Filing for bankruptcy can be a difficult yet necessary decision. A Chapter 13 filing allows debtors with valuable assets such as property to reorganize their debt and repay creditors according to a plan devised in consultation with a bankruptcy attorney and the Chapter 13 Trustee. Those wishing to file for Chapter 13 in Massachusetts should follow these six steps.

1. Consult with a Bankruptcy Lawyer

In Massachusetts, the first step in filing for Chapter 13 Bankruptcy is to consult with a Bankruptcy Lawyer. Various county bar associations in the state offer lawyer referral services so that debtors can find a competent attorney in their county of residence. A bankruptcy attorney will be able to assist in filing the petition for bankruptcy and completing the other necessary paperwork.

2. File a Bankruptcy Petition

The petition consists of a straightforward two page form that can be filled out in consultation with the bankruptcy attorney. A processing fee must be paid in order to file, and debtors must provide their certificate of credit counseling with their petition. Once the form is filed and the fee paid, the Chapter13 Bankruptcy petition will receive a docket number indicating that the petition has been successfully filed. Once the petition is filed, creditors are no longer able to request money from the debtor directly. Unless otherwise determined by the bankruptcy court, creditors will not be able to foreclose or repossess the debtor’s property in order to repay debts. It is important that the debtor submit the docket number to creditors as soon as possible in order to ensure creditors do not take further action outside of the bankruptcy court proceedings. This step not only allows debtors to avoid foreclosure, but also puts an end to other collection actions and permits reorganization of any credit card debt.

3. Submit Information on Creditors to the Bankruptcy Court

Within two weeks of filing the petition, debtors must submit information on their creditors to the bankruptcy court. There are three bankruptcy court divisions in Massachusetts: Eastern, Central, and Western. The correct court will depend on the location of the debtor’s residence. The information required for this document, known as the Matrix, includes the names and addresses of all creditors. Within a week of submitting the Matrix, the debtor will be required to submit the remaining paperwork to the court. A Bankruptcy Lawyer is an invaluable resource during this part of the process as a variety of documents must be submitted. During this phase, the debtor will present schedules detailing all assets, income, liabilities, expenses, and financial history. The debtors should also present the proposed reorganization plan and documentation supporting their ability to fulfill that plan.

4. File Any Necessary Amendments

Upon submitting the reorganization plan, the debtor will have the opportunity to submit any necessary amendments to the documentation previously submitted. This step allows debtors to add creditors or modify the Chapter 13 plan, if necessary.

5. Meet with the Chapter 13 Trustee

The debtor will meet with the Chapter 13 Trustee within about one to three months of filing the Chapter 13 petition. All creditors listed in the paperwork submitted to the bankruptcy court by the debtor will be invited to attend the 341 meeting. The trustee serves as the coordinator of the meeting and will review the reorganization plan to ensure that all bankruptcy court requirements are met.

6. Follow the Agreed upon Payment Schedule

The law stipulates that bankruptcy plans include payments over the course of 36-60 months. Payments will be divided into three different categories. The first group consists of secured creditors, including those that provided secure mortgages. Secured creditors are paid on the existing schedule, independent of the repayment plan. If these payments are not made on time, secured creditors will be able to move forward with foreclosure in order to secure payment. The second group includes unsecured creditors who will be paid via the Chapter 13 Trustee as part of the payment plan. The third and final group consists of creditors owed money following the bankruptcy petition and payment agreement; they fall outside of the protection offered by the declaration of Chapter 13 Bankruptcy.

Filing for Chapter13 Bankruptcy in Massachusetts is an option for those wishing to repay their debt while keeping valuable assets like real estate and automobiles. The repayment plan included as part of the Chapter 13 reorganization agreement allows debtors to make monthly payments over the course of 3 to 5 years depending on the individual’s circumstances. Chapter 13 bankruptcy also offers protection from lawsuits, tax collection, foreclosure, and delinquent auto loans. In addition, it is possible for some to completely eliminate a second or subsequent mortgage. Multi-family homeowners may even be able to cram down and pay off all mortgages within 5 years in situations where the property’s value is very low.

In short, Chapter 13 bankruptcy is a very powerful tool for correcting or improving a person’s current financial problems.