What is Chapter 13 Bankruptcy?
Chapter 13 is a form of personal bankruptcy for people with regular income but can’t keep up with their payments. The bankruptcy allows them to pay back their creditors over a period of time based on how much they can actually afford. The debtor (and their lawyer) works with the court to propose a plan to the court detailing how much will be paid to each of the creditors. Once that plan is approved by the judge, the debtor makes monthly payment to the trustee over 3 or 5 years and that payment is to be distributed to the creditors.
How is a Chapter 13 different than a Chapter 7 bankruptcy?
The primary difference between chapter 7 and chapter 13 is that in chapter 7 bankruptcies, the debtor’s non-exempt property is liquidated to pay off their debts, while in most chapter 13 cases a portion of the debtor’s future income is used to pay off as much debt as possible, depending on the circumstances.
Generally speaking, under chapter 7 the debtor loses all or most of their nonexempt property and receives a chapter 7 discharge, which completely removes many of their debt. With chapter 13, the debtor usually gets to keep their nonexempt property and must pay off as much of their debt as the court considers feasible. After this is over, the debtor receives a chapter 13 discharge, which is broader than a chapter 7 discharge, releasing the debtor from liability for several types of debts that are not dischargeable under Chapter 7. A chapter 13 plan normally lasts 3 to 5 years while a normal chapter 7 takes about three months to complete.
Looking for a chapter 13 bankruptcy lawyer in the North Andover area?
How long will my repayment plan last under a Chapter 13 bankruptcy?
This all depends on your income. If your monthly income is higher than the median income for a family of your size in Massachusetts, then your plan will last five years. If your monthly income is lower than the median income for your household size then your plan may only last three years.
What are some of the advantages of filing a Chapter 13 in Massachusetts?
Have a Massachusetts Bankruptcy Attorney Evaluate Your Chapter 13 Eligibility
The Mass Bankruptcy Lawyers firm offers FREE consultations to help people in need decide if bankruptcy is right for them. If you’re even considering bankruptcy in or North Andover, MA, our bankruptcy law firm can help show you the various options, such as Chapter 7 bankruptcy and Chapter 13 bankruptcy, and help you navigate the complexities and ramifications of each. Contact Us today!