You may have experienced a financial hardship and are considering filing bankruptcy in Massachusetts, specifically Chapter 7 bankruptcy.
There are 3 important things to consider when pursuing Chapter 7 bankruptcy in Massachusetts:
Chapter 7 bankruptcy is the most common bankruptcy in the United States. For example, I would not be surprised if the majority of the 3,529 bankruptcies filed in Massachusetts in the year ending June 30th, 2021 were Chapter 7 bankruptcy.
Let’s get started to understand why Chapter 7 is a popular choice in Massachusetts.
Many people we speak with care about two things:
When comparing debt-relief options, Chapter 7 bankruptcy often wins in both categories over alternatives such a Chapter 13 bankruptcy, debt negotiation, debt management, and debt payoff planning. Let’s explore those variables in greater detail.
You can often get a Chapter 7 bankruptcy discharge in as little as 120 days in Massachusetts. That is the typical time it takes to complete a no-asset Chapter 7 case in Massachusetts. No-asset generally means that you do not own a home or other assets that may be above the Massachusetts bankruptcy exemptions.
The Chapter 7 bankruptcy cost nationwide tends to be between $500 and $3000. That said, Chapter 7 bankruptcy cost in Massachusetts is different.
The Chapter 7 bankruptcy cost may even be different if you are filing in Springfield vs. Worcester. For example, you may pay a Chapter 7 bankruptcy attorney fee of $1,200 in Springfield, but pay a bankruptcy attorney fee of $2,200 in Boston.
You should check the cost to file Chapter 7 bankruptcy in Massachusetts for specific information about the cost in your city.
Also, there are instances where the cost to file bankruptcy can be reduced based on a filing fee waiver. You should consider seeing the information related to Massachusetts filing fee waiver.
Chapter 7 bankruptcies are intended for people who cannot afford to pay any portion of their debts. However, you must first pass an income evaluation to qualify for a bankruptcy discharge (forgiveness of debt) in Chapter 7.
If you pass the Massachusetts bankruptcy means test (which you can estimate below), you can erase most unsecured debts through Chapter 7. Unsecured debts discharged in Chapter 7 include medical bills, personal loans, some old income tax debt, old utility bills, credit card debts, and most personal judgments. Unsecured creditors hold debts that are not secured by collateral.
If, however, you want to get rid of secured debts, like car loans and mortgages in Chapter 7, you need to surrender the asset to the creditor. The creditor must accept the asset as full payment of the amount owed.
Let’s go into how you qualify for Chapter 7 bankruptcy.
An important element in filing for bankruptcy relief is the Bankruptcy Means Test. The Means Test is a bankruptcy form that calculates your average monthly and annual income. The test compares your income against the median income of other households in Massachusetts.
If your average annual income or median income is below the Massachusetts median income, you may qualify for a bankruptcy discharge under Chapter 7. You can estimate whether you qualify for a Chapter 7 bankruptcy using the free Massachusetts Chapter 7 Bankruptcy Means Test Calculator below.
If your median income is above the state median income, you may need to look at part 2 of the means test or at an alternative.
The Means Test is a two-part test, so it is not a simple pass-fail test. If you “fail” the first section, you can “pass” the second section and still qualify under Chapter 7.
You can learn more about passing the Chapter 7 means test when income exceeds the median.
The Massachusetts median income figures for the Means Test are adjusted periodically, based on IRS and Census Bureau data. Massachusetts median income for bankruptcy cases filed on or after April 1, 2022, is:
|# of People||Annual Income|
For Massachusetts households with more than 9 members, add $9,000 for each additional family member. You should always double-check the US Trustees website for the most current figures when calculating the Means Test.
Bankruptcy exemptions protect the equity in your property in a bankruptcy case. Likewise, property not protected by bankruptcy exemptions may be sold in a Chapter 7 liquidation case. Note also that for Chapter 13 cases, non-exempt equity in the property can increase the bankruptcy plan payment.
The most important asset most people like to protect is their home. See the Massachusetts bankruptcy homestead exemption 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)
It is important to review additional Massachusetts bankruptcy exemptions and choose those exemptions that best protect your assets.
The federal bankruptcy exemptions are detailed in 11 U.S. Code §522. The National Consumer Law Center maintains a list of federal bankruptcy exemptions on its website. Massachusetts is a state that allows you to use federal bankruptcy exemptions
Always check that you use the most current information available when analyzing bankruptcy exemptions.
Let’s cover the Chapter 7 bankruptcy alternatives in Massachusetts in case you do not qualify for Chapter 7 bankruptcy, have too many assets, or do not wish to pursue Chapter 7 bankruptcy.
For those who make above the income limit for Chapter 7, debt relief can still come through a filing a Chapter 13 bankruptcy. A Chapter 13 Bankruptcy in Massachusetts case allows you to restructure your debts into an affordable monthly plan. By restructuring debts, many people can afford to keep their homes and vehicles under Chapter 13.
