Bankruptcy law is one of the most misunderstood laws. The mere mention of bankruptcy by an attorney is enough to shake people with fear, primarily because they wrongly believe that filing for bankruptcy means losing whatever possessions they have. Fear and ignorance regarding bankruptcy prevents many from experiencing the benefits that come after filing for it.

Let’s use an example to explore bankruptcy law and its effect on the citizens of Boston. A guy named David took out mortgage loan from a local bank, and due to his financial crisis he’s not able to pay the installments. The bank called David and sent collection agents, notices, acceleration and default letters to his home, but he still did not make the payments. Now the bank has decided to foreclose on David’s home, and they’ve sent him a final letter announcing the date and time of sale. David’s financial situation is really bad, as apart from his mortgage he also had a pile of credit card debts, medical bills and other unsecured debts.

There is no way in which David can make his mortgage payments, so he either has to watch the auction of his house with moistened eyes, or he can consider filing for bankruptcy with the United States Bankruptcy Court. Indeed, filing for bankruptcy is the only way that David can save his house from foreclosure.

Under the law, filing for bankruptcy, even one minute ahead of the scheduled foreclosure sale, will legally void any such sale. While waiting one minute ahead of the scheduled sale to file for bankruptcy is legal, it’s not recommended. David should file for bankruptcy at least couple of hours before the scheduled time, and ideally he should have gone to the bankruptcy court at least a day or two before the scheduled foreclosure date.

For a person like David who lives in Boston, filing for bankruptcy cannot stop the bank from acquiring his house for indefinite period of time, but it will give him enough time and adequate resources (by wiping out any unsecured loan) to repay the mortgage.

Bankruptcy will not make you lose everything you have. Instead, it will make you immune to certain state laws, contracts and other financial arrangements.