Chapter 7 Bankruptcy in Massachusetts
Chapter 7 Bankruptcy is also know as liquidation. This form of bankruptcy is used primarily for individuals, although businesses are also able to file under Chapter 7 when specific criteria are met. Chapter 7 is governed by the Federal Bankruptcy Code, and is used primarily where an individual is seeking nearly complete freedom from debt (although not all debts will be discharged under Chapter 7 – as discussed below). Still, filing for Chapter 7 as an individual in Massachusetts may be the best option when personal financial debt and other circumstances make one’s debt load overwhelming because Chapter 7 offers a nearly clean slate for the bankruptcy filer.
There are many aspects that a petitioner must evaluate when filing for bankruptcy in the Federal Bankruptcy Court. First, the filer must be honestly attempting to get out from under debt while at the same time not doing so for any fraudulent purpose. For example, a bankruptcy petitioner in Massachusetts should never go on a spending spree, take an expensive vacation, or even repay a loan to a relative or friend prior to filing for bankruptcy. Taking any of the aforementioned actions may cause the bankruptcy petitioner’s activity to appear fraudulent to the Bankruptcy Court, and therefore, the Court may deny a bankruptcy petition for that reason. It is always prudent to consult a competent attorney to act on your behalf and provide legal advice in the area of bankruptcy.
Some Debt is not Dischargeable in Bankruptcy
While most debt will be wiped clean by a Bankruptcy Court when no fraud is present and other conditions for petition are met, some debt is not dischargable in bankruptcy by law. For example, certain tax debt, alimony and child support, student loan debt, and other types of debt are not removed in Chapter 7 bankruptcy.
You Must Pass the Screen of the Means Test to File Chapter 7
A mathematical formula is used to determine whether a person qualifies to have their consumer debt removed in Chapter 7 bankruptcy. This formula is known as the means test. To qualify for filing Chapter 7 a debtor must first determine average monthly income over the six month period prior to filing for bankruptcy and subtract from that number monthly expenses that are allowable under law. If, after making this calculation, your monthly disposable income is greater than that allowed by law then you will not be eligible for filing Chapter 7. However, if this occurs, Chapter 13 Bankruptcy may be a viable option. If, on the other hand, your income is less than the median, you are most likely eligible to file for Chapter 7 bankruptcy. Consult with a bankruptcy attorney to determine which Chapter is best for your specific circumstances.
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