Filing Chapter 7

BTW we live in Massachusetts

Deborah - I don't think your attorney is misleading you. There ARE exemptions that vary from state to state, which allow you to keep your house/car/possessions, up to a certain percentage. Obviously, if you own multiple cars, multiple homes (or one heck of a big mansion) or have major amounts of money stashed in an account, those would all be issues.

The first thing that makes my red flag go up is when you say "he's going to try to file under federal instead of state" -- Bankruptcy is and always will be federal; you cannot file bankruptcy in a state court.

Now, some states do have laws similar to a Chapter 13 bankruptcy - sometimes called "debtor's reorganization" or "voluntary ammortization of debts". But, like a 13, you have to make payments to a trustee. They are nothing like a Chapter 7.

Secondly, the only way to keep your cars in a Chap 7 is to reaffirm the debt and keep making your monthly payments. If you stop making your car payments, even in a Chap 7, they can come take your cars after it gets discharged.

Third, your house is not safe in a Chap 7!!! Just the fact that you are "current" on your mortgage doesn't mean you don't have to include it in your bankruptcy. IF YOU DON'T INCLUDE IT, then you will be falsifying court documents and may open yourself up to criminal/perjury charges. Also if your mortgage catches wind of you BK filing, that is considered a breech/default and they can make your entire balance due and payable.

Also, in re your exemptions... you can only claim a certain portion of your house as exempt. If you have a lot of equity in your house, and your equity exceeds the homestead exemption, the BK court will force you to sell your house in order to repay some of your creditors.

You should get another opinion from another bankruptcy attorney. From what you say, it sounds like this guy is telling you things that aren't true, and may cause you to get your house taken away.

Debtcruncher....I am pretty sure what the attorney is refering to in this case is federal vs state exemptions. In some cases, federal exemptions are larger.

OK, that would make sense then.

But I still don't think you can just "not include" your mortgage when you file. Maybe I'm wrong, if the equity in your house is less than the exemption you can take, maybe you can exclude it.

I just know, looking at the contracts we use, that the default clause says "... that a proceeding under any bankruptcy or insolvency statute shall be instituted by or against Buyer ... the holder may declare all unpaid installments immediately due and payable without notice or demand." ... and if the mortgage was not included in the BK, then there is no stay of collection and they could proceed with a foreclosure. Just my interpretation.