Boston Bankruptcy Answers - Boston Bankruptcy Information

Can a landlord turn down my rental application if I have filed for bankruptcy?

Gabriel Cheong — Tue, 24 Aug 2010 13:30:33 +0000

Yes, landlords are permitted to run credit checks on potential tenants and are permitted to turn down applications if you have a low credit score as a result of bankruptcy. This is because it is possible that you are a risk of non-payment for the landlord.

One way to avoid this problem is to secure housing before filing for bankruptcy. This way, your credit will not be as bad as after the bankruptcy. Also, if you secure a one or two year lease, the next time you are looking to secure housing, the bankruptcy will be older and you will also have a strong rental history.

If you have already filed for bankruptcy and are looking to rent, consider asking your potential landlord if putting down a large deposit would help you secure housing.

Will I have a difficult time receiving loans if I file for bankruptcy?

Gabriel Cheong — Mon, 23 Aug 2010 13:30:19 +0000

Typically, lenders will not want to loan money to anyone that they feel could not have the ability to pay the loan. When applying for a loan, you must answer “Yes” to the question, “Have you ever filed for bankruptcy before?” that will appear on the application. This may cause the lenders to believe that you are financially irresponsible and make them hesitant to provide you with a loan.

However, having a bankruptcy on your credit report isn’t the worst. Lenders understand that everyone hits a few bumps and are willing to give you another chance. The more money that you put down, the higher the chances are of getting a loan after bankruptcy. Also, going through a bank that you have already established yourself with may be helpful and help you get a lower interest rate.

Some lenders will not hesitate to lend to someone who’s recently filed for bankruptcy because they can charge a higher interest rate and they also know that you can’t file for bankruptcy again for a number of years.

Will tenancy by the entirety protect my property?

Gabriel Cheong — Thu, 19 Aug 2010 13:30:23 +0000

A tenancy by the entirety is a property ownership where each spouse owns the entire estate. Therefore, neither spouse can deal with the property independently of the other. One advantage of this is that if one spouse files for bankruptcy and the properties in question are under both spouses name, then that property will be protected under tenancy by the entirety.

However, if both spouses file for bankruptcy, the properties would not be protected under tenancy by the entirety and the properties may be liquidated in order to pay back the creditors who are owed (provided that the house in question is an exempted).

Is there a minimum amount of debt I must owe in order to file for bankruptcy?

Gabriel Cheong — Wed, 18 Aug 2010 13:30:40 +0000

No there is not a minimum amount of debt that you must owe in order to file for bankruptcy. However, it is important to make sure that you are confident that your financial situation is not a temporary one before you consider bankruptcy. Bankruptcy should be used only when debt is beyond your ability to repay.

One must consider the costs of applying for bankruptcy, the possible loss of assets, and the impact a bankruptcy will have on their credit report before they go ahead with a bankruptcy proceeding. An attorney will be able to help analyze your options and determine which action you should take.

Will bankruptcy effect my utility services?

Gabriel Cheong — Tue, 03 Aug 2010 13:30:21 +0000

No, filing for bankruptcy would not authorize any utility company from shutting off your services. However, you would have to keep paying your utility bills. If you are unable to pay your bills, Massachusetts law prohibits utility companies from terminating their services in particular situations and at specified times during the year.

Massachusetts law prohibits utility companies from turning off heating utilities for non-payment in these situations:

If the consumer can show that she is unable to pay the bill AND that someone living in the home is under the age of one or seriously ill;
If every person living in the home is over the age of 65; and
From November 15 to March 15, the “winter moratorium” is in effect and utilities are prohibited from turning off gas or electric for inability to pay.

Tax Implications of Debt Forgiveness

Roushi Sahagen — Wed, 28 Jul 2010 13:30:27 +0000

Debt forgiveness occurs when your bankruptcy case is closed, upon foreclosure, or short sale of a primary residence.
If your home is underwater and is given up in foreclosure or sold as a “short-sale,” the IRS will issue a 1099-C and come after you for the deficiency because debt you no longer have to pay back is considered an income to you. The reasoning behind the regulation stems from the idea that you borrowed money with the intention of paying it back and when you don’t, then you have pocketed some money that is considered as income rather than a debt. Same with the short-sale – because in essence, you are forgiven the debt amount.