Chapter 13 stops foreclosures, repossessions, and wage garnishments. Chapter 13 bankruptcy also allows you to pay back mortgage payments, past-due car payments, and tax debt over three to five years through a bankruptcy plan. In addition, Massachusetts may also allow you to reduce unpaid child support and alimony. However, you must resume your normal domestic support payments to remain in Chapter 13.
In a Chapter 13 plan, some debtors (the person filing the bankruptcy case) can lower their car loan payments and erase second mortgages, if they meet certain requirements.
Let’s say you do not qualify for a Massachusetts Chapter 7 bankruptcy and are wondering whether you should pursue a Chapter 13 bankruptcy. Can you afford it? It may be odd to ask whether you can afford bankruptcy, but it’s an important question to ask.
To understand whether you can potentially afford a Chapter 13 bankruptcy, you may want to take the Chapter 13 calculator below to estimate whether you can afford the monthly payment.
Debt settlement can be less expensive than both Debt Management and Debt Payoff Planning because the debt management company is negotiating a lower amount on your total debt. We covered the pricing estimate differences in our article covering debt management vs debt settlement.
Debt settlement companies negotiate lower amounts. Debt management companies negotiate lower interest rates. This is the key distinction. Often these programs last 3 or 5 years. This option is often more expensive than debt settlement and some creditors such as personal loan lenders may not work with the debt management company. There may be debt management credit score implications as well.
Who may debt management in Massachusetts best for? Debt management may be best for those that have all high-interest credit card debt, and a reduction from 22-30% interest rate to a 10% interest rate would continue to make the debt affordable.
You may be able to get out of debt through debt payoff planning, which is often a combination of trying to reduce expenses and putting extra cash into specific debts to avoid interest. You may not be able to do this because of the size of the financial hardship, but if you are interested, we build the Savvy debt payoff planner to help prioritize your debts. The app saves about $2,000 in interest on average by using the savvy debt payoff method instead of the snowball debt payoff method.
Let’s say you went through the 2 steps above and are now considering whether Chapter 7 bankruptcy is the right choice for you. Let’s go through some attributes about filing Chapter 7 bankruptcy in Massachusetts that would be helpful to consider.
When you file for bankruptcy relief under Chapter 7 bankruptcy, you must complete two bankruptcy courses to receive a bankruptcy discharge. This includes a credit counseling course prior to filing a bankruptcy case, and a debtor education course after filing. See below the approved courses for Massachusetts
The United States Trustee’s office has approved state-specific companies that offer bankruptcy courses. You can access a list of companies in Massachusetts offering bankruptcy courses on the UST website. Both courses are available online for a small fee.
Many 341 meetings of creditors have been over the phone or over Zoom due to the pandemic. That said, you may want to see where the courthouse is in Massachusetts if there are any meetings that need to take place in person. Below are the court locations for filing bankruptcy based on the bankruptcy district.
Below are the Chapter 7 bankruptcy trustees in Massachusetts broken out by bankruptcy district. You can also find the list here.
|Warren E. Agin||(617) 742-0110|
|John J. Aquino, III||(617) 723-3600|
|Joseph H. Baldiga||(508) 898-1501|
|Joseph G. Butler||(781) 636-3638|
|Joseph B. Collins||(413) 734-6411|
|Gary W. Cruickshank||(617) 330-1960|
|Mark G. DeGiacomo||(617) 457-4000|
|John O. Desmond||(508) 879-9638|
|Jonathan R. Goldsmith||(413) 747-0700|
|Stewart F. Grossman||(617) 973-6280|
|Jack E. Houghton, Jr.||(413) 447-7385|
|Donald R. Lassman||(781) 455-8400|
|David B. Madoff||(508) 543-0040|
|Janice G. Marsh||(508) 797-5500|
|Harold B. Murphy||(617) 423-0400|
|David W. Ostrander||(413) 585-9300|
|Gary M. Weiner||(413) 732-6840|
|Steven Weiss||(413) 737-1131|
|Anne J. White||(617) 263-2600|
In addition to the above, review Massachusetts local bankruptcy rules before filing a bankruptcy case. Some local rules may differ slightly from the Federal Bankruptcy Rules.
Hopefully, now you know much more about Chapter 7 bankruptcy in Massachusetts. You can take the Chapter 7 bankruptcy means test calculator below if you’re interested to estimate qualification and cost.
For more information about Chapter 7 bankruptcy, check out our Chapter 7 bankruptcy process.
Most people work with a bankruptcy attorney in both Chapter 7 and Chapter 13, but there is the option to file without a bankruptcy attorney. Read filing bankruptcy without an attorney to learn how.