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Chapter 7 vs. Chapter 13 bankruptcy

On Behalf of | Jun 25, 2019 | Uncategorized

Declaring bankruptcy could give you the financial freedom you need in Franklin, Massachusetts. If you feel like you are drowning in credit card debt or student loan repayments, filing for bankruptcy can be a viable solution.

Two of the most commonly filed types of bankruptcy are Chapter 7 and Chapter 13. Understanding the main differences between these two types of debt reorganization can help you choose the right one for you and your family.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy, also called a liquidation bankruptcy, has the power to free you from substantial financial debt. It takes your available assets, such as personal property, homes or vehicles, and uses them to repay debts you owe to creditors, hospitals or other debtors. Chapter 7 bankruptcy is a positive solution for people with limited income who cannot afford to repay their debts.

What is Chapter 13 bankruptcy?

Filing a petition for Chapter 13 bankruptcy in Franklin may be the right option if you do not qualify for Chapter 7 and if you have a steady income. This type of debt reorganization can end calls from creditors while protecting your important assets. You could keep your home and vehicle while making payments through debt consolidation and a repayment plan.

Which type is right for you?

Both Chapter 7 and Chapter 13 bankruptcies are smart solutions for people in Franklin who are struggling with significant debts. Either one could give you the clean slate you need to start over. These are only two of the many types of bankruptcies. Choosing the right one for you depends on your eligibility and long-term goals.

If you are not earning enough income, Chapter 7 may be most appropriate. If you have a source of income, Chapter 13 can allow you to clear your debts without losing assets. The courts have to approve your debt repayment plan for Chapter 13 bankruptcy, however. Review all your options with a lawyer in Franklin for the clearest picture of which choice is right for you.