What is bankruptcy?

Financial hardship can hit anyone. The loss of a job, medical bills, or a car accident that results in catastrophic injuries leaving you unable to work can all prevent you from paying your bills. No matter the reason, many folks fall behind on their bills and need help.

Bankruptcy is a legal process by which consumers (and businesses) can pay their debts, and have certain debts discharged, under the protection of the bankruptcy laws.

There are 2 types of bankruptcy, commonly known as liquidation (Chapter 7) or reorganization (Chapter 13). Under Chapter 7, certain assets may be sold to pay off the outstanding debts. Under Chapter 13, you keep your property and the court establishes a schedule for you to pay down your debt over time.

Why should I retain a lawyer to file bankruptcy?

While the Court does not require that a lawyer represent you, it will make the process a great deal easier. It also may save you money. Any mistake that you make in filing your bankruptcy petition and schedules could be costly. Finally, most bankruptcies involve some planning. Sometimes real estate issues are involved; sometimes it’s the estate of a family member; and sometimes its retirement accounts. An experienced bankruptcy lawyer will guide you through the process and help you protect as many assets as you can.

The attorneys at Burns & Jain have filed thousands of Chapter 7 bankruptcies for our clients over the years. We know the law governing Chapter 7 bankruptcy, and understand the many rules that determine which debts are covered, who can file, and what property you can and cannot keep. We work with our clients to determine if they qualify. We work hard to make sure that your assets are protected from your creditors.

What happens to my debts?

 

What debts can I discharge?

Chapter 7 bankruptcy may eliminate most kinds of unsecured debt. Some examples of unsecured debts are credit cards, medical bills, most personal loans, judgments resulting from car accidents, and deficiencies on repossessed vehicles. In addition, you can discharge any outstanding balances after a home was foreclosed upon.

What debts cannot be discharged?

While most consumer debts are dischargeable in bankruptcy, the following are the debts that are not:

• Most federal and state income taxes. (However, if the taxes are more than three years old, and other criteria are met, some taxes can be discharged in bankruptcy.)

• Student loans and other educational debts (absent “undue hardship.)

• Debts incurred by fraud (i.e., debts incurred without the intent to repay or debts incurred by use of a false financial statement or other written document.)

• Debts incurred by willful and malicious injury, fiduciary misconduct, or embezzlement.

• Criminal fines, traffic tickets, and criminal restitution.

• Child support, spousal support, and monies owed under divorce decrees.

• Personal injury or death caused to others while driving under the influence of alcohol or drugs.

What assets can I keep?

 

In addition to getting rid of your debt, you typically can keep all of your property. As long as your car and mortgage payments are current, and there is no significant equity in your property, we should have no problem making the arrangements for you to reaffirm the debt. Keep your home, keep your car, keep your personal belongings, but eliminate your debt; that is our goal.

The Chapter 7 Bankruptcy Process

Make an appointment with one of the well-qualified attorneys at Burns & Jain. During your initial free consultation in our office, we will ask you a series of questions from a checklist to determine whether you qualify for a Chapter 7 bankruptcy. We will review your income, assets, and debts.

The Petition and Schedules require that we list all assets. Please note that we need to know about all of your assets to determine how we can get all, or at least most, of your assets to be exempt. While, non-exempt assets are not protected assets under bankruptcy law and can be sold to pay down your debt, careful bankruptcy planning with an experienced Massachusetts bankruptcy lawyer can usually result in all of your assets being exempt.

However, well over 95% of Chapter 7 cases are called “no-asset” cases. This means that there are no assets to distribute to creditors. For this reason, our clients generally keep all of the assets they want to keep (home if it qualifies, motor vehicle, personal property, clothing, etc.) and discharge all of their consumer debts.

Once you have determined that you shall file for a “fresh start” in bankruptcy and have retained our office, we usually recommend that you can stop paying all credit card bills; however, it is axiomatic that you also stop using all credit cards at that time.
Clients must supply us with the following documents before we can file the bankruptcy petition with the court.

