Filing Bankruptcy in Massachusetts

In most respects, filing for bankruptcy in Massachusetts isn’t any different than filing in another state. The bankruptcy process falls under federal law in Massachusetts.

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Facing financial challenges is a part of life. But if you're one of the millions struggling financially due to COVID-19 or another event, bankruptcy can help. Here, you'll find:

  • an explanation about Chapters 7 and 13
  • checklists to help you understand the process and stay organized
  • Massachusetts's property exemption laws and filing information, and
  • links to our bankruptcy quiz, an online qualifying tool, and other helpful resources.

However, we couldn't squeeze everything into this article, so be sure to check out its companion What You Need to Know to File for Bankruptcy—you'll find lots more details there.

How Bankruptcy Works in Massachusetts

In most respects, filing for bankruptcy in Massachusetts isn't any different than filing in another state. The bankruptcy process falls under federal law, not Massachusetts state law, and it works by unwinding the contracts between you and your creditors—that's what gives you a fresh start.

But Massachusetts's laws come into play, too, in a significant way. They determine the property you can keep in your bankruptcy case. You'll also need to know other filing information, which we explain after going over some basics.

Choosing a Bankruptcy Chapter in Massachusetts

Most people file either Chapter 7 or Chapter 13. If you don't know the differences between the two, you're not alone. The short explanation below and our handy Chapter 7 versus 13 chart will help clear things up.

Chapter 7 bankruptcy. Chapter 7 is often a bankruptcy filer's first choice for several reasons. It's quick—it only takes a few months to complete. And it's cheap—you don't pay anything to creditors. It works well for those of us whose property consists of the essential items needed to live and work.

People with more assets could lose them, however, especially if they own unnecessary luxury items. For instance, you might have to give up your RV, baseball card collection, or timeshare in the Bahamas—even your house or vehicle if you have too much equity in it or you're behind on the payments. Unlike Chapter 13, Chapter 7 doesn't have a payment plan option for catching up on late mortgage or car payments. So you could lose your home or car if you're behind when you file.

Chapter 13 bankruptcy. By contrast, Chapter 13 filers must pay creditors some or all of what they owe using a three- to five-year repayment plan. But the payment plan allows Chapter 13 to offer benefits not available in Chapter 7. For instance, not only do you keep all of your property, but you can save your home from foreclosure or your car from repossession. If you need time to repay a debt you can't discharge in bankruptcy, you can use this chapter to force a creditor into a payment plan. The biggest downside to this chapter? It can be expensive. Many people can't afford the monthly payment. Learn more about when filing Chapter 13 is better than Chapter 7.

Caution for businesspeople. Be sure to learn about the ins and outs of small business bankruptcies. The principles discussed apply to consumers only.

Will Filing Bankruptcy in Massachusetts Erase My Debts?

Bankruptcy wipes out many bills, like credit card balances, overdue utility payments, medical bills, personal loans, and more. You can even get rid of a mortgage or car payment if you're willing to give up the house or car that secures the debt. (Putting property up as collateral creates a "secured debt"—if you don't pay what you owe, the lender gets to take the property back.)

But you can't discharge all debts. Nondischargeable debts, like domestic support arrearages and recent tax debt, won't go away in bankruptcy, and student loans aren't easy to wipe out (you'd have to win a separate lawsuit). You'll want to be sure that bankruptcy will discharge (get rid of) enough bills to make it worth your while.

Steps in a Massachusetts Bankruptcy

We all know that seeing the forest helps us recognize the trees, so it's probably a good time to consider the significant steps you'll take during your bankruptcy journey. Think of this checklist as a roadmap of sorts, but you can also use it to track your progress. The good news? You've already made headway on the first two items!

Bankruptcy Steps Checklist

Keeping Property When Filing Bankruptcy in Massachusetts

You won't lose everything in bankruptcy. You'll use your state bankruptcy exemption laws to protect your property. We list the significant exemptions below, but first, understanding the following will help you maximize what you'll keep in your case.

  • Exempt and nonexempt property. You can keep property protected by an exemption or "exempt" property. When a bankruptcy exemption doesn't cover the property, you'll either lose it in Chapter 7 or have to pay for it in the Chapter 13 repayment plan.
  • Choosing state or federal exemptions. You can choose whether you use the state exemption list or the list of federal bankruptcy exemptions, but you can't mix and match exemptions from both sets. Filers who use state exemptions can also use the federal nonbankruptcy exemptions.
  • Doubling exemptions. Spouses filing together can double the exemption amount if both own the property.
  • COVID-19 recovery rebate exemption. You might be able to protect stimulus payments, tax credits, and child credits in bankruptcy with the federal recovery rebate exemption.

