The Law Offices of                                                            Springfield         Worcester
George E. Bourguignon, Jr.                  (413) 746-8008;(508) 769-1359

Bankruptcy
Chapter 7

Chapter 7 bankruptcy is liquidation. It is also known as “traditional bankruptcy” and is what most people think of when they think of bankruptcy. Generally, it involves the surrender of non-exempt assets and the discharge of most unsecured debts. Most individuals who file for bankruptcy under chapter 7 bankruptcy keep all of their assets and are able to eliminate their personal responsibility for most of their debts (including credit cards). They attend one meeting conducted by a trustee that is scheduled between 20-40 days after the day they file their petition. A few months after the meeting, they obtain their discharge, and shortly thereafter, their case is closed. Done properly, and at the right time in a person’s financial life, chapter 7 bankruptcy can be fairly painless and the financial turnaround needed.  To learn more about the basics of bankruptcy, check these videos out.  Bankruptcy Basics.

Chapter 13

Chapter 13 bankruptcy was historically known as the “wage-earner’s plan” because it is designed for people with regular incomes overburdened with debt to obtain relief. Under this bankruptcy chapter, as opposed to liquidation under chapter 7 bankruptcy, a debtor retains his assets and presents a repayment plan of three to five years for approval. Generally, in approved plans, the debtor pays his disposable income over the life of the plan, and the remaining balance of unsecured debts, if any, are discharged upon completion of the plan. All the while the debtor retains his assets.

One of the main benefits of chapter 13 bankruptcy, and one of the most common reasons it is chosen, is that it can be used to save the debtor’s primary residence. This is because chapter 13 bankruptcy has the power to “cure” a mortgage default by payment of the arrearages due over the life of the plan. If followed to completion, a debtor can be restored to pre-default status and retain their home, which is a wonderful success story every time it happens. However, if your goal is to save your home, DO NOT DELAY.  For various reasons, it can become more difficult, and sometimes becomes impossible, to properly implement chapter 13 for this purpose if one waits too long.  For more details concerning chapter 13 bankruptcy, see my published article.

Adversary Proceedings

An “adversary proceeding” is essentially a lawsuit filed in a bankruptcy case to determine an issue related to the underlying bankruptcy case.  Although an adversary proceeding must stem from an underlying bankruptcy case, they are significant federal law suits that encompass (almost) all of the elements of a civil action filed in a United States District Court.  There are pretrial conferences, discovery, and a bench trial with the bankruptcy judge presiding.   

For the typical bankruptcy case, an adversary proceeding is unnecessary and does not occur.  But if necessary or desired, an adversary proceeding can be filed by the Debtor for many reasons, including to avoid a lien or to determine the status of the Debtor’s interest in property.  Most commonly a Debtor files one to “strip off” a second mortgage in a chapter 13. 

The bankruptcy trustee or a creditor can also file an adversary proceeding against the Debtor.  Common subjects are a trustee or creditor objecting to the Debtor’s discharge of all debts (under code section 727), or a creditor objecting to the discharge of a particular debt (under code section 523).  

Why not file bankruptcy myself?

Despite the benefits that can be understood by all, the actual legal “inner workings” of a bankruptcy is quite complicated. Especially after the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) and its implimentation of the “means test,” it is unwise to undertake filing for bankruptcy without competent legal counsel. This is also because bankruptcy involves certain concepts unique to its field, that even most attorney’s are not familiar with. Fairly innocuous seeming activity can have distinct and serious ramifications in bankruptcy.  So, it is best not to take the risk of the unknown. Instead, we suggest to hire a competent lawyer if you are considering bankruptcy to take you through the process of rebuilding your financial life.

Bankruptcy alternatives

Bankruptcy is not for everyone. Sometimes, to avoid the risks that can arise due to a person’s prior financial transactions, or to retain assets, or even for personal choice, alternatives to bankruptcy should be sought. In fact, in some circumstances, some people are not even eligible to file bankruptcy, under any chapter! In these cases, alternatives to bankruptcy such as mortgage loan modifications, forebearance agreements, workouts, repayment plans, and/or debt settlements can be pursued. It is likely less stressful to work with an attorney.  Give us a call to evaluate what is the best solution for your situation.  Our offices are located in the city of Worcester in central Massachusetts and in the city of Springfield in western Massachusetts.  We also represent clients in Greater Boston.

Contact Us for Help with Bankruptcy at (413) 746-8008 or (508) 769-1359 or by email below. 

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