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Springfield, MA 01103
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Chapter 7 Bankruptcy

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Chapter 7

Chapter 7 bankruptcy is designed for individuals that are unable to pay their debts.  It is also known as a liquidation proceeding, however, Chapter 7 is intended to allow debtors to get a "fresh start."  In a Chapter 7 case, a bankruptcy trustee is appointed to evaluate the debtor's financial circumstances and determine whether there are any assets that may be sold for the benefit of creditors.  Individuals in Chapter 7 are entitled to claim exemptions in certain property, which allow them to keep that property post-bankruptcy.  In Massachusetts, most people are able to exempt most of their belongings including their home, car, and retirement accounts.

Immediately upon the filing of a bankruptcy case, you receive the benefit of the "automatic stay," which is designed to stop all harassment by creditors. The automatic stay prohibits your creditors from contacting you and will stop almost all pending debt collection activities, including law suits and wage attachments.

Individuals seeking to file a Chapter 7 bankruptcy case must pass a "Means Test," which compares the current annual income for your household to the state median income for a household of the same size.  The current state median income by family size may be found on the U.S. Trustee's website at:  http://www.justice.gov/ust/eo/bapcpa/20141101/bci_data/median_income_table.htm. If your recent income exceeds the state median income limit, we can do a more detailed analysis to determine whether you qualify for Chapter 7 now or may in the future.

A Chapter 7 bankruptcy case usually takes no more than six months and does not require any court appearances.

The purpose of a Chapter 7 is to receive a "discharge" of your debts, meaning you are no longer personally obligated to pay them.  Only a few debts are not dischargeable in bankruptcy such as student loans and certain taxes.  With respect to secured debts (e.g., mortgages, car loans), if they wishes to keep the property, then the debtor is required to continue to make the loan payments pursuant to the contract.

This is also an option for businesses that do not have enough capital or cash flow for organizational restructuring. In this circumstance, the available assets from the company are sold. This money will then be used to pay creditors the debt that is owed.

Bankruptcy issues are complex.  Hendel, Collins & O'Connor, P.C. has some of the most experienced bankruptcy lawyers in Western Massachusetts.  For more information about Chapter 7 and whether you qualify for this option, please give us a call today at (413) 734-6411.