Legal Question in Bankruptcy in Massachusetts

Re: What is Difference Between filing FEDERAL or STATE Bankruptcy for Chapter 7?

The is no Federal vs. State bankrupcty for Chapter 7. There is however federal and state exemptions which are selected at the time of filing. The exemptions allow you to exempt a certain dollar amount of your equity in real or personal property. For example, debtors who own a home are able to exempt $300,000 if selecting the state exemptions and $18,450 federal. You cannot pick and choose. You must select one or the other. You need to draft a list of your assets including market value and amount owed in order to determine how much equity you have in your property. You would then select federal vs. state exemptions in order to protect as much property as possible.

Most homeowners with more than $18,750 in equity will select the state exmemption (and file a Declaration of Homestead) in order to protect their home. If you are current on your mortgage the lender will normally re-affirm the debt and you will keep paying the same as pre-bankruptcy.

The filing of a bankruptcy petition will stop any creditor contact and/or lawsuits involving the debt. Assuming you obtain a discharge, they would be forever barred from attempting to collect the discharged debt.

Re: What is Difference Between filing FEDERAL or STATE Bankruptcy for Chapter 7?

There is NO SUCH THING as State bankruptcy. A bankruptcy case is filed in a FEDERAL court. Sometimes the federal bankruptcy judge must refer to state law to make a decision, but the judge is always a federal judge. For example, people who have a lot of value in their home above a mortgage can use the state homestead exemption to protect it. A chapter 13 bankruptcy case will allow you to cure a default on mortgages and car loans over a period of time, up to five years in some cases. If you are current with the mortgage, the bank has no reason to foreclose; a bankruptcy case is not a reason. Email me directly if you have other questions, or call me at 617-367-4260. David Baker

Re: What is Difference Between filing FEDERAL or STATE Bankruptcy for Chapter 7?

Hi -

Just briefly, I handle bankruptcy cases in New Hampshire and Massachusetts, and I feel compelled to tell you that bankruptcy can often be the solution to financial difficulties, but when you have substantial equity in your home refinancing and consolidating debt can be as good a solution, sometimes a better solution.

How much unsecured debt do you have, "unsecured" being credit cards, medical bills, etc. Before you file for bankruptcy make certain that you explore all of your options. Refinancing can keep you in your home, without question, pay off debts and protect your credit rating - it's worth looking at if you haven't done so already. If you need a referral I have several colleagues who are honest and experienced mortgage loan officers. Feel free to call me at (603) 434-3437 or send me an email, we can review your options and the consultation is at no cost or charge.

Regards and Good Luck -

Len Foy