Massachusetts's Bankruptcy Exemption List

Below is a list of common Massachusetts exemptions; however, you should independently verify the following exemptions or consult with an attorney:

  • Cemeteries and burial property. (Mass. Ann. Laws ch. 235, § 34.)
  • Displacement benefits. Moving expenses if you must move due to eminent domain. (Mass. Ann. Laws ch. 79, § 6A.)
  • Fraternal Benefit Society benefits. (Mass. Ann. Laws ch. 176, § 22.)
  • Homestead or residential property. Debtors who file a "Declaration of Homestead" with the Registry of Deeds can exempt up to $500,000, as well as debtors over 62 or who have a disability; otherwise, the exemption is $125,000. (Mass. Ann. Laws ch. 188, §§ 1-4) Interests of a non-debtor spouse in property held as tenancy by the entirety (an attorney can explain these rights). (11 U.S.C. § 522 (b)(3)(B).)
  • Rented residential property. Renters can exempt rent (not to exceed $2,500 per month) for each rental period. (Mass. Ann. Laws ch. 235, § 34.)
  • Insurance benefits. $400 per week in disability insurance benefits; healthcare provider self-insurance funds, insurance policies, and annuity contracts payable to the insured's spouse or dependent. (Mass. Ann. Laws ch. 175, §§ 110A; 175-36B, 119A, 125, 126, 132C, 135; ch. 175, § 15. (In re Sloss, 279 B.R. 6 (Bankr. D. Mass 2002).)
  • Motor vehicles. $7,500 in one motor vehicle or $15,000 if owned or substantially used by a person with a disability or over the age of 60. (Mass. Ann. Laws ch. 235, § 34.)
  • Partnership property. Specific partnership property is exempt. (Mass. Ann. Laws ch. 235, § 34.)
  • Pension and retirement benefits. Retirement benefits, except for benefits subject to claims under support orders. (Mass. Ann. Laws ch. 32, § 19; ch. 168, § § 41 and 44; ch. 170, § 35; ch. 171, § 84; ch. 246, § 28.)
  • Personal property. Clothing and beds; $15,000 in household furniture; $1,225 in jewelry; one heating unit; $500 per month for utilities; $500 in books; two cows, 12 sheep, two swine, and four tons of hay; $600 in provisions; military uniforms; a pew in a house of public worship; $300 sewing machine; $2,500 in cash or deposit accounts; $100 shares in a cooperative. (Mass. Ann. Laws ch. 235, § 34; ch. 246, § 28.)
  • Public assistance. (Mass. Ann. Laws ch. 118, § 10; ch. 235, § 34.)
  • Trade implements. $5,000 in tools, implements, fixtures; $5,000 in stock-in-trade; $1,500 in business-related fishing gear; and military uniforms and arms. (Mass. Ann. Laws ch. 235, § 34.)
  • Unemployment compensation. Exempt except for certain support obligations. (Mass. Ann. Laws ch. 151A, § 36.)
  • Veterans benefits. (Mass. Ann. Laws ch. 115, § 5.)
  • Wages. The greater of 85% of gross earnings or 50 times the Massachusetts minimum hourly wage per week. (Mass. Ann. Laws ch. 115, § 5.)
  • Wildcard. $1,000 plus up to $5,000 of any unused exemption amount for automobile, tools of the trade, and household furniture exemptions. (Mass. Ann. Laws. ch. 235, § 34(17).)
  • Worker's compensation. Exempt except for certain state agency and support obligations. (Mass. Ann. Laws ch. 152, § 47.)

Other Massachusetts exemptions exist, and amounts adjust periodically. Be sure you have the most recent figures for Massachusetts by visiting the Massachusetts legislative website.

Preventing Bankruptcy Exemption Problems

Exempt your property carefully. The bankruptcy trustee—the court-appointed official assigned to manage your case—will review the exemptions. A trustee who disagrees with your exemptions will likely try to resolve the issue informally. If unsuccessful, the trustee will file an objection with the bankruptcy court, and the judge will decide whether you can keep the property.

Example. Mason owns a rare, classic car worth $15,000, but the state vehicle exemption doesn't cover it entirely. Believing that the car qualifies as art—at least in his mind—Mason exempts it using his state's unlimited artwork exemption. The trustee disagrees with Mason's characterization and files an objection with the court. The judge will likely decide the vehicle doesn't qualify as art.

Purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Qualifying for Bankruptcy in Massachusetts

If you've never filed for bankruptcy before, you'll meet the initial requirement. Otherwise, check whether enough time has passed to allow you to file again. The waiting period varies depending on the chapter previously filed and the chapter you plan to file. Learn more about multiple bankruptcy filings.

You'll also need to meet specific chapter qualifications.

