Financial distress isn’t always the fault of the debtor, but is sometimes the result of a series of circumstances beyond their control. Financial difficulties can be the result of an illness, a dispute with a business partner, an unexpected personal injury or protracted litigation. At Frisoli Associates, P.C., in Cambridge, Massachusetts, we never judge debtors who come to us for help. Instead, we focus on the future, helping clients with debt collection problems get their lives and their businesses back on track, and get a “fresh start.”
At Frisoli Associates, P.C., we handle bankruptcy litigation cases including:
- Preferential transfers
- Avoidance actions
- Trustee investigations
- Fraudulent transactions and transfers
Well-versed in both creditors’ and debtors’ rights, we offer knowledgeable legal counsel that keeps in mind all your options under the law. We never hesitate to go to court to protect our clients’ rights, and we help our clients approach bankruptcy litigation in a way that weighs the benefits and costs of court action.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is commonly known as “liquidation bankruptcy.” It involves selling off certain property and assets to repay creditors. Once these assets have been sold off, an individual may be “discharged” of his or her debt. Filing a petition under Chapter 7 automatically stays the majority of collection actions against you and your property. The stop may be temporary, but as long as it is in effect, creditors generally cannot continue phone calls demanding payment, sending threatening letters, bringing lawsuits, repossession actions or wage garnishments.
Eligibility - The Means Test
Individuals, partnerships, corporations and other business entities may be eligible for Chapter 7 bankruptcy. If you are an individual debtor and your current monthly income is more than the state median, the bankruptcy code requires that the court apply what is known as a “means test” to determine your eligibility for Chapter 7 bankruptcy.
This test balances your aggregate net monthly income with your debt. The courts may not allow you to file for Chapter 7 bankruptcy if your disposable monthly income exceeds a certain amount or exceeds a certain percentage of your total, non-priority, unsecured debt.
If you don’t qualify for Chapter 7 bankruptcy, you may still qualify for Chapter 13 bankruptcy, but the best way to know if you are eligible for bankruptcy protection is to work with an experienced lawyer.
Chapter 13 Bankruptcy
Many people who are not eligible for Chapter 7 bankruptcy are still eligible for Chapter 13 relief. Chapter 13 bankruptcy provides for the adjustment of debts of an individual with regular income. It allows you to create a repayment plan to repay all or part of your debts over three to five years. During that repayment time, the law prohibits creditors from starting or continuing their collection efforts.
A Chapter 13 case begins by filing a petition, a payment plan, and supporting materials with the bankruptcy court serving your area. When you file a Chapter 13 petition, an impartial trustee is appointed to your case. The trustee evaluates your debts and payment options, collects payments from you, and distributes them to your creditors.
One advantage to Chapter 13 bankruptcy is that it gives individual debtors the opportunity to save their homes from foreclosure by allowing them to create a payment plan for catching up on missed payments. Filing a Chapter 13 petition can also help stop most collection actions on consumer debt.
Homestead & Bankruptcy Exemptions
For most people, their home is the biggest investment they will ever make. So, when creditors threaten you and your family, it is important to know that you can take legal action to save your home. The knowledgeable lawyers at Frisoli Associates, P.C., in Cambridge, Massachusetts, help people and families protect the equity in their homes.
Massachusetts law allows many homeowners to file a Declaration of Estate of Homestead. This document allows homeowners to protect their property against unsecured creditors and can prevent the forced sale of a family home. After filing a homestead declaration, homeowners are protected for up to $500,000 of the value of their home. The law gives even more protection to the elderly and people with disabilities.
The Homestead Act and Bankruptcy
In a Chapter 7 bankruptcy, people go through an asset liquidation proceeding. They can often claim certain exemptions to protect their assets. If you have a Homestead Declaration in place under Massachusetts state law, you may actually be able to retain a much greater portion of the money from a liquidation sale of your home than you would normally be allowed to keep under federal bankruptcy law.
In a Chapter 13 bankruptcy, having a Homestead Declaration in place may decrease the amount of money you have to pay through your Chapter 13 payment plan proposal.
Recent Changes to Bankruptcy Laws
On October 17, 2005, new changes in the bankruptcy code took effect. While the revisions will not necessarily prevent you from qualifying for bankruptcy, it is important to know and understand how they may affect you. At Frisoli Associates, P.C., located in Cambridge, Massachusetts, our lawyers work with you to make sure you understand the law. We then guide you through the bankruptcy process so that you are well-prepared to participate in the legal decisions that create the best outcomes possible.
The new bankruptcy law created some additional requirements for filing bankruptcy. These include:
- Counseling Requirements: Since 2005, bankruptcy law in the United States requires that most applicants attend pre-filing credit counseling in a government-approved program. They also must participate in a government-approved financial management education program after the conclusion of the court proceedings and before any debt can be discharged.
- The “Means Test” Requirement for Chapter 7 filing: Bankruptcy applicants who now want to file for Chapter 7 bankruptcy must now pass a “means test” to qualify. This test applies if your current monthly income is more than the median income in your state. If you make more than the median income, the court considers factors like your monthly income, your expenses, and the total amount of your debt. People who do not qualify for Chapter 7 may still qualify for Chapter 13 bankruptcy relief.
- Fewer protections for filers: Bankruptcy law has traditionally provided protection called an “automatic stay” that automatically went into effect when applicants filed for bankruptcy. The 2005 changes eliminated some of these protections, like ones preventing evictions, driver’s license suspensions, child support actions, or divorce.
It is important to take a long-term view of how you will be affected by bankruptcy, taking into account the broad picture. At Frisoli Associates, P.C., our personal bankruptcy lawyers can help you examine your situation. They can walk you through adversarial proceedings and the bankruptcy process and help you get your finances, your life, and your business back on track.
When representing consumer debtors in connection with bankruptcy, Frisoli Associates, P.C. is a debt relief agency as defined by the Bankruptcy Code, 11 USC § 101(12A).”