What is Bankruptcy?

Bankruptcy refers to a legal status where a person or an entity is unable to pay debts as and when they fall due. When one is insolvent, it does not mean that they do not own property. It simply means that the person or the entity is unable to pay the debt they owe as and when it is due.

A bankruptcy petition filed in Massachusetts can be commenced either by the debtor or creditor. The debtor may on his own volition decide to petition the Massachusetts Bankruptcy Court to declare him insolvent. The other scenario is where the creditor petitions the court to declare the debtor insolvent. In somerare instances, you find that the creditor is the one who makes the petition.

Different jurisdictions deal with issues of bankruptcy differently as there is different case law and rules. Massachusetts has it’s own local rules which dictate how business is done relative to Bankruptcy. Some people avoid filing Bankruptcy and make their situation worse.

Some Debtors leave the state, district or territory where the person lives and may even decide to leave the country where he/ she lives and go to another country with that intention of running away from the creditors whom he owes. Unfortunately, the problem does not go away and can cause much bigger problems when the person fails to address the circumstances and they become worse when the creditor receives a judgment and the courts issues a warrant for the Debtor’s arrest.

You could simple be driving in another state, going five miles over the speed limit and be stopped by an officer who arrests you on the spot because there is an warrant for your arrest because you failed to show up in court, all for a credit card. .

Secondly, the debtor may also hide to avoid being arrested. Although this can be a solution for a short time, Creditors are experienced and have resources to find the Debtor and eventually serve the Debtor with a Warrant with for his/her arrest.

The debtor may also remove his goods, chattels or effects or concealment of them to prevent them from being levied, or taken into execution or other process. This always come back to haunt the Debtor and can result in his/her not receiving a discharge and being responsible for all his/her debts.

The Debtor may also while insolvent, make some fraudulent conveyance, assignment, sale, gift or any other transfer of his lands, goods or chattelsto one or more of his creditors with intent to defraud any of them. What happens when one is declared bankrupt?

Being declared insolventand moving forward to file Bankruptcy is not an easy decision to make.

Being insolvent, your assets including shares, property and anything of real value and non-essential value can sometimes be disposed of and the proceeds of the sale used to pay the creditors. However, it is important to note that the law provides the Debtor will exemptions so they can keep their property, however, there are limits. The law provides very generous exemptions and many Massachusetts Debtor’s keep their assets.

The process of declaringbankruptcy can be very stressful. In most instances there is the credit counseling course that needs to be taken and financial management course, both online or over the phone and the 341 meeting.