FREQUENTLY ASKED QUESTIONS
WHO MAY FILE BANKRUPTCY?
Depending on one's family size and gross income, any person who has debts that exceed their ability to pay is able to file Bankruptcy seeking a fresh start.
WHAT TYPES OF BANKRUPTCY ARE AVAILABLE TO A WAGE EARNER?
There are two types of Bankruptcy filings available to an individual who is a wage earner or is self employed.
First - Chapter 7 - Liquidation. Under Chapter 7, all unsecured and some secured debts, will be eliminated and the filing Debtor will be able to start fresh.
Second - Chapter 13 - Wage Earners Plan. Allows the Debtor to pay a portion of their debts to a trustee appointed by the Bankruptcy Court over a period of time (usually 5 years). Under Chapter 13 Plan, monthly payments are sent to the trustee and he pays a percentage of the payment to all unsecured Debtors pro rata. At the end of the plan's period of time, the unsecured debts will be eliminated.
IF I FILE BANKRUPTCY, WHAT HAPPENS TO MY DEBT?
All secured and unsecured non priority debts can be eliminated after filing Chapter 7 of the Bankruptcy code.
WHAT ARE SECURED DEBTS?
Secured debts are obligations which have property liens that follow the obligation of the Debtor to pay. The security might be a car, your home, your business or similar property.
WHAT IS A PRIORITY DEBT?
These debts are usually tax obligations; student loans and are not discharged after filing Bankruptcy.
WHAT IS THE MAXIMUM INCOME I CAN EARN AND BE ELIGIBLE TO FILE FOR BANKRUPTCY PROTECTION UNDER CHAPTER 7 (LIQUIDATION)?
The maximum income level will depend upon the state you reside in and the size of your household. If you live in Massachusetts, are married and have 2 dependent children, then the maximum income you and your spouse can earn will be $92,572.00. Income includes all income, not only wages.
IF I FILE BANKRUPTCY, CAN I RETAIN MY HOME?
You can keep your home if you file Chapter 7 of the Bankruptcy Code. However, this will depend on your ability to pay your mortgage after you have eliminated all of your unsecured debt.
IF I FILE BANKRUPTCY, CAN I KEEP MY AUTOMOBILE?
In many cases, a Debtor will be able to keep their auto as long as the monthly payments are paid when due.
WHY SHOULD I FILE BANKRUPTCY UNDER CHAPTER 7 OR CHAPTER 13?
Many times it is the only way to stop harassment by your creditors and prevent wage attachments, law suits and foreclosure of your home and repossession of your automobile.
HOW OFTEN CAN I FILE BANKRUPTCY?
Under current law, a Debtor may file for Bankruptcy protection, once every 10 years.
