If you continue to operate the business, its assets and income will still be subject to creditors’ claims, and if you continue to derive sufficient income from it, you may be forced into a Chapter 13 re-organization plan in order to repay part of the loan.

For example, if you borrowed $50,000 to open a hair salon with a personal guarantee, and the salon failed, and you had $20,000 in the bank, $11,200 would be protected under federal exemption rules. The rest would be available to creditors.  If you had less than $11,200 then the debt would be completely discharged.  If Massachusetts exemption rules are used instead, your home can be protected (for up to $500,000 in equity) but not your bank accounts.  Massachusetts is generous with its home exemption amount but not for personal property whereas the Federal Bankruptcy rules are almost the opposite.

A short sale of your home is a sale in which the mortgage lender agrees to accept less than the value of the mortgage as repayment. The difficulty of arranging such sales, including the bank’s slow response, often causes buyers to simply walk away.  A short sale however, may be less damaging to your credit than bankruptcy.

So how do you know if a short sale or bankruptcy is your better option?  It depends on your situation.  Speak with an experienced bankruptcy attorney during the free consultation to find out.

If one spouse accumulated the debt prior to marriage, then he/she may file without involving the other spouse.  However if the debt is jointly held, then both will have to file together in order to discharge the debt obligation.

If one spouse does not want to involve the other due to credit rating issues, take heed, because the non-filing spouse’s income will be included in the calculations in determining whether a Chapter 7 filing is appropriate.

If both parties’ incomes fall under the state median income, then the filer will qualify with no presumption of abuse, meaning that he/she will not be subject to the means test that he/she qualifies for a Chapter 7 filing.  The spouse’s entire income is not included in the calculations however and only the portion that is attributed to household expenses will be considered as income.  For example, if the spouse makes payments toward his/her personal expenses such as a car loan, insurance, or student loans, then all those expenses are deducted from the total income and the left-over portion is added to the filer’s income.

The ability to determine whether one or both spouses should file is complicated and carefully measured steps should be taken before filing.  Contact a bankruptcy lawyer in the Boston area for a free consultation at (617) 273-5110.

Child support
Alimony
Taxes
Education loans
Loans repayment borrowed against IRAs
Debt associated with criminal wrongdoings
Evictions – if landlord acquires judgment to eviction before tenant files for bankruptcy
Evictions – if tenant endangers property with illegal use of controlled substances on the property

*Warning! Even without a Court order judgment, a landlord may always ask the Court to lift the protection enjoyed by tenant debtor and courts often grant this request to landlords.

A bankruptcy attorney may help in spending down some of the money in property you can exempt (property you are allowed to keep), and if you qualify for the Federal exemptions, you will have the right to keep up to about $12,000 in cash.

Bankruptcy is a last resort for people who cannot see their way out of debt. If the process is abused by intentional omission or lying to the bankruptcy court and the Trustee finds out there’s extra cash, then the Trustee will either dismiss the case or report you to the judge for fraud, perjury or other felony charges.

If you need help in filing for bankrutpcy, contact a Boston bankruptcy lawyer at (617) 273-5110.

Most Americans are one medical emergency or one job loss away from bankruptcy.  But it doesn’t have to be like that and in fact, it shouldn’t be.  We suffer from a deficit not only of money but of knowledge of how finances work and how it ought to work.

Here are a few things that you must do after bankruptcy so that your finances come out better the second time around.

Savings

You must have savings of at least nine months.  If you get laid off or there are unforeseen expenses, you need to have the money to pay for such things.  Your savings cannot be in the form of a home equity loan/line of credit, credit cards or your retirement plans.  You must have liquid, cash savings.  Figure out how much you need to break even every month and save up nine-months worth of expenses.

Insurance

You must have adequate and appropriate insurance.  If you have minor children or other dependents, you must have life insurance.  You must have health insurance.  If you cannot afford health insurance, there are programs such as the MassHealth Connector that will provide you with health insurance for little or no cost.  If you are 55 or older, you must have long-term care insurance.

Budget

You must learn to budget.  What does budgeting mean?  It means that you cannot spend more than you make every paycheck.  You can use credit cards for convenience and for reward points but every credit card bill must be paid in full at the end of the month.  If you don’t pay it off in full, you have not budgeted correctly.  It might be a small amount at first, but it’ll quickly spiral out of control.  Use an expense spreadsheet or budget calculator to help you.

Goals

You must set clear financial goals.  For example, if you have a 30-year mortgage, you should set a date in the future where you promise yourself to pay off that mortgage before you retire and before the 30-year mark.  That date should be a definite date such as January 31, 2025.  Do the same for a car loan or how much you want to save for retirement.  If you don’t have a date for your goals, it’s just a dream.

Retirement

You must save for retirement.  Even if you don’t think you have the money to put away, if you work for a company that offers a 401(k) plan and they match your contributions, you must contribute.  Since your contributions to a 401(k) are taken out of your paycheck before you even get it, consider it like you never had that money to spend.  A matching contribution to a retirement plan is free money.  You can’t afford to pass up free money.

However, if you don’t have much equity in your home and chooses the Federal exemptions, then you may be able to keep the refunds provided the $11,000 of wildcard exemptions cover that amount and the wildcard exemption isn’t used toward keeping other personal property.

Call (617) 273-5110 for a free consultation with a Boston Bankruptcy Lawyer.

If the debtor proceeds with a reaffirmation agreement without an attorney, then the Court will have to approve the new contract provided the agreement does not result in undue hardship to the debtor.

For a free consultation with a Boston Bankruptcy Attorney call (617) 273-5110 and ask for Roushi Sahagen.

• Borrow from friends or family
• Use tax refund
• Borrow from their retirement plan but only in a foreclosure case where there’s urgency to do so
• Go on payment plans if provided by the attorney

More paperwork is now required to be filed electronically with the Bankruptcy Court due to the 2005 Bankruptcy Law reforms. A Bankruptcy attorney’s fees are far less than other legal fees and it is often worth engaging an attorney because aside from their guidance, sometimes amendments to a filing are required.  For example, if more creditors are discovered after filing, or additional information needs to be updated, then the bankruptcy attorney will make the changes with no additional cost to the client.

The bankruptcy fees to the court may be waived if your income is below 150% of the Massachusetts or Boston Poverty Guidelines, which is currently around $15,000. The Bankruptcy Court also allows installment plans as well.

For a free consultation with a Boston Bankruptcy Lawyer call (617) 273-5110 and ask for Roushi Sahagen.