Bankruptcy is a federal system, so the process to file for Chapter 7 bankruptcy or to file for Chapter 13 bankruptcy is nearly identical in every state, including Massachusetts. However, Massachusetts state law plays an important role, especially in setting property exemptions, which determine what property you get to keep (if you file for Chapter 7) and how much you have to repay your creditors (if you file for Chapter 13). There are also important state-specific resources available to you.
Credit Counseling in Massachusetts
Before you file for Chapter 7 or Chapter 13 bankruptcy in Massachusetts, you will have to get credit counseling from an agency approved by the United States Trustee’s Office. Here’s a list of Massachusetts agencies that have been approved to provide this counseling.
Where to File for Bankruptcy in Massachusetts
Massachusetts has federal bankruptcy courts in Boston, Worcester, and Springfield. (There’s also a court in Hyannis, but you can’t file your papers there.) You can find information on filing for bankruptcy, as well as forms, and local rules, at the website of the Massachusetts bankruptcy courts.
Property Exemptions in Massachusetts
Like every other state, Massachusetts has a list of property exemptions. (To learn more about how property exemptions work generally and which exemptions you may use, see Bankruptcy Exemptions: What Do I Keep When I File for Bankruptcy?)
Massachusetts allows bankruptcy filers to choose between the state exemption list and a federal exemption list (not all states offer this option). However, filers must use one list or the other; they may not mix and match some exemptions from the state list and some exemptions from the federal list.
Bankruptcy filers in Massachusetts may exempt up to $500,000 in home equity, if they have filed a homestead declaration; for those who haven’t filed a declaration, the exemption if $125,000. Massachusetts filers may also exempt $7,500 in equity in a vehicle, and up to $500 worth of books and Bibles. Here is a list of Massachusetts exemptions.
The Means Test
When you file for bankruptcy, you must compare your income to the median Massachusetts income for a household of your size. If your income is less than the Massachusetts median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years).
Currently, the median income for a one-person household in Massachusetts is just under $53,500; these figures change periodically. You can find the most recent amounts on the website of the U.S. Trustee at www.justice.gov/ust. Click on “Bankruptcy Reform,” and then “Means Testing Information.” Or go directly to the Census Bureau table here.
Debtor Education in Massachusetts
After you file for bankruptcy but before you receive your discharge, you must take a debtor education course. Like the mandatory credit counseling you must take before filing your forms, you must receive debtor education from an agency approved by the U.S. Trustee’s Office. Here is a list of Massachusetts agencies that are currently approved to provide this counseling.
Finding a Bankruptcy Lawyer
If you're considering bankruptcy, you may want to talk to an experienced Massachusetts bankruptcy lawyer.