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Personal & Business Bankruptcy
Collections
Personal & Business Bankruptcy
Can I file for
bankruptcy for free?
Yes, but only if you qualify. Massachusetts Local Bankruptcy
Rule 1006-2(b) states that a debtor may file an application for
waiver of the filing fee. MLBR 1006-2(a) provides for the
payment of the filing fee in installments. Absent the waiver,
the fee charged for filing a Chapter 7 bankruptcy is $306 and for
filing a Chapter 13 bankruptcy is $281. Free legal services of are
available to individuals with low-income who qualify. Click here
for more information on these free, called "pro bono"
services.
Who should consider
filing for bankruptcy?
Bankruptcy can help individuals who can no longer pay their
creditors by helping them start new in one of two ways: by
liquidating their assets to pay their debts or by creating a
repayment plan to pay their debts. Depending upon eligibility
requirements, an individual may choose to file for either Chapter 7
or Chapter 13 bankruptcy. The best way to determine whether
bankruptcy is the right choice is to consult with either a
bankruptcy attorney or groups that offer free legal services. Every
individual's situation is unique, and bankruptcy may be right for
one individual, but not for another.
How does filing
bankruptcy affect my credit?
Filing for bankruptcy will show up on a debtor's credit report for
several years, and will likely make obtaining credit more difficult
and/or expensive. Bankruptcy can remain on a debtor's credit report
for 10 years under provisions of the Fair Credit Reporting Act. If
the debtor successfully completes a Chapter 13 repayment plan, many
credit agencies will reduce the bankruptcy reporting to seven
years. Creditors will decide whether to grant or deny credit to an
individual after he/she has filed bankruptcy based upon the type
and amount of credit requested.
Are student loans
discharged in bankruptcy?
Student loans are typically not discharged in bankruptcy. However,
if you file for bankruptcy and can successfully prove that
repayment of debt would cause "undue hardship," the bankruptcy
court will discharge your student loans. Proving "undue hardship"
usually requires demonstrating that you cannot provide a minimum
standard of living for yourself and your dependents if you have to
repay the loan.
Will filing
bankruptcy affect the value of any life insurance policies I
hold?
Under Massachusetts law, filing bankruptcy will not affect the
value of any life insurance policies held by an individual. A term
life insurance policy, which provides insurance for a specified
number of years does not accumulate a cash value over time. This
type of life insurance policy is exempt from assets during
bankruptcy proceedings and will not be affected. A universal life
insurance policy, however, accumulates a cash value over time. A
portion of the premiums paid by the individual who holds the policy
are invested by the insurance company. In Massachusetts, the
cash-value of an individual's universal life insurance policy is
exempt from bankruptcy.
Collections
Will
checking my credit report hurt my credit score?
Checking your credit report will not hurt your credit score.
Checking your own credit report is different from a bank or car
dealership checking your credit report after you apply for credit.
An inquiry by one of the previous mentioned creditors after an
individual applies for credit is called a "hard inquiry," and is
reflected on the individual's credit report. Individuals can --
without hurting his/her credit score -- visit AnnualCreditReport.com to view free copies of
all three credit bureau credit reports, which should be reviewed
for errors.
Is there
anything I can do to stop collection agencies from calling
me?
The Massachusetts Fair Debt Collection Practice Act protects
individuals against harassment by debt collectors and collection
agencies; however, it does not apply to an actual creditor to whom
the individual owes money. The most effective way to stop
collection agencies from calling is to pay your debt, or negotiate
a reduction or payment plan. Individuals can write a letter to a
collection agency telling the agency to stop calling, or to state
that the individual is refusing to pay their debt. According to the
law, letters must be sent via Certified Mail. Communications via
fax, telephone or e-mail are not effective. Upon receipt, the
collector may only call the individual to acknowledge receipt of
the letter or to advise the individual of specific legal action the
collector intends to take against the individual. If an individual
continues to receive calls from the collection agency even after
sending a letter, the individual may file a complaint with the
Massachusetts Attorney General's Office or use the Federal Fair
Debt Collection Practices Act to take action against the collection
agency.
Can I stop
creditors from coming after me if my ex-spouse has failed to pay
credit cards?
If you have not changed your credit account from a joint account
to an individual account or closed all joint accounts held with
your spouse during marriage, a creditor can require you to pay for
the joint account. Even if a divorce decree assigns separate debt
obligations to each spouse, if a joint account is still maintained,
the creditor may require payment from both individuals. If you
maintain a joint credit account after divorce, an ex-spouse can
negatively affect your credit history and leave you responsible for
paying creditors.
Do I have to
pay taxes on money I have inherited?
No, Massachusetts does not tax beneficiaries on the money or
property that they inherit from an estate.
*These answers do not constitute legal advice and are written for general information purposes only. Individuals should consult with a lawyer for specific legal advice.