Massachusetts Bankruptcy Attorneys

Nicholas F. Ortiz, Esq. and John O'Donnell, Esq. Boston Bankruptcy Lawyers 306 Dartmouth Street Boston, MA 02116 ~and~ 270 Broadway Revere, MA 02151 Tel: (617) 716-0282 Fax: (617) 507-3456 Email: nfo@mass-legal.com Experienced, Effective, and Affordable Consumer and Business Bankruptcy Lawyers in Massachusetts Main Office two blocks from MBTA Copley Stop in Boston's Back Bay.

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Chapter 7 Bankruptcy in Massachusetts

Chapter 7 is a liquidation.  In the most simple terms, you give up your non-exempt property for release from your debts.  Some people have so little property that they do not have to give up any of it because it is all exempt.  Here are a few key points about Chapter 7:

1. Qualifying: You have to qualify for Chapter 7.  In general, if you can afford to pay part of your debts, you don't, and instead you must file Chapter 13 bankruptcy.  There are concepts like median income, the means test, and the totality of the circumstances tests under Section 707(b)(3) of the Bankruptcy Code that attempt to get it this question, but at core it's a simply concept: The laws are designed to only let you out of your debts if you can't afford to pay them.
2. Credit: Chapter 7 stays on your credit report for ten years from the date of filing.  This does not destroy your credit for the whole ten years.  Most people think it does.  What it does do is put a bad mark on your credit for the whole ten years.  However, as time passes, the weight given to the bankruptcy by the credit bureaus gets lighter--after ten years it's gone completely.
3. Eight-year rule: You can only get one Chapter 7 discharge every eight years.
4. Assets: If you do have assets that are not exempt and want to keep them, you cannot do so in a Chapter 7 and will need to file a Chapter 13.  You can learn what will happen to your assets in a Chapter 7 bankruptcy by calling us and answering our questions honestly.  We will then tell you.
5. Nondischargeability: Not all debts are discharged in a Chapter 7.  Student loans and recent taxes are a couple of examples.

Note: In Chapter 7 cases you cannot stop foreclosures by curing mortgage arrears like you can in Chapter 13 cases.  You can also not cram down car loans, strip off wholly unsecured second and third mortgages, and pay off nondischargeable tax debts.  Chapter 13 offers more flexibility and options than Chapter 7 and sometimes is the better choice.  However, sometimes Chapter 7 is the perfect remedy to financial problems that you just can't fix any other way. 

Here is some information on choosing between Chapter 7 and Chapter 13 bankruptcy.

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