DEBT RELIEF
Chapter 7 bankruptcy can help qualifying Massachusetts individuals eliminate many unsecured debts, including credit cards, medical bills, personal loans, and certain older tax debts. It is generally best suited for people who do not have enough income to repay what they owe and who want a relatively fast path to a financial reset.
Michael Goldstein is licensed to practice law in Massachusetts and helps clients determine whether Chapter 7 is appropriate, what property they may be able to keep, and whether another option such as Chapter 13 would provide a better result.
WHAT IS CHAPTER 7?
Chapter 7 bankruptcy is a federal debt-relief process that allows qualifying Massachusetts individuals to eliminate many unsecured debts without making payments through a Chapter 13 repayment plan. Common examples include credit-card balances, medical bills, unsecured personal loans, and certain older tax debts.
Whether you qualify depends in part on your income, household size, expenses, prior bankruptcy filings, assets, and the types of debt you owe. For consumer cases, the Chapter 7 means test is an important part of the analysis. If your household income is below the applicable Massachusetts median-income level, you generally do not need to complete the second portion of the means-test calculation. If your income is above the median, you may still qualify after allowable expenses and other factors are considered.
Chapter 7 is generally designed for people who do not have enough disposable income to repay their unsecured debts and who can protect their property using available bankruptcy exemptions. Whether it is the best option for you depends on your individual financial circumstances.
Important: Not every debt can be eliminated in Chapter 7. Child support, alimony, most student loans, and many tax debts generally survive bankruptcy. Attorney Goldstein can review your debts, income, assets, and goals to determine whether Chapter 7 or another option may provide a better result.
Important: Not all debts are dischargeable in Chapter 7. Student loans, most tax debts, alimony, and child support generally survive bankruptcy. Attorney Goldstein will review your specific debts and circumstances before recommending a path forward.
Chapter 7 may be worth evaluating if unsecured debt has become difficult to realistically repay, you do not need a long-term repayment plan to catch up on secured debts, and your income and assets make Chapter 7 available. The right analysis depends on your full financial picture—not simply how much debt you owe.
WHAT CHAPTER 7 Bankruptcy CAN DO
Chapter 7 can discharge a wide range of unsecured debts, giving you a clean slate to rebuild from.
Most ordinary credit-card balances can be discharged in Chapter 7, although debts connected to fraud or certain recent charges or cash advances may receive different treatment.
Unsecured medical debt is generally dischargeable in Chapter 7, including qualifying balances that have already been sent to collection.
Many unsecured personal loans can be discharged, although the circumstances under which the debt was incurred can matter.
Certain business debts for which an individual is personally liable may be dischargeable. The treatment depends on the nature of the debt and whether the individual or business is filing.
Qualifying deficiency balances remaining after repossession or foreclosure may be dischargeable.
Some judgment debts can be discharged, but the underlying basis for the judgment matters. Debts arising from fraud, certain intentional injuries or other statutory exceptions may survive bankruptcy.
Past-due utility balances are often dischargeable, although a provider may require a deposit for continued or restored service.
Qualifying debts remain subject to the same discharge rules even after they have been placed with a collection agency.
Chapter 7 does not discharge every type of debt. Child support and alimony generally cannot be discharged. Many student loans, many tax debts, and certain debts arising from fraud, willful and malicious injury, or other conduct identified in the Bankruptcy Code may also survive bankruptcy.
Some older income-tax debts may qualify for discharge when specific requirements are satisfied, so tax debt should be reviewed individually.
Chapter 7 may be worth evaluating when your debt problem is no longer temporary and there is no realistic path to paying unsecured balances while still covering ordinary living expenses.
You are making payments, but credit cards, personal loans, or other unsecured debts remain about the same or continue to grow.
A job loss, illness, divorce, reduction in income, or other life event caused debt that you have not been able to catch up on.
Credit-card and loan payments are using money you need for housing, food, transportation, utilities, or other necessary expenses.
