Essex County Bankruptcy Court

District of Massachusetts handles bankruptcy cases arising from Essex County. The bankruptcy courts are spread out over ninety different judicial districts across the states. Each bankruptcy court has a matching district court. The bankruptcy court and district court handle all the federal cases arising from the district.

Am I able to file my Essex County bankruptcy case in District of Massachusetts Bankruptcy Court?

If you live in Essex County or your business’s principal place of business is Essex County, the case can be filed in District of Massachusetts. In addition to Essex County, this district handles cases from the following counties: Barnstable County, Berkshire County, Bristol County, Dukes County, Essex County, Franklin County, Hampden County, Hampshire County, Middlesex County, Nantucket County, Norfolk County, Plymouth County, Suffolk County, Worcester County. Jurisdiction is a legal term for the geographic area or types of cases that a court has the power or authority to hear. Federal bankruptcy courts have what is called limited jurisdiction. This means the bankruptcy court can only hear bankruptcy cases arising from its own district. For example, a non-bankruptcy case has to be filed in the appropriate Massachusetts State Court or District of Massachusetts Court.

Essex County Bankruptcy Court

Differences Between Chapter 7 and Chapter 13 Bankruptcy

Chapter 7 requires liquidation (or sale) of all non-exempt assets. The proceeds are given to the debtor’s creditors (the people who are owed money by the debtor). Chapter 7 is generally the quickest and simplest form of bankruptcy. Due to concerns that Chapter 7 was being abused by some debtors, a 2005 amendment to the bankruptcy code requires the debtor to pass a “means test” in order to be eligible to file under Chapter 7. If the “means test” is failed, the case will be dismissed or converted to a Chapter 13 case. Chapter 13 allows an individual to keep all of their property and possessions. However, the debtor must agree to pay a portion of their future income to repay their creditors. Chapter 13 requires the debtor to have a regular source of income in order to develop a plan to repay all or a portion of his or her debts. The Chapter 13 laws allow for a payback period between three and five years (depending on the amount of income the debtor has coming in). The biggest difference between Chapter 7 and Chapter 13 is the payback period for Chapter 13 and the ability to keep all of your possessions under Chapter 13.

Bankruptcy Court Clerk for Essex County

The bankruptcy court has its own clerk. The clerk’s office is where documents are filed involving the bankruptcy court. The office for the clerk is usually located in the same building as the bankruptcy court. The clerk can provide legal information about your bankruptcy case but not legal advice.

Bankruptcy’s Automatic Stay

A very important feature of bankruptcy filings is called an automatic stay. By filing a bankruptcy petition, an automatic stay begins which immediately pauses any lawsuits, repossessions, evictions, or any other debt collection.

Bankruptcy Discharge

Discharge is a word in bankruptcy terminology which means the debtor is no longer liable for certain debts. This discharge from that liability is permanent meaning the creditor no longer can legally pursue the debtor for that debt. Put more simply, the debtor (or person owing the money) is no longer required to pay it to the creditor (or person to whom the money is owed). The discharge is a permanent court order preventing the creditor from pursuing the debt. The creditor cannot take any collection action including written communication or telephone calls to the debtor. Once the discharge is granted, the debtor is removed from all personal liability. However, any valid lien that was not removed in bankruptcy still exists. Under Chapter 7 law, a bankruptcy discharge can occur as soon as four months after the initial petition is filed with the clerk’s office. Pursuant to the laws under Chapter 12 or Chapter 13, the discharge occurs only after all payments under the plan have been made, which may be as much as four years.

Bankruptcy Means Test under Chapter 7

If a debtor under Chapter 7 is over a certain amount, the debtor must satisfy what is called the means test. (If the debtor’s income is under the state’s median income, then the debtor is qualifies for filing under Chapter 7). The means test the debtor’s aggregate currently monthly income over a five year period, (minus certain expenses that are the debtor is allowed to deduct pursuant to statute), is more than (1) $11,725, or (2) 25% of the debtor’s nonpriority unsecured debt (as long as that amount is at leat $7,025). The debtor can rebut the presumption that the debtor does not qualify for filing under Chapter 7 by demonstrating that special circumstances exist that justify additional expenses or adjustments of current monthly income. However, unless the debtor is above to overcome the presumption, the case will be converted into a Chaptet 13 petition or dismissed (pusruant to 11 U.S.C. § 707(b)(1).

