Massachusetts Bankruptcy Law Blog

Avoid combining bankruptcy and divorce with these simple steps

Did you know that your divorce may require you to split your marital debts as well as your assets? If you are in the process of pursuing the dissolution of a marriage in Massachusetts, you may be rightfully concerned about bankruptcy and divorce. The fact remains that you could find yourself in financial straits if your ex refuses to make payments that are mandated in the divorce decree; however, there are some steps you can take to protect yourself and your financial future.

First, you may be able to avoid bankruptcy and divorce by finding a quick way to pay off debts prior to breaking up. Cash and savings may be allotted to those debts before the divorce papers are actually approved. Many couples address their financial difficulties by using money from the sale of the family home to pay off existing debts.

Bankruptcy case thrown out in Holyoke, Massachusetts

The Holyoke Geriatric Authority, which is located in Holyoke, Massachusetts, is now facing a new hurdle. The HGA was already in something of a bind, attempting to put in a bankruptcy filing, but it appears that will not be happening. A judge recently looked at the case and decided not to approve it, stopping the filing and even dismissing the legal case.

The issue is that the HGA was found by the judge to officially be an entity of the government. As such, it was impossible for it to put in a filing for Chapter 11 bankruptcy. After this happened, the mayor of the town stepped forward to spread the news in an interview.

Crumbs bakery files for Chapter 7 bankruptcy

It has been a crummy business for Crumbs bakeries nationwide ever since the cupcake craze collapsed. The eatery chain, which had locations in Massachusetts, is headed for Chapter 7 bankruptcy proceedings because of its financial woes, according to recent reports. The move comes after the company was removed from the NASDAQ index in early July.

Crumbs began as a humble New York bake shop with a wide variety of exciting and unusual cupcake offerings. The company sparked an interest in the idea of take-out for dessert, which led to a rapidly growing business and a decision to offer its stock to the public. Crumbs peaked at about 165 full-time employees and about 650 part-time employees.

Private student loan discharge bill would provide debt relief

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Bankruptcy protection for student loans may sound like a pipe dream, but this seminal decision could be on the horizon in the national legislature. Lawmakers have introduced a new package of legislation that would allow Massachusetts residents to have their private student loans discharged during bankruptcy. Although this move would not offer debt relief to those with federal loan balances, it would help some borrowers who are facing financial woes because of existing bankruptcy discharge rules.

Private student loans differ from their federally administered counterparts because they do not have income-based repayment options, deferments or loan forgiveness as potential fail-safes. Instead, they take the form of a traditional loan. Further, the payments and interest rates associated with these private loans are generally far higher than those exacted upon graduates by the federal government.

Source Home Entertainment files for Chapter 11 bankruptcy

An East Coast company that provides magazines and periodicals to outlets in Massachusetts has filed for business bankruptcy in a Delaware court. The company, Source Home Entertainment, claims to have liabilities of $290 million with assets of $205 million. The Chapter 11 bankruptcy will allow the company to restructure its finances in order to satisfy its creditors. It does not appear as though the company will continue operating at its prior capacity, if at all. About 5,000 employees were laid off from the company on May 30 after the firm suffered a serious financial setback.

Experts say that the media company was the source of about one in three magazines and periodicals that were stocked in thousands of national retail stores. The company blames the ongoing shift toward digital media for its downfall. Analysts say that the trend toward online magazines and electronic readers for books created a tough economic climate for the print media distribution group. Further, the company appears to have suffered a significant hit because of supplier agreements that required the company to take on additional magazines.

When IRAs aren't protected: liquidation bankruptcy rules

Can an individual retirement account, or IRA, be targeted by creditors during bankruptcy? Although most Massachusetts residents might believe that their IRAs are safe during this process, there is an important exception. If you have inherited assets through an IRA that initially belonged to someone else, it could be considered as payment for creditors during your liquidation bankruptcy.

A recent opinion from the U.S. Supreme Court explained that inherited IRAs -- from one's parents, for example -- are not considered protected from creditors like a traditional IRA. Those that are established and funded by the borrower are safe from this intrusion, however. There are some important distinctions between original and inherited IRAs.

Firm plans to continue operations thanks to Chapter 11 bankruptcy

A company that has survived two devastating fires in recent decades is fighting for its life in bankruptcy court. The company, which is going through the proceedings in Massachusetts' neighboring state of Connecticut, is seeking protection under Chapter 11 bankruptcy provisions. Latex Foam International Holdings first burned in 1975, and it fell victim to another fire in 2001.

Chapter 11 bankruptcy allows businesses to restructure their debts using a reorganization plan. It is different from Chapter 7 liquidation bankruptcy because it does not require the sale of all business assets. Instead, it seeks to assist the company with debt restructuring that could allow the firm to continue operations.

Oil company owner seeks debt relief for personal balances

Did you know that the failure of your company could affect your personal finances? In some cases, corporate bigwigs have had to file bankruptcy in Massachusetts because of financial difficulties with their entrepreneurial endeavors. That is what happened when the owner of the Norton Oil Company in Pennsylvania sought debt relief from 89 separate creditors in bankruptcy court.

Official reports show that the man filed bankruptcy just weeks after his company shuttered its operations. Many individuals in the area had prepaid for their fuel oil, so they were left in the lurch without the ability to reclaim their money. Now, the man may able to avoid paying many of those individuals back with his personal funds due to the bankruptcy, which formally discharged all debts. The personal bankruptcy does not affect the business bankruptcy, so those who have been slighted out of their oil purchases may still be able to recover money through the bankruptcy process.

Momentive Performance Materials business bankruptcy contested

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A business bankruptcy deal has been approved for the firm Momentive Performance Materials. Although the $570 million financing package for the Chapter 11 bankruptcy may be larger than repayment plans for most Massachusetts businesses, this example still shows that even large companies can get back on their feet after suffering financial setbacks. Still, Momentive is facing some hurdles in convincing their creditors that the plan is appropriate. Reports show that the majority plan has been approved by a U.S. bankruptcy court in New York, but some unsecured creditors held up the process because of objections.

Official reports show that JPMorgan Chase & Co. have scheduled a $600 million rights offering and about $1.3 billion in exit loans for the manufacturer, which makes silicone and quartz products. That company is owned by a larger private equity group called Apollo Global Management. Most of that financing has not been contested by the unsecured creditors; rather, they are arguing that they have been limited in their rights to contest the bankruptcy exit plan.

Bankruptcy and divorce lead to questions about Chapter 13

Are you considering breaking it off with your spouse in the midst of financial difficulties? The fact is that bankruptcy and divorce often occur together, but they are not always easy to manage at the same time. What happens if you are a Massachusetts resident who has filed for Chapter 13 bankruptcy and then chooses to pursue a divorce?

Experts say that Chapter 13 divorce repayment plans allow consumers to enjoy lower payments and debt restructuring. However, it can be affected because of a divorce. When Chapter 13 and divorce collide, participants have two options: reduce payments for the reorganization to reflect the fact that two households now exist or convert to a Chapter 7 bankruptcy.

NACBA | National Association of Consumer Bankruptcy Attorneys | Boston Bar Association | MBA | American Bankruptcy Institute | NCLC | National Consumer Law Center