You are thinking about borrowing against your home or withdrawing retirement funds simply to keep unsecured debts current.
You may be earning enough to meet current expenses again, but accumulated debt from an earlier difficult period is still preventing you from moving forward.
Even after cutting expenses or trying to reorganize payments, there is no reasonable timeline for becoming debt-free without sacrificing other financial priorities.
Chapter 7 is not automatically the right solution simply because these problems exist. The purpose of an initial review is to compare the consequences of filing with the realistic alternatives available to you.
Discuss Your Chapter 7 Options →What You Keep in Bankruptcy
Many Chapter 7 filers are able to protect all of their property, but the answer depends on what you own, how much equity you have, and which bankruptcy exemptions apply. Massachusetts debtors may have a choice between the Massachusetts and federal exemption systems, and that choice can materially affect what property is protected.
A common misconception about Chapter 7 is that you’ll lose your home, your car, and your belongings. In practice, the vast majority of Chapter 7 filers keep everything they own, because Massachusetts and federal law both provide generous exemptions that protect specific property from creditors. Massachusetts allows you to choose between the Massachusetts exemption system and the federal exemption system, whichever protects more of your specific assets, and Attorney Goldstein evaluates which one applies to your situation as part of your free consultation.
Your Home
Massachusetts law provides homestead protection for a principal residence. Current state law provides an automatic homestead exemption of up to $125,000 and, when a qualifying declaration of homestead has been properly recorded, a declared exemption of up to $1 million, subject to the statute’s requirements and exceptions. Bankruptcy analysis also depends on mortgages, liens, ownership, equity, and whether Massachusetts or federal exemptions are used.
Your Vehicle
A set amount of equity in one vehicle is protected under both the Massachusetts and federal exemption systems, with a higher amount available for filers who are disabled or over 60. If you’re still making payments and your equity is within the exempt amount, your car isn’t at risk.
Retirement Accounts
401(k)s, IRAs, and most other qualified retirement accounts are fully protected under both exemption systems in nearly all cases. Retirement savings are treated as off-limits to creditors, so filing doesn’t require touching what you’ve saved for the future.
Personal Property & Wages
Household goods, furniture, clothing, and everyday personal belongings are covered by specific exemption categories, and a portion of your wages is protected from garnishment during the process. A “wildcard” exemption also exists to protect additional property that doesn’t fall neatly into another category.
Important: Exemption amounts change periodically and the right exemption system depends on your specific assets, home equity, and filing history. Attorney Goldstein reviews your full financial picture before filing to make sure everything you’re entitled to keep, stays protected.
THE PROCESS
Complete a required credit counseling course from an approved provider before filing.
Attorney Goldstein prepares and files your bankruptcy petition, schedules, and supporting documents.
An automatic stay immediately stops all collection actions, lawsuits, wage garnishments, and creditor calls.
After the trustee meeting and any required proceedings, qualifying debts are discharged — typically within 3–6 months.
No. Filing Chapter 7 does not automatically mean losing your home, car, retirement accounts, or personal belongings. Massachusetts and federal bankruptcy exemptions may protect some or all of your property. The result depends on what you own, how much equity you have, which exemption system applies, and your individual circumstances.
Read the Full Guide: Will I Lose Everything If I File Bankruptcy in Massachusetts? →The answer depends on your assets, equity, income, debts, and what you need to protect. Chapter 7 may work well when available exemptions protect the property you want to keep. Chapter 13 can provide additional options when a debtor has nonexempt property, needs time to catch up on mortgage or vehicle arrears, or has other reasons to use a repayment plan.
Compare Chapter 7 vs. Chapter 13 in Massachusetts →Not every bill should necessarily be treated the same way before bankruptcy. Payments connected to property you want to keep, such as a mortgage or vehicle loan, may require a different strategy than unsecured debts such as credit cards or personal loans. Before stopping or changing payments, it is important to understand how bankruptcy may affect each debt and the property connected to it.
Read: Which Bills Should You Keep Paying Before Filing Bankruptcy? →