Essex County Bankruptcy Debtor

Bankruptcy is able to eliminate most consumer debts. Consumer debt includes credit card and other unsecured debts (ie. not a mortgage). Some debts cannot be eliminated or wiped clear in bankruptcy. These debts will continue to be owed just as if bankruptcy was never filed. Debts that cannot be removed in bankruptcy include child support, alimony, and tax debt. Also, student loans are not eliminated or discharged in bankruptcy absent a showing that repayment of the loans would be an “undue burden”. The “undue burden” test is a very tough showing for a debtor to make.

Essex County Bankruptcy Creditor

A creditor is someone who is owed money or claims to be owed money by a debtor (or the person filing for bankruptcy). The creditor does not necessarily have to live or do business in Essex County. The debtor files in the district where he lives or where the corporation does business or is incorporated.

Does the debtor need to appear at any court hearings?

A normal Chapter 7 debtor will usually not have to appear personally in court. The Chapter 7 Debtor will only have to appear in court if an objection is filed by a creditor. A Chapter 13 debtor will usually only have to appear in court at the plan confirmation hearing. A debtor usually only has to appear at a 341 meeting. The 341 meeting is usually held at the office of the U.S. Trustee. The meeting is required under Section 341 of the U.S. Bankruptcy Code which requires a debtor to attend the meeting so creditors can inquire about the debtor’s debts and other property.

Is an attorney required?

Under the law, corporations, partnerships, or any other associations are required to have counsel. Individuals can technically file bankruptcy without an attorney (called “pro per” or “pro se”). However, the rules of bankruptcy are very complex. A party, even one without an attorney, is still required to follow all the rules and will be held by the court to them.

Bankruptcy Trustee

The trustee is the representative of the bankruptcy estate which is authorized to exercise certain powers for the benefit of the unsecured debtors. The trustee is a private individual or corporation appointed in all Chapter 7, 12, and 13 cases (and also in some Chapter 11 cases). The trusee reviewed the debtor’s bankruptcy petition and schedules. Additionally, the trustee can bring actions against creditors or the debtor to recover property that has been improperly removed from the bankruptcy estate. In a typical Chapter 7 case, the trustee is also charged with liquidating the property of the bankruptcy estate to make distributions to the creditors. A trustee in a Chapter 12 and 13 plan is also in charge of overseeing the debtor’s repayment plan.

Financial Information Required to File for Bankruptcy in Essex County

A debtor should have on hand tax returns (for at least the last two years), documentation of income (including paystubs for the last six months along with W-2s from the last two years). If a debtor owns any property, a valuation of any real estate needs to be provided. If a debtor owns any vehicles, supporting documentation including insurance, registration, etc. will be needed (along with information regarding any loans on those vehicles). Information on retirement accounts including type and balances will also be needed. If alimony and/or child support payments are currently owed, paperwork reflecting these payments will be needed as well. At the hearing, the debtor needs to bring a valid photo identification (like a driver’s license or identification card) and provide proof of social security number (usually by bringing your social security card). In order to complete the petition for bankruptcy, you will need the contact information for the creditors (or people who you owe the money to). This includes then name of each creditor and the amount of money you owe them.

Credit Counseling Requirement for Essex County Bankruptcy Cases

The bankruptcy law requires that individuals filing for bankruptcy complete a credit counseling class before filing for bankruptcy. This requirement can be completed by taking an online class (that can usually be finished in under an hour).

Rules Governing Bankruptcy Cases for Essex County

The United States Constitution, under Article I, Section 8, authorizes Congress to enact laws regarding bankruptcy. Under that authorization, Congress has codified the bankruptcy rules in Title 11 of the United States Code. Title 11 is called the Federal Rules of Bankruptcy. Under these rules, the bankruptcy judge is granted jurisdiction to make all decisions surrounding the bankruptcy case including case eligibility along with whether the debtor is properly entitled to discharge of the debt. Most of the bankruptcy process is actually administrative. In certain cases (those which are filed under Chapter 7, Chapter 12, and Chapter 13), the trustee performs much of these administrative functions.

Different Types of Bankruptcy Cases

There are six basic types of bankruptcy allowed under the Federal Rules of Bankruptcy.

