What are the differences between filing for Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 and Chapter 13 bankruptcy are two different types of bankruptcy available to individuals in the state of Massachusetts. Chapter 7, also known as liquidation or straight bankruptcy, is the more common and simpler form of bankruptcy. It requires individuals to liquidate their assets and use the proceeds to pay off their creditors. In return, the debtor is relieved of their debts and has no further obligation to pay them. Chapter 13, on the other hand, is a repayment plan. It allows debtors to keep their property and reorganize their debts into a plan that is more manageable and affordable. Under this type of bankruptcy, debtors make monthly payments to a court-appointed trustee who then distributes payments to creditors. At the end of the repayment period, any remaining eligible debts are discharged. The main difference between Chapter 7 and Chapter 13 bankruptcy is that with Chapter 7, all eligible debts are discharged, while with Chapter 13, the debtor is still obligated to pay a portion of their debts, although the amount is usually significantly lower than what was originally owed. Additionally, Chapter 7 requires the liquidation of assets, whereas Chapter 13 does not. Finally, individuals who make more than the median income and have a large amount of debt may not qualify for Chapter 7 bankruptcy, and therefore must file for Chapter 13.

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What are the differences between filing for Chapter 7 and Chapter 13 bankruptcy?

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