residence determines whether you file your bankruptcy case. See the Massachusetts bankruptcy district(s) below.
In either case, the Chapter 13 bankruptcy process in Massachusetts is the same. You need to begin by deciding whether Chapter 13 is right for you, locate a Chapter 13 bankruptcy attorney, complete the bankruptcy forms, and attend your bankruptcy hearings.
Let’s discuss the Chapter 13 bankruptcy process in Massachusetts in more detail.
A Chapter 13 bankruptcy trustee administers each Chapter 13 bankruptcy case. Although, you do not have a choice of your Chapter 13 trustee. You can find the current list of the current Chapter 13 bankruptcy trustees on the UST’s website or below:
|Carolyn A. Bankowski||(617) 723-1313|
|Denise M. Pappalardo||(508) 791-3300|
Some common questions that people ask about the Chapter 13 filing process in Massachusetts include:
The benefits of the Chapter 13 filing process in Massachusetts include:
Another benefit of the Chapter 13 process in Massachusetts is getting rid of the stress and anxiety of dealing with debt problems. Financial problems can cause an enormous amount of stress, which can cause severe health problems. The Chapter 13 bankruptcy process in Massachusetts allows you to take control of your debts and finances to relieve stress and anxiety.
There are several costs of filing Chapter 13 in Massachusetts. Chapter 13 bankruptcy costs in Massachusetts include bankruptcy attorney fees, the trustee fees, filing fee, bankruptcy courses and miscellaneous costs.
The bankruptcy attorney fees for a Chapter 13 case are higher than the fees charged for a Chapter 7 case because there is much more work for the attorney to perform in a Chapter 13 bankruptcy case. However, you do not need to pay all the fees upfront. Bankruptcy attorneys generally include all or most of the Chapter 13 bankruptcy fees in the Chapter 13 plan.
Chapter 13 bankruptcy lawyers can itemize their fees, but most charge a flat fee for Chapter 13 cases. The Massachusetts Bankruptcy Courts limit the flat fee amounts, which are increased periodically to reflect inflation. These are called no look fees.
If you are interested in filing Chapter 13, you can use our Bankruptcy Attorney Fee Estimator to obtain an estimate of the attorneys’ fees for Chapter 13 in your area. You also receive a list of Chapter 13 bankruptcy attorneys near you. Ascend can help you contact the attorneys to arrange a free consultation to discuss filing Chapter 13 in Massachusetts in more detail.
One of the highest costs in a Chapter 13 bankruptcy in Massachusetts is the Chapter 13 bankruptcy trustee fees. A Chapter 13 bankruptcy is often a 3 or 5-year plan. So, there are many administrative tasks for the Chapter 13 bankruptcy trustee.
Here’s the breakdown of Massachusetts Chapter 13 bankruptcy trustee fees: 8.30%. Just as a reference, this can result in thousands of dollars in trustee fees. Our Chapter 13 calculator helps estimate what that fee would be.
The bankruptcy filing fee for a Chapter 13 case is $313. The fee is paid to the bankruptcy court. The fee is the same whether you file an individual case or a joint bankruptcy filing with your spouse.
There are two bankruptcy courses that you must complete as part of Chapter 13. The first bankruptcy course or Credit Counseling Course must be completed before you file your Chapter 13 bankruptcy petition. You can shop around to find a credit counseling agency in Massachusetts that offers the course for the lowest price. Most agencies charge $15 to $50 for the course.
The second bankruptcy court or Debtor Education Course must be completed after you file your Chapter 13. Many of the credit counseling agencies offer both bankruptcy courses. Some agencies offer discounts for taking both courses through the agency. The Debtor Education Course in Massachusetts can be as low as $10 through some agencies.
If you choose to file Chapter 13 without an attorney, you will have miscellaneous fees. You may need to pay for credit reports to verify you have listed all creditors on your bankruptcy forms. You are also responsible for the postage for mailing bankruptcy notices and other required forms to creditors and other parties in interest. Throughout your bankruptcy case, you will be required to mail notices or other information to your creditors and parties in interest.
Some people go through several financial difficulties during their lifetime. A person could need help from the bankruptcy system more than once. For that reason, bankruptcy cases are not limited to one case per person. You can file bankruptcy again if you need debt relief.
There are no restrictions on the number of bankruptcy cases a person may file. However, there are mandatory waiting times for obtaining a bankruptcy discharge. The bankruptcy discharge is the legal order that forgives your debt. Therefore, filing a bankruptcy case without receiving a bankruptcy discharge is generally a waste of time and money.
If you need to file another bankruptcy case, it is crucial to know the waiting periods for receiving a bankruptcy discharge. The time limits are based on the filing dates of the bankruptcy cases:
It is usually best to talk to a bankruptcy lawyer before filing Chapter 13 again. You want to ensure that there are no specific situations that apply in your case that could interfere with obtaining another Chapter 13 bankruptcy discharge. Also, there could be another debt relief option that would work in your situation that could help you avoid another Chapter 13 bankruptcy in Massachusetts.
However, a Chapter 13 bankruptcy in Massachusetts may not be right for everyone. You may have another solution to your debt problem that works better for your situation. There are 9 common bankruptcy alternatives, but we will cover 2 of the most popular. Ascend’s goal is to help you explore various debt relief options to help you find a solution to your debt problems that work for you.
Our Debt Settlement Guide and our article entitled “Debt Management vs. Debt Settlement” provide valuable information about non-bankruptcy alternatives for getting out of debt. You can also read through our FAQs about debt settlement and compare debt consolidation to debt settlement to learn more about ways that you can get out of debt without filing bankruptcy.
Debt management (also known as credit counseling) is another common alternative to Chapter 13 bankruptcy. In debt management, a credit counseling agency would negotiate the interest rate with your creditors. For example, a credit counseling agency may negotiate your credit card interest rate from 23% to 9%. Debt management is often best with high-interest credit cards. You may save less in a debt management program than a debt settlement program because interest rate reduction may not save as much as debt amount reduction.
Before you make any decisions regarding debt relief, make sure you have all the facts.
In short, deciding to file a Chapter 13 bankruptcy case in Massachusetts can be overwhelming. Before you file bankruptcy, you may want to estimate your Chapter 13 plan payment that you can compare against your current monthly debt obligations. You can compare that plan payment estimate to your Chapter 13 bankruptcy alternatives below.