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Bankruptcy in Massachusetts

Have you ever heard the 1969 story about Ted Kennedy? Ted Kennedy and his friend, Mary Jo Kopechne, were out for the evening on the Island of Chappaquiddick. Their car went off a bridge and Mary Jo was killed. Ted escaped and didn’t get help for Mary Jo. In fact, he left the scene of the accident.

Did the Kopechne family get to the Kennedy family millions? Nope.

Joe and Rose Kennedy had placed the money they gave to their children in trust. If drafted properly, trust assets are exempt from lawsuits, divorce, inheritance rights, and bankruptcy.

Years later, when Ted got divorced (twice), his ex-spouses were not able to access the family money. And when Ted died, his wife did not inherit the family trust money.

By now, you’re likely thinking to yourself something along the lines of, “That’s somewhat interesting, but what does it have to do with me?”

The connection between the Ted Kennedy stories and yours is “exemptions”. If you have to file bankruptcy, you too can protect much or all of your assets with exemptions.

Massachusetts State Specific Exemptions

Like many other states, when you file bankruptcy in Massachusetts, you can select either the federal or the applicable state’s exemptions. The Massachusetts exemptions are particularly generous, especially if you own a home.

For example, if you file the right papers, you can protect up to $500,000 of equity in your home. If you either have a disability or are age 62 or older, you and your spouse can double that exemption and protect up to $1 million of home equity (and still file bankruptcy).

To make sure you can take care of yourself and your family (and go to Legal Seafood for clam chowder) there are other exemptions as well such as exemptions wages, personal property, insurances, and retirement accounts.

Chapter 7 or Chapter 13 in the Commonwealth of Massachusetts

In addition to showing you how to protect assets through various exemptions, your bankruptcy attorney will help you to determine whether you can file Chapter 7 or whether you should file Chapter 13.

Be sure to get good legal advice because there is more to picking or qualifying to pick a chapter than meets the untrained eye. While both chapters get you to the same place a clean slate and a fresh start, the ways of getting there are different.

  • In Chapter 7, unsecured debt is wiped out and you never have to pay it back. There’s a chance you’d have to give up property to pay off creditors, but most bankruptcy filers’ property is covered by exemptions. The process takes about 6 months.
  • In Chapter 13, some unsecured debt may be wiped out and but other is renegotiated so you typically owe less or pay what you owe back at a lower rate (or both). You won’t lose any property, if you continue to pay for it; and, the process takes 3 to 5 years.

How to Find a Good Massachusetts Bankruptcy Attorney

  • Five easy ways to find a good attorney are:
  • Limit your search to those attorneys who limit their practice (to bankruptcy).
  • If you have a loved one who has filed bankruptcy, ask him about his experience. Would he recommend the attorney he worked with?
  • Ask the local bar association for a referral to bankruptcy attorneys.
  • Do an Internet search for “Find a Massachusetts Bankruptcy Attorney”.
  • Have a conversation with each potential bankruptcy lawyer. Then, ask yourself, “Would I be comfortable working with this person and her team?”

How to Prepare to Work with a Bankruptcy Lawyer

Take a deep breath and know that bankruptcy laws were made for people in your situation. There is nothing to fear. Filing bankruptcy is likely the end of a long period of stress; or, it’s at least the beginning of recovery.

Gather all your financial documents. Jot down your debts, monthly bills, income, savings, and a general list of your property. Your attorney will show you how to organize the information and make the most out of those exemptions to protect your property.

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