Chapter 7 Bankruptcy

Chapter 7, also known as liquidation, allows for an orderly, court-supervised procedure where the trustee takes over the assets of the debtor, reduces them to cash (often by way of a sale), and disbursing the funds to the creditors. The disbursement to creditors is subject to certain exemptions that the debtor is entitled to. Usually, under Chapter 7, there are little to no assets which are non-exempt. Meaning, the creditors will not receive anything if the debtor’s petition goes through as Chapter 7. These types of cases are called “no-asset cases”. The creditor will only receive a distribution from the debtor’s estate if the case is an asset case and the creditor has filed proof of the claim with the bankruptcy court. Generally, the debtor in Chapter 7 cases is an individual and will get a discharge that releases the debtor from personal liability for the debts listed in the bankruptcy petition. The discharge is usually received a few months after the bankruptcy is initially filed. In order for the debtor to qualify for a bankruptcy relief under Chapter 7, the “means test” must be satisfied. If the income of the debtor is over a certain amount, the debtor is not eligible for relief under Chapter 7.

Chapter 13 Bankruptcy Case

Chapter 13 targets a debtor who has a regular source of income. Chapter 13 is preferred by most debtors over Chapter 7 because it allows for debtors to keep certain assets (ideally, a house), and allows the debtors to set up a plan to repay creditors over a period of time (normally three to five years). This chapter is also utilized by individual debtors who would not qualify under Chapter 7’s “means test”. At a confirmation hearing, the court chooses to either accept or reject the debtor’s repayment plan. In making this decision, the bankruptcy judge looks to the requirements or factors that the court is authorized under the U.S. Bankruptcy Code. Chapter 13 is different from 7 in that the debtor usually is allowed to retain possession of property. Additionally, the debtor, under Chapter 13, does not receive the discharge from the bankruptcy court until all the payments are made. Because of this, debts available for discharge are broader under Chapter 13, than Chapter 7.

Chapter 11 Bankruptcy Case

Chapter 11 is generally for commercial enterprises that wish to keep operating a business and repay creditors through a debt repayment plan approved by the bankruptcy court. During the first 120 days, the debtor has the exclusive right to file a reorganization plan and provide the creditors with a disclosure statement which allows the creditors to evaluate the plan. The bankruptcy court is charged with ultimately approving or rejecting the reorganization plan submitted by the debtor. Under the plan, the debtor can reduce its debt by discharging some or repaying only a portion of its obligation. Under Chapter 13, the debtor undergoes a period of consolidation and ultimately leaves with a reduced debt load and reorganized business.

Chapter 12 Bankruptcy Case

Chapter 12 is only available to farmers or fishermen. The procedures under Chapter 12 are very similar to those under Chapter 13. The debtor agrees to pay a portion of the debts under a repayment plan (over the course of approximately three to five years). Chapter 12 also calls for a trustee to be appointed to transfer payments to creditors. Under Chapter 12, a farmer or fisherman can continue to operate the business while the repayment plan is carried out.

Chapter 9 Bankruptcy Case

Chapter 9 cases allow municipalities (city, town, county, school district, water district, etc.) to undergo a reorganization process that is very similar to Chapter 11 for commercial enterprises. However, this chapter is only available to municipalities.

Chapter 15 Bankruptcy Case

This chapter addresses corporate entities where a debtor’s property is subject to the laws of the United States along with one or more foreign states (countries).

Bankruptcy Explained

Bankruptcy is a process that provides debtors a fresh start from debts they cannot manage. This happens through a bankruptcy discharge which releases that debtor from personal liability for specific debts which are listed in the bankruptcy petition and prevents creditors from ever taking action against the debtor to collect those debts which have been discharged.

Bankruptcy Rules in District of Massachusetts Bankruptcy Court

All of the procedures for bankruptcy cases are found in the Federal Rules of Bankruptcy Court (Title 11 of the United States Code) and the local rules.

Essex County Filing Fees for Bankruptcy Cases

Filing fees for each case vary depending on which Chapter the debtor is filing under.

Chapter 7 – $306
Chapter 9 – $1213
Chapter 11 (non-railroad) – $1213
Chapter 11 (railroad) – $1046
Chapter 12 – $246
Chapter 13 – $281
Chapter 15 – $1213