Massachusetts Bankruptcy Law Blog

Benefits of an automatic stay in your debt relief process

It's the one thing that stops creditors in their tracks: the automatic stay.

Did you know that filing for bankruptcy in Massachusetts automatically protects you from bill collectors and creditors? The automatic stay immediately halts any lawsuits that are pending against you by a creditor. Further, other collection attempts from private and government entities are also suspended pending the outcome of your bankruptcy decision. The automatic stay is one of the most powerful legal protections available through the bankruptcy process.

Understanding types of creditors in your Chapter 13 bankruptcy

If you are going through Chapter 13 bankruptcy in Massachusetts, you know to expect the formal approval of a repayment plan to accompany your bankruptcy petition. Structuring this repayment plan may come as a bit of a challenge, however, because different types of debts have different implications in your bankruptcy filing. Today, we explain the three basic types of creditors' claims and how they should be handled in a successful Chapter 13 bankruptcy repayment plan.

First, three types of claims exist during a Chapter 13 bankruptcy: priority, secured and unsecured. Priority claims are given a special status by the bankruptcy courts. These include the costs related to the bankruptcy itself, along with taxes and other required payments. Secured claims include those that are tied to collateral or certain property -- if payments are not made, then the property is recovered by the lender. Unsecured claims, such as unpaid credit card balances, generally have lower status when it comes to collecting.

Massachusetts biotech company files for Chapter 7 bankruptcy

A Massachusetts biotech firm that has been developing a critical new food-safety technology has officially filed for Chapter 7 bankruptcy. The company, PathoGenetix, said in its liquidation bankruptcy filing that it owed $1.4 million in debt, but it had $3.5 million in assets. The board of directors decided that the bankruptcy was necessary since the company did not receive additional outside funding by a July 2 deadline.

The company had named a new chief executive officer in late 2012, and it was planning to launch a genome sequencing scanning method to improve food safety investigations. The technology would have helped determine the source and nature of food safety outbreaks. This automated method was designed to be released to both government and food industry customers in 2013. Delays with the development in the system led that date to be continually pushed back, however, with the most recent information indicating that the company would be ready to go live with its equipment next year.

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

bankruptcy court.jpg

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.

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