Property That May Be Exempt From Personal Bankruptcy

In approximately 120 days you will receive your discharge and the final decree a few weeks later. Chapter 13's and 11's take longer. Your attorney can give you a rough estimate of the time involved and fill in the details.

In Massachusetts, if you own your own home and it serves as your principle residence, you may be able to protect it against the claims of creditors and/or a forced sale by filing a Declaration of Homestead. Speak with a qualified bankruptcy attorney in Massachusetts to determine whether this is an option for you should you choose to file bankruptcy.

There are pros and cons as well as many, many complexities that vary case by case. Take the time to consult an experienced, caring bankruptcy lawyer whose office isn't a bankruptcy factory whose clients are processed without regard to their individual needs.

A recent Massachusetts bankruptcy court case has ruled against "attorney fee only" Chapter 13 bankruptcy plans. Now, as a Missouri bankruptcy attorney, I am always following the court activities of other states because it might have an influence on how bankruptcy law in Missouri works. You see, law isn't set in stone--it actually evolves and changes with every case, judgment, and holding. So, here is what this new Massachusetts ruling says.

The case in Massachusetts banned a practice which involved attorneys who filed Chapter 13 bankruptcies for the purpose of paying attorney's fees through the chapter 13 payment plan.

Why did this situation arise in the first place? These attorneys had their clients file Chapter 13 bankruptcies so they could try to pay their fees over a long amount of time because the clients didn't have enough money to pay the Chapter 7 fees upfront. The Judge ruled that filing a Chapter 13 for the sole purpose of paying attorneys fees was not in "good faith" if the client was better suited for a Chapter 7.

Wait, let's back track. What's the difference between a Chapter 7 and Chapter 13 bankruptcy? A Chapter 7 gets rid of "unsecured" debt allowing debtors to eliminate credit card debt, medical bills, payday loans and other unsecured debts. While you can get certain exemptions, a Chapter 7 bankruptcy is meant for those who mostly have debt and very little assets.

On the other hand, a Chapter 13 bankruptcy allows protection from foreclosure and other actions of your creditors with an affordable payment plan that lasts for usually 3-5 years and bundles all of your debts together. The good thing about a Chapter 13 bankruptcy is that for people with a lot of assets, such as a home, are able to keep them.

Now, both Chapter 7 and Chapter 13 provide immediate protection from creditors. This means that harassing creditor calls, wage garnishments, and threats to your property can finally end. However, as you can see, Chapter 7 and Chapter 13 are meant to help two entirely different kinds of debtors. Advising someone to file a chapter of bankruptcy that isn't right for their situation could leave them without a real fresh start. The debtors in this situation probably won't be able to get through a Chapter 13--because their income and debt were more appropriate for a Chapter 7.