Case Study: A Typical Client Who Files Chapter 7 Bankruptcy in Massachusetts

by Jack Morrison on December 16, 2011

Filing for bankruptcy: it’s a raw, emotional, devastating personal decision. I can attest to this personally as I have clients who come to me daily in bad shape. Bankruptcy involves real people with real problems. Financial problems that, regardless of how they happened, are not going away.

To humanize bankruptcy and shed some real light on what someone goes through, I’d like to share with you a story of a real person, a Chapter 7 bankruptcy client named Alan (of course, I changed his name to protect privacy).

Before Filing for Chapter 7 in Massachusetts…
Alan is a 45-year  old single man who lives here locally in Worcester County. When Alan came to me, he was emotionally drained. He was “throwing in the towel.”  Ever since his work hours were cut, debt started mounting. While he was barely living month to month before, now he was deep in the red. He had been dealing with harassing phone calls from collection companies at all hours of the day. Along with not being able to pay his credit card bills in four months (with their current incredibly high interest rates), he was about to forego making car payments too.

Alan’s debt was around $25,000. Although he considered going to a debt consolidation company, he was distrustful and had heard the overall experience was not positive. He needed more than a temporary fix. And, he didn’t want to lose his car which he needed to get to work.

Finally, Alan decided to search around for a bankruptcy attorney in Worcester County. He called, and we set up a meeting to discuss his finances and lay out his options.

What Our Bankruptcy Explorations Entailed…
A common misconception is that when you approach a bankruptcy lawyer, you have to be ready to file for bankruptcy immediately. Not so. I always talk to the client first to find out their goals, get an idea of their debt, their assets, and then we look at options.

Alan admitted that it took him a long time to take this step and look for a lawyer because he was hoping for a miracle. Unfortunately, that miracle never materialized, so he was ready to get a plan to eliminate his debt.

This is exactly what Alan and I did. We discussed several things, two of which included:

  1. The pros and cons of calling his credit card companies to see if they would work out a payment plan with him. However, Alan decided to forego this option once I explained that most companies won’t reduce the amount you owe unless you’re 3-4 months behind. And, it’s really only worth it if you can pay a large sum of money up front. Unfortunately, Alan didn’t have access to cash.
  2. The pros and cons of taking money from his 401k. I rarely, rarely advise pulling from retirement accounts. Unless Alan was getting threatened by collection agencies with bodily harm, which thankfully he wasn’t. (which, of course, is illegal) So Alan decided to hold on to what he had worked so hard to build up, as it is his legal right and this money is protected.

Armed with information and a set of options (with repercussions) clearly presented to him, Alan felt empowered for the first time in a long time. Alan decided to wipe the slate clean; although it was tough decision, he decided to go ahead and file.

Here’s what happened to Alan after filing Chapter 7 Bankruptcy:
Alan filed for Chapter 7, went through the process, and 4 months later received his discharge. The discharge legally wiped away his $25,000 in credit card debt. And, he had a clear plan for making car payments, so he gets to keep his car.

The constant worry of how to get money to pay the credit card debt was gone. The phone calls stopped. Alan told me, a few months later, that this was a total relief. He was free again. And he vowed never to get in the same position again. He’s now living his “new normal”: paying cash for purchases, building back up his credit, and putting a small amount of savings aside every month. Alan’s quote to me was, “If I had known how easy this was, I would have filed a lot sooner.”

Does Alan’s situation sound a lot like yours?

My name is Jack Morrison and I am a Worcester bankruptcy lawyer. If you want to explore your options, call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. There’s no obligation and the call is free. If bankruptcy is not the best option for you, I’ll let you know straightaway. Thank you.

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