What your Bankruptcy Lawyer Needs

 

• A copy of your driver’s license or legal identification
• A copy of your social security card
• A copy of all checking and savings account statements for one year
• A copy of three months of payroll or income verification
• Two years of tax returns
• Copies of your deed, mortgage balance and proof of home value
• Up to date credit report
• A copy of your credit counseling certificate*
• A copy of each credit card bill and information regarding each and every creditor to whom you owe money – including vehicle loans, school loans, medical bills, etc.

*Please note that every debtor must complete a Credit Counseling Course prior to filing the Petition and Schedules with the Court. You can find a local course by using the web – go to www.mab.uscourts.gov for a current list of approved credit counselors. We can also provide you with an updated list, phone numbers and web sites.
Once we review all of the documentation and determine if you qualify, we then prepare all of the paperwork to complete the Chapter 7 Petition and Schedules. We will then forward the Petition and Schedules to you for review, signature and return. We will then file your petition with the Bankruptcy Court electronically.

After your petition is filed, a trustee is appointed by the Court to oversee your case. The Chapter 7 Trustee has the responsibility to determine if you have any assets that are not considered exempt under the law, sell such assets, and use the proceeds to distribute among your creditors.

We will send the Trustee payroll verification and a copy of your recent tax return. The Trustee may request additional documents, such as bank statements, credit card statements and your credit report.

The 341(a) Hearing (Meeting with Creditors)

 

Approximately 30 days after the filing of a Chapter 7 case, the debtor is required to attend a brief hearing with the Chapter 7 Trustee. This meeting is called the “meeting of creditors” or the “341(a) hearing” and typically does not exceed 5 minutes. The creditors’ meetings are held in federal buildings in the downtown areas of Boston, Brockton, or Worcester, depending on where you live. We will provide you with the address.

At the meeting of creditors, the trustee will ask a series of questions almost identical to the checklist used in our office during the first consultation with the attorney. The trustee is looking for non-exempt assets or to identify other legal issues in your case. In virtually every case, any of those issues will have been previously discussed with you by one of the attorneys in our firm. Creditors are permitted to attend the meeting and ask questions if they wish. Few, if any, of the creditors actually attend.

An attorney from our office will always be with you at the meeting, although it may not be the attorney you met with for the initial consultation. The attorney will have reviewed your file thoroughly prior to the hearing, and will meet with you shortly before the hearing to answer any last-minute questions.

Please bring proof of identity, such as driver’s license or DMV identification card, and your Social Security Card to the hearing.

After the 341(a) Hearing, the Trustee will evaluate your Petition and sometimes asks for additional information. Your creditors have 60 days to file a Complaint against you in the Bankruptcy Court. This is an adversarial proceeding and does not usually occur.

The Financial Management Course

During this 60-day time period, you will also need to take a second “course” after the Trustee Hearing. This is called the Financial Management Course. There is a fee for this course. You can go back to the same folks where you took the first “class.” This second class needs to be completed so we can send the certificate to the Court prior to you receiving your discharge.

Assuming there is no problem, your debts will be discharged at that time. Most cases end here.
In uncontested matters, the Court issues a notice through the mail indicating that your debts have been discharged approximately 60-75 days after the hearing.

 

OUR PLEDGE TO YOU.

When you hire The Law Office of Neil Burns, you can depend on a few things:

  • Our best efforts – We will work our hardest and use all our experience and available resources to get you the best possible result.
  • Aggressive representation – We will fight for your rights with zealous force and tireless persistence.
  • Honest representation – We know how important your good name is to you – so we will always work on your behalf ethically and honestly.
  • Negotiating from strength – We’ll prepare your case as though it’s going to trial. Most cases settle. But the only way to get the best settlement is to be fully ready for battle.
  • No “legalese” – We will speak clearly with you, use a minimum of jargon, and make sure you understand your case.
  • Responsiveness – We will return your phone calls or emails within one day, unless there’s an emergency – and always as soon as possible.

Give us a call at 617-227-7423 or request an appointment online. For more information, see also our Personal Injury FAQs.