You'll qualify for Chapter 7 bankruptcy if your family's gross income is lower than the median income for the same size family in your state. Add all gross income earned during the last six months and multiply it by two. Compare the figure to the income charts on the U.S. Trustee's website (select "Means Testing Information").

Want an easy way to do this online? Use the Quick Median Income Test. If you find that you make too much, you still might qualify after taking the second part of the "means test." If, after subtracting expenses, you don't have enough remaining to pay into a Chapter 13 plan, you'll qualify for Chapter 7.

Qualifying for Chapter 13 can be an expensive proposition because the extra benefits come at a hefty price, and many people can't afford the monthly payment. To qualify, you'll pay the larger of:

  • your priority nondischargeable debt
  • the value of nonexempt property, or
  • your disposable income.

Find out more about calculating a Chapter 13 bankruptcy payment.

Hiring a Bankruptcy Lawyer in Massachusetts

Most people find it worthwhile to get counsel. A bankruptcy attorney will help you:

  • qualify for the chapter of your choice
  • determine when it's time to file
  • help you keep the property you want
  • make sure you don't run afoul of fraud or other issues, and
  • explain when you can stop paying the bills you'll erase in your case.

You can expect creditors to call until you file. It's usually best to ignore them because telling creditors about your bankruptcy can encourage them to take more drastic collection steps before losing the right to collect altogether. However, if you hire counsel and refer creditors to your lawyer, they'll have to stop calling you.

Are you curious whether your case is simple enough to file yourself? Our quiz will help you identify potential complications while educating you about the bankruptcy process. You'll find it here: Do I Need a Lawyer to File for Bankruptcy?

Filing Your Bankruptcy in Massachusetts

Now that you've decided to file, the fun begins! Well, not really. The first step—gathering your financial information—can be a bit of a chore. But using our bankruptcy document checklist should help you organize the things you (or your attorney) will need.

Bankruptcy Document Checklist

Bankruptcy Forms, Means Test Multipliers, and Course Providers

After assembling the documents, your next step will be to prepare the paperwork. Here's what you'll need and where to find it.

  • Bankruptcy forms. You'll find free downloadable bankruptcy forms on the U.S. Courts website.
  • Means test multipliers. Go to the U.S. Trustee website to get the figures needed to complete the means test.
  • Education providers. The U.S. Trustee website also lists providers under "Credit Counseling & Debtor Education." Scroll down until you get to your district. And don't give up—it's a long list. (Individuals must complete credit counseling during the 180 days before filing for bankruptcy and a debt management course after filing the bankruptcy case.)

Massachusetts Bankruptcy Court Website and Locations

Your case starts when you file your paperwork with the local bankruptcy court and either pay the filing fee or request a fee waiver. Also, keep in mind that each court creates its own rules that you must follow, and some might have local forms, too.

On the Massachusetts Bankruptcy Court website, you'll find helpful information, including instructions for filing your paperwork and the location that services your zip code, by clicking "Debtor Information" on the far right of the menu bar.

Boston

Worcester

Springfield

John W. McCormack Courthouse

5 Post Office Square, Ste 1150

Boston, MA 02109-3945

Phone: (617) 748-5300

Fax: (617) 748-5315

Donohue Federal Building

595 Main Street, Room 211

Worcester, MA 01608-2076

Phone: (508) 770-8900

Fax: (508) 770-8975

United States Courthouse

300 State Street

Springfield, MA 01105

Phone: (413) 785-6900

Fax: (413) 781-9477

After Filing for Bankruptcy in Massachusetts

Your creditors will stop bothering you soon after you file. It takes a few days because the court mails your creditors notice of the "automatic stay" order that prevents most creditors from continuing to ask you to pay them. Here's what will happen next:

  • You'll turn over financial documents proving the statements in your bankruptcy paperwork.
  • You'll attend the 341 meeting of creditors—the one appearance all filers must attend.
  • You'll complete a debtor education course and file the completion certificate.

These things all must happen before you get a Chapter 7 bankruptcy discharge. Chapter 13 filers will also attend a repayment plan confirmation hearing and complete the three- to five-year payment plan.

Need More Help?

You might not know this, but Nolo has been making the law easy for over fifty years. If you have questions, use the links we've included throughout for more details. Otherwise, you'll find the answers to almost all of your bankruptcy questions at nolo.com/legal-encyclopedia/bankruptcy.

Providing all information needed to file for bankruptcy is beyond the scope of this article. If you'd like to file without an attorney, consider buying a self-help book like How to File Chapter 7 Bankruptcy by Attorney Cara O'Neill and Albin Renauer J.D. to help you make well-informed decisions about your bankruptcy matter.

Updated April 26, 2021

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