Bankruptcy & Loan Modifications

As a practicing bankruptcy attorney in Massachusetts, I been asked many questions about certain debts and assets, which people have and are concerned with prior to filing bankruptcy.   I have determined the top bankruptcy questions that I receive below:
Q: What income do I need to disclose on my bankruptcy petition?

A: The following types of income need to be reported:

1. wages, salary, tips or bonuses
2. Profit from a business
3. bank interest
4. Stock dividends
5. Royalties
6. income from realestate
7. Pensions and retirement income not part of an ERISA protected account
8. Child support or Alimony
9. Unemployment or workers compensation benefits

Q:         Will filing for bankruptcy protect me from creditors?
A:         When you file for bankruptcy, Section 362 of Title 11 provides an automatic stay. The automatic stay stops most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor precede with collections.

Q: What if a creditor tries to collect after my bankruptcy?
A: If a creditor attempts to collect a debt after your bankruptcy is discharged, the creditor would be violating the law and could be held in contempt of court. The only way a creditor can come after you following your discharge is if you neglect to list the creditor on your bankruptcy forms and fail to provide notice to said creditor of your bankruptcy.

Q:         Will my creditors object to my bankruptcy filing?
A:         Although every creditor has the right to object to a bankruptcy filing, most creditors will just write off your debt, as a result of the legal fees they may incur in trying to prove their debt should survive your filing.

Q:         What’s the value of my house and car?
A:         In order to determine if certain property will be exempt under the bankruptcy law, you need to value the property at the replacement value.  This value can make the difference whether you get to keep your house or car. You should consult with a local bankruptcy attorney to find out what the maximum value of property is in your state. However, if you want to get a good idea of the market value of your property, you should look at your tax bill, which will have an accessed value.

Q: Can I file for Chapter 7 even if I make too much?
A: You may still be able to file for chapter 7 bankruptcy protection even if you make a significant amount of money. If your projected disposable income over the next five years is less than $6,000 ($100/month), you qualify under the means test exception and can file under Chapter 7.

If your disposable income falls between $6,000 and $10,000 over the next five years then you must compare your disposable income over the next five years to a percentage of your unsecured debt to determine whether any significant repayment to your creditors is possible. If your disposable income over those five years is greater than 25% of your unsecured, non-priority debts, you find yourself in the same circumstances as if you’d had more than $10,000 in disposable income. If your disposable income over a five year period is less than 25% of your unsecured, non-priority debts, you “pass” the means test.