Salem Chapter 7 Bankruptcy Lawyer

When times are good, no one ever considers the possibility of needing to liquidate their assets just to pay their bills. Unfortunately, circumstances can change quickly in the U.S.

Whether because of medical bills, credit card debt, divorce, or another type of shift in circumstances, debts and expenses can easily spiral out of control these days. If you’re in this position, Chapter 7 bankruptcy may be an option worth considering.

Here, we go into detail on Chapter 7 bankruptcy, explaining how it works and giving you the tools to decide whether it could be the right step for you.

What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy involves liquidating your non-exempt assets to pay creditors. “Non-exempt” is a key word to keep in mind; many of our clients are able to protect their essential assets like their home, car, and retirement savings when filing for Chapter 7. We cover exemptions in more detail a little further down on this page.

If you’re submitting a filing and you want everything to go smoothly, you’ll need a Chapter 7 bankruptcy lawyer in Salem who understands Massachusetts’ specific rules and exemptions. Your attorney will help you to:

• Complete the pre-filing process
• Submit your official bankruptcy petition to the court.
• Help you prepare for the 341 meeting of creditors, during which you answer questions about your finances under oath
• Make the most of your exemptions and protect your most important assets.

The Means Test for Chapter 7 Bankruptcy in Massachusetts

To qualify for Chapter 7 bankruptcy in Massachusetts, you must pass a means test, which measures your income against the state median. The goal is to prevent high-income earners from using Chapter 7 if Chapter 13 is a viable option for them.

The test is based on annual household income, adjusted for the number of people in your household. The upper limits are regularly adjusted for inflation; at the time of writing, the limit for a two-person household is $103,404. So, if you and your partner live alone and collectively earn more than this, you may not be entitled to file for Chapter 7.

However, there are exceptions to this rule. For example, some forms of income (such as Social Security benefits, some forms of military disability benefits, and payments related to national emergencies) are excluded from means-test calculations.

What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 and Chapter 13 are the two main types of bankruptcy for consumer debts.

Chapter 13 (also known as a “wage-earner’s plan”) uses your income to address your debts, rather than your assets. It requires you to pay monthly installments to your creditors over the course of three to five years, but it does not force you to liquidate assets.

Chapter 7 involves a quicker process than Chapter 13 and is often more affordable overall, so it’s preferable for many people. It may be especially attractive if you have a lot of non-exempt assets that you’d be uncomfortable parting with.

If you’re not sure whether Chapter 7 or Chapter 13 is the most suitable option for you, contact us to schedule a free initial consultation about your case. Once we look at your accounts and your upcoming cash flows, we’ll be able to tell you which route is likely best for you.

How Massachusetts Exemptions Work

Chapter 7 bankruptcy won’t require you to sell all your assets; some will be protected by exemptions, such as the:

• Homestead exemption: This protects a certain amount of equity in your primary residence.
• Vehicle exemption: This allows you to protect equity in your car up to a certain limit.
• Personal property exemption: This covers essential household items and personal belongings.
• Retirement accounts: Exemptions usually cover pensions and retirement savings.

The application of these rules can get complicated. That’s one reason why you need a Massachusetts Chapter 7 bankruptcy lawyer with a strong track record of delivering positive results.

What Is Wage Garnishment?

If your creditors have taken you to court over unpaid debts, they may request that your wages be garnished.

If such a request is successful, your creditors will be allowed to take a portion of your paycheck to satisfy unpaid debts. The creditor will typically send a court order to your employer, requiring them to withhold a percentage of your wages each pay period until the debt is repaid.

Massachusetts has stricter limits than many other states when it comes to garnishment, generally capping deductions at 15% of gross wages for general debts.

However, it may be possible to avoid wage garnishment altogether. Filing for Chapter 7 bankruptcy initiates an automatic stay, which halts most garnishments immediately.

The Chapter 7 Bankruptcy Process in Salem, MA

Chapter 7 bankruptcy involves several steps:

• Credit counseling: Before filing, you’ll complete a mandatory credit counseling course approved by the U.S. Trustee.
• Filing the petition: You’ll submit a petition that includes detailed financial information and the list of creditors to which you owe money.
• Automatic stay: A successful filing triggers an automatic stay, which temporarily stops collection efforts and lawsuits against you, and also halts any wage garnishments.
• 341 meeting of creditors: You’ll attend this meeting to answer questions about your finances under oath.
• Discharge of debts: If everything goes smoothly, you’ll receive a discharge order that eliminates qualifying unsecured debts.

Frequently Asked Questions (FAQs)

Are all debts dischargeable in Chapter 7 bankruptcy?

No. Certain debts (including child support, alimony, and most student loans), are not dischargeable, which means you’ll still need to pay them in full in spite of a bankruptcy filing.

What happens if I forget to list a debt in my bankruptcy filing?

If you forget to list a debt, it may not be discharged, and you could still be responsible for paying it after your Chapter 7 bankruptcy is finalized and your assets are liquidated. It’s crucial to review all debts with your Chapter 7 bankruptcy lawyer in Massachusetts to ensure everything is included.

Will filing for Chapter 7 bankruptcy eliminate medical bills?

Yes, Chapter 7 bankruptcy typically eliminates unsecured debts like medical bills.

What documents do I need to file for Chapter 7 bankruptcy?

You’ll need to provide income records, a full list of your assets and liabilities, recent tax returns, proof of expenses, a list of creditors, and any other financial information requested by the court.

A Salem Chapter 7 Bankruptcy Lawyer Who Will Fight for Your Rights

The prospect of Chapter 7 bankruptcy might be an intimidating one. However, if you’ve accumulated more debt than you can manage, it could be an invaluable lifeline. Once you’ve taken the plunge, your financial affairs could be stable again in a relatively short space of time.

Don’t wait until it’s too late. Contact us today to schedule a free initial consultation about your case. You can reach us over the phone at (978) 744-8818 or fill out our online contact form. We’ll give you the advice you need to hear, not the advice you want to hear.

ATTORNEY MONIQUE B. LAMB

Since founding the practice on January 4, 1999, Monique has dedicated her career to family law, providing clients with compassionate yet practical guidance through some of life’s most challenging moments. With over two decades of experience, she understands the complexities and emotional toll of family law cases and focuses on achieving resolutions while minimizing unnecessary conflict. [ ATTORNEY BIO ]