Lipton Law Group, LLC

There is no reason for your employer, coworkers, neighbors, relatives, or friends to find out that you have filed for bankruptcy. When you file for bankruptcy, your creditors and, in some cases codebtors, are notified of the filing by the bankruptcy court at the mailing address listed on your bankruptcy schedules. Although personal bankruptcy filings are public records they are not generally published in local newspapers or prominently posted anywhere. There are some private companies that aggregate bankruptcy filings, which can result in the bankruptcy appearing in a Google search, but these are not typically prominent in the search results unless you have a very unique name and there is little other information about you on the internet. In most cases, the only people who find out about your bankruptcy filing are your creditors and the bankruptcy court.

It depends on how complicated the case is. In some cases, if there are just a few creditors with simple claims, and the individual owns significant assets, a case may be as little as $1,000, plus court filing fees. A typical Chapter 7 bankruptcy case will cost between $1,500 and $3,000. In more complicated cases, fees are generally charged at an hourly rate as the amount of work can be difficult to estimate in advance. In most Chapter 13 bankruptcy cases, the Debtor can incorporate legal fees into the payment plan, spreading out the cost over 3-5 years. Wherever possible, we work with our clients from the start to develop cost-efficient strategies to provide affordable and highly effective legal representation.

Chapter 7 and Chapter 13 are the two main bankruptcy options for individuals. Both provide immediate protection from creditors through the automatic stay and each allows for the ultimate discharge of debts. However, the timing, cost, and complexity are very different. In Chapter 7 bankruptcy, the debtor agrees to surrender their non-exempt property in exchange for a discharge of their debts. The debtor must also complete a “means test” examining their income and household expenses to determine whether the filing should be considered an “abuse” of the bankruptcy system. Because of the means test, many higher-income people are unable to qualify for chapter 7 bankruptcy. In most individual Chapter 7 cases there is no non-exempt property, and the discharge is granted in just a few months. In Chapter 13 bankruptcy, the debtor proposes a payment plan to their creditors in which they make monthly payments for 3-5 years. The amount of the payments is determined by a combination of factors, including the debtor’s household size, income, and expenses, the value of their non-exempt property, and what types of debts they owe. Chapter 13 is often used to cure a default on a secured debt, such as a mortgage or car loan, or to pay non-dischargeable taxes, child support. Unlike in Chapter 7, Chapter 13 debtors are not required to surrender any non-exempt property to creditors. Rather, the Debtor’s plan must propose to pay creditors at least as much as they would receive if the debtor’s assets were liquidated in Chapter 7. Upon completion of the payment plan, any remaining unpaid debts are discharged.

Yes and No. Generally, you can expect a 100-300 point drop in credit score immediately after filing for bankruptcy. Typically those with higher scores see the greatest drop in their credit score, while those with already damaged credit may see little to no drop in their credit score. After filing, credit can recover quickly. This is because after bankruptcy you have no outstanding debt, no past due payments and no charge offs. Many people are anxious to start rebuilding credit after filing and are pleased to learn that it is possible to rebuild credit after bankruptcy. People are often able to get new credit cards within months of their bankruptcy discharge and car loans within a year. You can even qualify for mortgages backed by Fannie Mae and Freddie Mac in as little as four years from a bankruptcy filing. Although bankruptcy can stay on your credit report for up to 10 years that does not mean your credit is destroyed or that you will not be able to get credit for 10 years, it is simply one factor in the credit score.

In Massachusetts, individuals filing for bankruptcy are allowed to exempt up to $500,000 in equity in their home from the bankruptcy estate. In order to claim the maximum exemption, you must (1) own the home on the day you file bankruptcy (2) occupy or intend to occupy the property as your principal residence, and (3) you must have recorded a Declaration of Homestead in the registry of deeds for the county in which the property is located. If you have not recorded a Declaration of Homestead prior to filing bankruptcy, then the exemption is limited to the “automatic homestead” of $125,000. Prior to filing, your bankruptcy attorney should review your deed and Declaration of Homestead to ensure that they are valid, and the exemption will be allowed.

Generally, no. When an individual files for bankruptcy, they are allowed to exempt certain types of property from the bankruptcy estate. In Massachusetts, individuals are allowed to exempt up to $7,500 in equity in a vehicle; that is, the trade-in value of the vehicle, less the amount of any loans against it. For disabled people over age 62 and disabled people, the exemption is up to $15,000. In most cases, an individual will not lose their vehicle when they file for bankruptcy.