Bankruptcy in Massachusetts, and what a filing means, might be a subject worthy of study in this day and age, when times are tough everywhere. This includes the Bay State, too. And even though an economy in most circumstances might be going along well, it’s still the case that people may find themselves in rough financial straits for various reasons. In this regard, knowing a bit about bankruptcy could be important.

Changes to federal bankruptcy laws — which govern and oversee individual state bankruptcy filings — occurred in 2005, so understand that certain older processes are now invalid. Congress passed 25 changes to how bankruptcy is handled and each state also has certain exemptions (Massachusetts does), which is important to remember if considering bankruptcy as a last resort option when all other attempts at financial repair have failed.

Massachusetts exemptions revolve around the kinds of property that can be excluded from possible seizure and sale in the event of a bankruptcy, but there’s no simple hard-and-fast rule for determining just what can and cannot be included in a bankruptcy filing. As well, when to file (and the form of bankruptcy to file for) also depends on many different factors. Generally, these include doing so to stave off a home foreclosure or when a job is lost.

Whatever the reason, there are also two different types of bankruptcy a Bay State resident can file for, depending on specific circumstances; Chapter 7 (straight bankruptcy) and Chapter 13 (“Wage Earner Bankruptcy”). Which type of bankruptcy that will selected, as was said, depends on just what it is the filer is trying to accomplish, in accordance with the 2005 changes to the federal bankruptcy law.

In general, Chapter 7 is a liquidation and will wipe out all debts except those listed and is a way to get a fresh start. There’s a means test, a hearing and then a decision. If it’s positive, a trustee will begin an asset sale (on property not exempted by the court) and then a payoff to creditors. Chapter 13 is similar to a corporate bankruptcy, reorganization and then reemergence with a repayment plan.

Bankruptcy in Massachusetts filings begin with an official petition, a schedule and a statement of financial affairs, all of which are filed with the federal bankruptcy court. The Chapter 7 filing fee is $299 and the process can be quite intrusive in terms of personal and financial information that’ll need to be supplied. In most cases, it’s best to work with an experienced bankruptcy attorney when thinking of going this route.

Understanding the prospect of bankruptcy in Massachusetts can be scary. It’s important that you have confidence in your decisions and a qualified bankruptcy attorney MA can help guide you down the right path.