Bankruptcy Q&A

Bankruptcy Lawyer Answers Common Questions About Bankruptcy

 

 

 

  1. How much does it cost?
  2. Can bankruptcy actually help me?
  3. What is a bankruptcy really?
  4. What does Chapter 7 bankruptcy mean?
  5. What does Chapter 13 bankruptcy mean?
  6. What is the bankruptcy “automatic stay”?
  7. What are bankruptcy exemptions?
  8. Where is the Bankruptcy Court in Massachusetts and will I have to go?

 1. How Much Does it Cost?

Cost of a Chapter 7 Bankruptcy

In 2012 people can expect that attorney fees in Massachusetts consumer bankruptcy cases will range from around $1,800 to $2,500, not including costs. Our fees are substantially lower and the Crossely Law Offices charges only $1,250 for the majority of cases.

Why is that? Probably because the bad economy has unfortunately forced many more people to file for bankruptcy protection and as a result some attorneys in Massachusetts have probably raised their fees. The Crossley Law Offices however is still charging nearly the same $1,250 fee for standard individual consumer Ch. 7 bankruptcy cases that it did back in 2003, because it’s a fair and reasonable fee to charge people.

This $1,250 fee does not include costs which generally consist of a  court filing fee of $306 (the largest cost) and more minimal costs such as a 3 bureau credit report ($45) and 2 Bankruptcy Court required credit counseling certificate courses, typically $40-50 each or $80-$100 for both course, but which only cost our clients $20 total for both courses.

What this means for you is that filing a bankruptcy through the Crossley Law Offices will cost you around $1,600 (this amount includes fees and costs) while other bankruptcy lawyers are likely charging between $2,000 and $2,890 for the very same service.

Don’t make a costly mistake. For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

Cost of a Chapter 13 Bankruptcy

The calculation of bankruptcy lawyers‘ fees in Chapter 13 bankruptcy cases is quite different than in Chapter 7 cases because Ch. 13 cases are more time involved than Ch. 7 cases.  Massachusetts Bankruptcy Local Rules permit a standard Chapter 13 fee of $3,500 for pre-confirmation and $2,000 for post-confirmation services without an attorney needing to file a special itemized explanation of the attorney fees. This $5,500 fee is the amount probably charged by most attorneys in Massachusetts for Chapter 13 cases; but not by our office.

For Chapter 13 bankruptcy cases the Crossley Law Offices usually charges clients only $2,000 upfront for an individual Ch. 13 and takes the remaining $1,500 Chapter 13 fee through the plan (which comes to only $25/month for the 60 month plan). For joint Ch. 13 cases our office charges clients only $2,800 upfront and takes the remaining $1,700 Chapter 13 fee through the plan (which comes to only $28.33/month for the 60 month plan).  For the level of experienced bankruptcy lawyers on your side, our fee is considerably lower than most other attorneys in Massachusetts, but we think it’s a fair and reasonable fee to charge people who are struggling through increasingly difficult economic times.

Remember, any portion of the attorneys’ fee that is put into your Chapter 13 plan usually comes out of the share of money that your creditors would normally get. The bottom line is it doesn’t matter if you pay 75%, 30% or 5% of your debts to your unsecured creditors because all of your unpaid balances are discharged once your plan time-frame has been completed.

Don’t make a costly mistake. For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

Business Bankruptcy Fees:

Fees for business bankruptcies are higher than for consumer bankruptcies because business bankruptcies are more involved. Clients can be billed on an hourly basis or a flat-rate fee arrangement. For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

2. Will filing a bankruptcy actually help me?

The very simple answer is YES. Filing for bankruptcy protection helps a lot of people, and it can help you too.  If you have financial problems then bankruptcy can help when you simply cannot pay your debts and live reasonably anymore. Filing for bankruptcy is not a free ride, but it can be a path to financial freedom and fresh start; you may even find that you sleep better at night.

Chapter 7 will discharge most types of debts, and Chapter 13 will allow an affordable partial repayment and forgiveness of the balance.

The Crossley Law Office has been representingMassachusettsconsumers in bankruptcy since 2003. Honest, efficient and we get the job done for our clients–affordably and with dignity.  If you are looking for a fresh start, we can help. For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

3.  What is a Bankruptcy really?

Bankruptcy is a federal law.  It is intended to give people a fresh start free of debt.  In bankruptcy, a person either gets released from their dischargeable debts (Chapter 7) or reduces their debts to a manageable level and maintains a payment plan for three to five years (Chapter 13).  Although bankruptcy certainly helps people out of some impossible financial situations, the existence of bankruptcy laws is meant to promote the kind of entrepreneurial risk taking that theU.S.economy depends on for growth.  To encourage a certain amount of risk taking, there must be a path to financial freedom if things don’t pan out and you land in an impossible financial situation.

For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

4.  What does Chapter 7 Bankruptcy mean?

The goal of a Chapter 7 bankruptcy is to wipe out (“discharge”) your debts.  In exchange for having your debts erased, you must give all your property to your creditors.  This sounds rather harsh, but the reality is not as bad as it sounds. You need only give up your “non-exempt” property, which for most people, once the proper exemptions are applied, amounts to nothing.  In other words, in many cases much or all of your property will be exempt.  This is called a “no-asset” case: Even though you may have some assets–like a house, car, 401k, and household goods–all your assets are exempt in a “no-asset” case.  You will determine what property is exempt with your bankruptcy lawyer before filing your bankruptcy petition.

Income also affects your eligibility for Chapter 7.  To learn more about Chapter 7 allowable median income and the bankruptcy “means test” click here.