Prior to 2007, many distressed debtors in foreclosure or short-sale were beset by such harsh consequences. There may be a recourse due to the passage of “The Mortgage Forgiveness Debt Relief Act of 2007.” This Act, which is due to expire on 12/31/2012, allows a debtor up to $2,000,000 in forgiven-debt not to be declared as income. Boston, Massachusetts, does not have a counterpart to this Act and therefore taxes will be owed to the state.

The qualifications requires that you be “insolvent” at the time of debt forgiveness. This means that your assets have to be worth less than your debts.

Can same-sex spouses file for joint bankruptcy petitions?

Gabriel Cheong — Tue, 27 Jul 2010 13:30:16 +0000

Bankruptcy is a federal proceeding and same-sex marriage is not recognized on a federal level (yet). Therefore, same-sex spouses cannot file joint bankruptcy petitions.

One significant drawback to this is that the cost of two bankruptcy cases will obviously be higher than for one case. However, same-sex spouses tend to have less joint debt than heterosexual couples. Therefore, if only one spouse has debt problems, it might be more advantageous for just that one spouse with the debt to file bankruptcy.

What is the effect of bankruptcy on eviction proceedings?

Gabriel Cheong — Thu, 15 Jul 2010 13:30:11 +0000

When you file for bankruptcy, the “automatic stay” goes into effect immediately and halts nearly all collection attempts against the person filing for bankruptcy. Once your Chapter 7 or Chapter 13 bankruptcy is filed, your landlord may not proceed with an eviction attempt under certain circumstance.

However, more than likely, your landlord will file a motion to lift the automatic stay and allow him to proceed with the eviction. So while bankruptcy will likely not prevent eviction, it will prevent your landlord from collecting any back rent that you owed. This amount will be discharged upon the completion of the bankruptcy proceeding because it is an unsecured debt.

It is important not to file bankruptcy just to prevent an eviction from occurring. If the court finds that you have, they can dismiss the bankruptcy and impose legal and monetary sanctions on you.

Should I transfer real estate before filing for bankruptcy?

Gabriel Cheong — Wed, 14 Jul 2010 13:30:36 +0000

Although transferring ownership to your spouse or child may sound like a good idea, you should be extremely careful before transferring real estate or other property just prior to filing for Bankruptcy. This is because it may be considered a fraudulent conveyance. The federal bankruptcy Trustee will review your bankruptcy petition as well as any real estate transfers. All deeds in Massachusetts are located at The Registry of Deeds and are public record and therefore it is easy to catch real estate fraud. Furthermore, it will likely be unnecessary because you can exempt your house under both federal and state laws when filing for bankruptcy.

What Happens If I Left Out Listing Some Creditors During Bankruptcy?

Roushi Sahagen — Mon, 12 Jul 2010 17:01:45 +0000

If you have what we categorize as a “no-asset” (means that the debtor has no money left over in the bankruptcy estate that the Trustee or creditor can claim) case in a Chapter- 7 Bankruptcy in the Greater Boston area, and you miss some creditors, chances are that your debts will be forgiven in Bankruptcy, even if there were no notifications to the missed-creditors.

How can this be? Well, the logic behind this claim says that even if the creditor was notified, what rights did they forgo in objecting to your case if there were no assets in the first place? Unless the debt was great enough and the creditor had a compelling fraudulent (very difficult to prove) cases against you, then you are in the clear, most likely.

The burden is on the creditors to prove fraudulence and that they should’ve been on notice since debtor hadn’t paid bills in a while, that perhaps debtor did file for Bankruptcy. All they have to do is access the e-filing listings of the Bankruptcy Court.

A debtor always has the right to re-open their case and amend the creditor listings.