FAQ

Determining whether to file bankruptcy is often a difficult decision. We suggest contacting our office via phone or email to discuss your financial situation so we can evaluate what your options could be and whether you are a candidate to file for bankruptcy relief.

The filing of a bankruptcy petition in most instances will result in an automatic stay being put in place which prevents creditors from calling you, sending demand letters, proceeding with court hearings and any other collection actions. Once you obtain a discharge in bankruptcy the creditor (in most cases) is enjoined from pursuing the claim even after the bankruptcy case is closed. 

Not all unsecured debts can be discharged in a bankruptcy. One of the biggest sources of debt for people in today’s economy, student loans, are also almost always non-dischargeable in bankruptcy. Only in very rare cases will the Bankruptcy Court discharge student loans. Other debts, such as certain taxes, child support or alimony are not dischargeable.

Your options depend on whether you want to try and keep the home. If you want to move out and walk away, then you can file Chapter 7 to surrender the house and discharge the debt. If you want to save your home then a Chapter 13 petition may be in your best interest provided you have the ability to make your current mortgage payments and cure the arrearage over the life of your Chapter 13 plan. A consultation with one of the firm’s attorneys is warranted if you have fallen behind on your mortgage and seek to avoid foreclosure.

If you are behind on your debts, then that is already damaging your credit. One of the goals of bankruptcy is to give the honest debtor a “fresh start.” While your credit score may go down in the short-term, it should rebound and allow you to move forward with your life. Filing of the bankruptcy is a financial decision which will impact your credit but it may also start on the path of financial stability. If you are having financial difficulty and need to talk to a bankruptcy professions then please give our office a call at (413) 732-6840.

Chapter 13 Bankruptcy allows individuals with a regular income to reorganize their debt through a “Chapter 13 Plan” of repayment in order to repay at least a portion of their debt with their future income.  The plan typically lasts three or five years. The length of your Chapter 13 Plan is dependent on your household income. Payments are made to a Chapter 13 trustee who distributes payments to creditors. Just as in Chapter 7, creditors may not start or continue collection efforts after the petition is filed. 

Individuals filing for bankruptcy must compete a statement of current monthly income and means test calculation, which looks at your last 6 full months of household income. The means test is only applicable to those with primarily consumer debt. The means test analyzes average household monthly gross income to determine eligibility for Chapter 7 bankruptcy proceeding or whether you can repay a portion of your debt to creditors in a Chapter 13. Anyone who is over the means test for income (which is based upon a median income for household size) has a presumption of abuse and is subject to dismissal for Chapter 7. If you do not pass the means test, you may quality for Chapter 13 instead.    

Your Chapter 13 bankruptcy plan payment is determined by the schedule of income and expenses to determine how much disposable income is available to pay creditors.  You must also pay an amount equal to the value of your un-exempt property. 

Most debts are eligible for repayment under Chapter 13 including non-dischargeable debts such as student loans, back taxes, and child support payments. The remaining amount of unsecured debt not paid through the Chapter 13 plan will be discharged at the end of the bankruptcy period (aside from certain non-dischargeable debts). Therefore, there are still significant benefits to seeking Chapter 13 bankruptcy protection.  If you think that Chapter 13 bankruptcy may be a good option for you, please do not hesitate to contact our office and speak with our experienced attorneys.