The First Days of a Massachusetts Bankruptcy…
When you file a petition in the Bankruptcy Court in Massachusetts under Chapter 7, Chapter 11, or Chapter 13 as an individual (rather than as a business) you are actually petitioning the court to view your case. By filing for bankruptcy in Massachusetts you create a bankruptcy estate, it is this estate that will become the subject of the case in Bankruptcy Court. One particularly beautiful aspect of bankruptcy, if we can use that word to describe anything involving bankruptcy, is that once your bankruptcy petition is filed in Massachusetts your unsecured creditors must, in most instances, stop pursuing you. This “stopping” effect caused by filing a petition in bankruptcy in Massachusetts is known in the bankruptcy world as the “automatic stay.” Practically, the automatic stay means that unsecured creditors (those to whom you owe money on debts like credit card bills, and several others) cannot, under penalties of law, contact you any further about the money you owe them.
NOTE: For creditors who fail to comply with the automatic stay, that is, for creditors who continue to call, send letters, or communicate with you by other means, severe penalties may result.
Actually, even before you file for bankruptcy in Massachusetts you will be required to take a credit counseling course (online). These courses are offered by non-profit government approved agencies and serve to explain to you your options in bankruptcy. The purpose of these credit counseling courses is to look at your income and your debt, and at least potentially, to determine if a repayment plan is something that you could afford. This process, which is required in order to participate in the bankruptcy process in the U.S., acts as a sort of pre-screen of individuals wishing to file bankruptcy because it is possible that a credit counseling course may determine that you have the ability to repay your debts. Repayment of debts puts the bankruptcy petitioner into Chapter 13. Still, there is no guarantee that the courts will agree with the results of a credit counseling agencies plan, and this is a point that you or your attorney may argue with the Bankruptcy Court.
Wait…Doesn’t Bankruptcy Completely Rid Me of My Debts?
This is a good question and the answer was usually “yes it does” prior to 2005 in the United States. Prior to 2005, a petitioner filing bankruptcy in Massachusetts (in any state, actually) under Chapter 7 could (as long as there was no fraud perpetrated on the court) usually bank on having the entirety of his or her unsecured debts wiped away…giving the filer a “fresh start.” However, in 2005, Congress passed law making the hurdle for receiving a fresh start in bankruptcy much higher. Congress at that time was concerned, among other things, that filing for bankruptcy was essentially the easy way out and that the bankruptcy process was being abused…too many people having their debts largely eliminated.
While complete unsecured debt elimination is still possible under Chapter 7 bankruptcy in Massachusetts, the process has gotten stricter since 2005. Now, a bankruptcy petitioner must complete the credit counseling course described above, and then, usually with the help of a good bankruptcy attorney, figure out which form of bankruptcy is most appropriate: Chapter 7 or Chapter 13, and sometimes Chapter 11.
The 341 Meeting
After the credit counseling has been completed and the petition for Bankruptcy has been filed by your attorney, you will be required to attend with your attorney a meeting between yourself, the bankruptcy trustee, and those to whom you owe money (your creditors). In many cases, the only person sitting at this meeting is your attorney, yourself, and the bankruptcy trustee. This meeting occurs in the United States Bankruptcy Court in either Boston or Worcester. Again, your attorney will accompany you to this meeting.
Often, the 341 meeting is a source of fear and concern for the person filing bankruptcy. There is a great deal of embarrassment felt by a person filing for bankruptcy as that person is effectively saying to the whole world (or at least to the people present at the 341 meeting) that they are deep in debt and have no way out. Still, remember that filing for bankruptcy in Massachusetts is your legal right. Filing for bankruptcy is also a means to an end…that is, a recognition that for a number of valid reasons your debt is overwhelming and that you need assistance in overcoming these debts so that you can improve your financial life going forward. Also, keep in mind, that the bankruptcy process is something that is occurring every day in courts throughout the United States. By choosing bankruptcy as an option to change your financial future, you are choosing a clean slate under Chapter 7 bankruptcy, or a repayment plan under Chapter 13 bankruptcy, or a different legal option which is your right under law.
You are Not Alone in Filing Bankruptcy
Many famous people, from entertainers to successful businessmen and businesswomen, and yes, even famous financial advisors have filed for bankruptcy in the United States. Are these people somehow tainted by the fact that they have filed for bankruptcy in their past? Have these people somehow become less than others, or should they suffer from social stigma as a result of their filing for bankruptcy? Well, I don’t think so, and neither does the Bankruptcy Court nor the Congress of the United States. Bankruptcy is a valid, legal, and sometimes the only practical method of rerouting your financial life in a direction that will yield positive results for your financial future. I will end with a list of famous individuals who have all filed for bankruptcy at one or more times in their pasts:
- Walt Disney
- Willie Nelson
- MC Hammer
- David Bowie
- Mick Fleetwood (of the band Fleetwood Mac)
- Thomas Jefferson (yes, that Thomas Jefferson)
- Nicholas Cage
- Mike Tyson
- Leon Spinks (the boxer)
- Francis Ford Coppola
- Cindy Lauper
- Perez Hilton
- Tammy Wynette
- Mickey Rooney
- Anita Bryant
- Donald Trump
- P.T. Barnum
- Merle Haggard
- Zsa Zsa Gabor
- Toni Braxton
- Jerry Lewis
- Marvin Gaye
- Abraham Lincoln
There is much more to read about on the subject of bankruptcy here:
Bankruptcy and Credit
Is Bankruptcy the Best Choice for a Massachusetts Resident?
Property Exempt in Bankruptcy
Before Filing For Bankruptcy – Foreclosure Basics
Chapter 13 Explained
Chapter 7 Explained
How Debt is Handled in Bankruptcy in Massachusetts
Will I lose my Car When I File for Bankruptcy?
Massachusetts Bankruptcy FAQ’s
Consolidate Debt or Declare Bankruptcy in Massachusetts?
DISCLAIMER:
The information provided in the pages and posts of this website are for general informational purposes only. The information presented on this site is not legal advice, and no attorney-client relationship is formed by the use of this site.
