The Dozen Myths About Filing For Chapter 7 Bankruptcy in Massachusetts

1.  It’s immoral or wrong to file for bankruptcy protection.  It’s neither.  Federal law allows it; state law allows it.  Most democracies allow it.  It provides for a fresh start, which is what helps the economy.

2.  If I file bankruptcy, I’ll never be able to buy a house, or a car, again.  Wrong.  Sure, filing for bankruptcy protection has a negative effect on your credit score.  But, if you are behind on bills, your credit score has already taken a hit.  If you get a fresh start, you can rebuild your credit score.  See our page on life after bankruptcy  in Massachusetts.

3.  Bankruptcies are public so everyone will know.  Well, they are public, and there will always be a record at the federal bankruptcy court, but only folks who really want to find out will look. Most folks will never look.  And, since it’s completely legal to file, there is nothing wrong.  See above…and below!

4.  If I file for bankruptcy, I’ll loose everything.  No, there are exemptions which include your home, your retirement accounts, your vehicle, your clothing.  You should seek an experienced bankruptcy attorney to work on keeping as many of your assets as you can.

5.  The new bankruptcy law makes it too difficult for most folks to file for bankruptcy.  False.  The new law has income limits, requires you to take a credit class and requires more paperwork but it does not prevent most folks from filing for bankruptcy protection.

6.  The credit counseling classes required by the new law makes filing prohibitive.  No way.  The counseling class can be undertaken in any language, over the Internet, over the phone, and if you still have a problem, our able legal assistant can walk you through it.

7.  All Debts are Discharged in Bankruptcy.  Secured debts, such as mortgages and motor vehicle loans, are not discharged.  Student loans are not discharged.  Recent taxes are not discharged.  Debts derived from fraud are not discharged.  Alimony and child support are not discharged.

8.  You can’t discharge taxes in Bankruptcy.  Taxes that were three years old or older are dischargeable!  Recent taxes are not.  Work with an experienced bankruptcy attorney to be sure your tax filings are accurate.

9.  If I’m married, my spouse will have to file.  Another myth.  You can file jointly, or not.  And, if you file, it will not have an adverse effect on your spouse’s credit.

10.  Our house is in a trust so it can’t be exempt from bankruptcy.   Not true in Massachusetts. Under state law, your home may very well be exempt.  An experienced bankruptcy lawyer can review the trust and file for your home to be exempt.

11.  The bankruptcy hearing will be difficult.  No.  It is not like being cross-examined in a criminal case that you may have seen on television.  The bankruptcy trustee will ask you questions about your bankruptcy petition and schedules.  If you have prepared your petition and schedules with an experienced bankruptcy lawyer, the trustee should have minimal questions and you should have all the answers.

12.  I already file for bankruptcy once, now under the new law, I can’t ever file again.  Not true; the 2005 bankruptcy law changed the time from 6 years to 8 years between which you can file for bankruptcy protection again.

The Biggest Myth:  Bankruptcy Lawyers are too Expensive

For most bankruptcies, the cost is minimal compared with the amount of work the attorney does and the result you will get.  The consultation is free and the pre-bankruptcy planning will protect assets so you will likely save money.  Call Burns & Jain for a free consultation.