Nicholas F. Ortiz, Esq. and John O'Donnell, Esq. Boston Bankruptcy Lawyers 306 Dartmouth Street Boston, MA 02116 ~and~ 270 Broadway Revere, MA 02151 ~and~ 1 Adams Place Quincy, MA 02169 Phone: (617) 716-0282 Email: attorney@bkmass.com Experienced, Effective, and Affordable Consumer and Business Bankruptcy Lawyers in Massachusetts Main Office two blocks from MBTA Copley Stop in Boston's Back Bay.   Reviews from Our Clients   Site Map (Internal Navigation)  Home  Free Bankruptcy Consultation  Client Testimonials  About Us  Chapter 7 Bankruptcy  Chapter 13 Bankruptcy  Chapter 7 or Chapter 13 Bankruptcy?  Business Bankruptcy in Massachusetts  Credit After Bankruptcy  Divorce and Bankruptcy  Bankruptcy Fees and Costs  Foreclosure and Bankruptcy  Loan Modifications and Bankruptcy  Car Repossession in Massachusetts  Fight Abusive Debt Collection  Non-Bankruptcy Alternatives  Massachusetts Bankruptcy Blog   Suggest a Question: Didn't answer all your questions about this topic? Suggest a question here and we'll try to put an answer on this page. Enter your email if you want to be notified if we post an answer to your question (optional):

Should You File Chapter 13 or Chapter 7 Bankruptcy? Last Edited: 12/31/2011 There are two types of bankruptcy that individuals usually file, Chapter 7 and Chapter 13. One of the main questions people ask is which of the two is best for them. First, the basics: Chapter 13 is a reorganization, which is essentially a court-approved partial repayment plan of debts that lasts between three and five years. At the end of that time, any remaining balances are forgiven on most debts (credit cards, etc.) Chapter 7, on the other hand, is a liquidation. This means that you give up your non-exempt property in exchange for a complete discharge of most debts (no partial repayment plan). Most people don't have any non-exempt property. So they end up keeping all of their property and get a debt discharge. Both types of bankruptcy are very popular, but which should you file? First, sometimes you don't have a choice. In general, if you have the income to pay part of your debts, you must do so in a Chapter 13. This is common sense: If you can afford to pay some debts back based on your income and certain expenses, the bankruptcy systems requires that you do so. Most, but not all people, who are above-median income are in this category. In Massachusetts, here's the median income by family size (for cases filed after November 1, 2011): Family of one: $53,496 Family of two: $64,174 Family of three: $80,337 Family of four: $99,067 Add $7,500 for each additional family member. Whether you must file Chapter 13 isn't only based on the median income figures, however--especially if you are only slightly above the income thresholds. It also depends on the means test. Once we have a consultation call with you and learn about your secured debt payments and other factors, we can usually tell you quickly where you fit based on the means test. You can click here to request a consultation. If you only qualify for Chapter 13, that's it and your choice is easy. One key benefit of Chapter 13 is that it stays on your credit report for only seven years from the date of filing, three fewer years than a Chapter 7. But what if you qualify for Chapter 7, should you file under that chapter? As I alluded to, Chapter 7 stays on your credit report for 10 years from the date of filing. It hurts your credit during this period, but it does not destroy it or erase it. Many people get credit scores in the 600s within a year or two of a bankruptcy case. Moreover, people considering filing for bankruptcy usually already have or shortly will default on their debts, which also causes significant credit report damage (for seven years). However, even if you qualify for Chapter 7 and have come to terms with the credit report issue, you still may not want to file. People who qualify for Chapter 7 file Chapter 13 all the time. Some common reasons are: they want the satisfaction of paying part of their debts. they want the shorter credit reporting period (only seven years for Chapter 13). they want to stop foreclosures, cure mortgage or car defaults, which can only be done in Chapter 13. they have tax debt problems which can sometimes only be solved in Chapter 13. they want to strip a second or third mortgage that has become entirely under water due to a decline in property values. One thing is true, however, Chapter 7 is usually cheaper than Chapter 13 because in Chapter 13 you make a monthly payment and in Chapter 7 you don't. If you qualify, this is a compelling reason to consider filing a Chapter 7 case. The first step for any of this is a free consultation. You can reach us at (617) 716-0282 or via this page.    Read the Top 10 Questions about Bankruptcy in Massachusetts.  Bankruptcy Client Testimonials.  About Ortiz & O'Donnell.  Request Free Phone Consultation or call (617) 716-0282.