For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

5.  What does Chapter 13 Bankruptcy mean?

The primary difference between a Ch. 7 bankruptcy and a Ch. 13 bankruptcy has to do with the amount of your Household Income. Generally speaking if your annual household income is less than the average median income in Massachusetts it means that you probably can’t afford to pay your debts and as a result that you qualify for Ch. 7 bankruptcy protection and that your debts will be discharged (you don’t have to pay them).

But, what if your annual household income is greater than the average median income in Massachusetts? Well, this means that you probably can afford to pay some portion of your debts through a Ch. 13 plan. If you make more than the allowable median income based on household size, you will have to take the bankruptcy “means test.” This test only applies to people who have family income greater than the median income.  InMassachusetts, the median income by family size (for cases filed after May 1, 2012) is:

  • Family of one: $55,185
  • Family of two: $66,200
  • Family of three: $82,873
  • Family of four: $102,194
  • Add $7,500 for each additional family member.

Filing a bankruptcy under Chapter 13 allows you to create a payment plan that you will pay into on a regular basis. This might make a Chapter 13 bankruptcy sounds less attractive than a Chapter 7 filing because Chapter 13 requires you to pay money into a plan whereas a Chapter 7 just wipes out your dischargeable debts. It is true that Chapter 7 will be better in many cases. However, a Chapter 13 bankruptcy plan has many significant benefits that a Chapter 7 does not have.  Some are:

  • It can be used to defend against foreclosure, allowing you to satisfy unpaid mortgage bills (or tax bills) over time when your lender is demanding that you pay in one lump sum in order to stop foreclosure.
  • The cost to file Chapter 13 is often lower than Chapter 7, especially under the new bankruptcy law.  People often want to file a bankruptcy case quickly; Chapter 13 can often be the way to do this.
  • Chapter 13 bankruptcy stays on your credit report for less years than Chapter 7 does (7 instead of 10).
  • There is no reaffirmation in Chapter 13.  This avoids a sometimes problematic situation related to car loans in Chapter 7 in which you have to prove to the bankruptcy court that you do have enough money to continue paying your car loan even though you are simultaneously claiming that you don’t have enough money to pay your total debts. In Chapter 13 you don’t have to deal with the reaffirmation process to keep cars for which you have a loan.
  • No one ever looses property in a Chapter 13.  It is not a “liquidation” chapter, it is a “reorganization” chapter.
  • Chapter 13 creditor payments are often quite low, allowing an individual to pay pennies on the dollar to unsecured creditors.

To learn more about Chapter 13 Bankruptcy click here.

For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

6.  What is the “Automatic Stay”?

The automatic stay is an important aspect of the bankruptcy process. Once you file a bankruptcy petition, the bankruptcy laws’ provision of an automatic stay requires that all of your creditors and their agents stop all collection efforts, lawsuits and foreclosure proceedings against you. The automatic stay gives you the opportunity to deal with your financial affairs without interference from your creditors and harassing debt collectors.

Once retained by you the Crossley Law Office will contact your creditors in writing and advise them of your intent to file a bankruptcy. We do this to reduce or eliminate the number of debt collection calls that you receive. Once you have retained this firm to represent you then you can even provide your creditors and debt collectors with our law firm’s phone number and inform them that they have to go through us from now on. This is even before your bankruptcy case has been filed.

For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

7.  What are bankruptcy exemptions?

As part of a bankruptcy filing you must choose between (1) the federal bankruptcy exemptions and (2) the exemptions underMassachusettsand federal non-bankruptcy law. This is an important decision that depends on the type of (and value of) the personal property that you have. We will advise you so that you make the most informed and best decision for your situation.

Here’s a little bit of basic information. If the Massachusettsexemptions are chosen, it is usually because you own a house or have a mortgage and want to take advantage of the Massachusetts Homestead Exemption.  This is a very important exemption for homeowners with equity in their homes.  Filing a declaration of homestead in the proper manner and at the right registry of deeds will exempt up to $500,000 of your equity in your primary residence, even if the filing occurs just prior to your bankruptcy filing.

There are some new rules that limit the amount of the homestead in bankruptcy to $146,450 if the property was acquired within 1215 days of a bankruptcy petition date.  This so-called “1215 day rule” does not apply if you bought a new home in the same state and rolled over your equity from your old home into your new home.

For cases filed after March 16, 2011 homeowners will get an automatic $125,000 of homestead protection in Massachusetts for their primary residence even without filing a homestead for the full $500,000.

In the past, if the Federal exemptions were chosen it was usually because of the higher value of the personal property exemptions. But, in January 2011, the State of Massachusetts finally increased and modernized the value of the personal property exemptions.  These changes went into effect on April 7, 2011 and now make the Massachusetts exemptions better for consumers–while the federal exemptions stay as they are.

For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.

8.  Where is the Bankruptcy Court in Massachusetts and will I have to go?

There are 3 bankruptcy court departments in Massachusetts, one in Boston, one in Worcester and one in Springfield.  You will have to visit one of these courts at least one time, but we will be with you every step of the way.  After the court receives a Chapter 7 or 13 bankruptcy filing, it schedules a meeting of your creditors.  In the vast majority of cases no creditors attend the meeting and it is just you, your bankruptcy attorney, and the bankruptcy trustee for about a ten minute meeting. This is called the section 341 meeting (341 meetings are also held in Brockton, Springfield, and Pittsfield).  The Crossley Law Office handles bankruptcy cases for people who live throughout Massachusetts. For a FREE bankruptcy consultation contact the Crossley Law Office on-line, or call (508) 655-6085 today.