As you may know, you can choose between several forms of bankruptcy. Those pursuing a personal (nonbusiness) bankruptcy in Massachusetts typically choose between Chapter 7 and Chapter 13. These two are the most common types of bankruptcy for individuals.
If this is your first bankruptcy filing, you probably have no idea which option to choose. You may want to start by discovering the benefits of both bankruptcy types, as outlined below.
What are the benefits of Chapter 7 bankruptcy?
A Chapter 7 bankruptcy comes with many benefits and is the most popular form of personal bankruptcy. Consumers like it for the following advantages it affords them:
- Stops aggressive collection techniques and harassment
- Typically concludes within three to six months
- Discharges all eligible debt
- It allows them to keep some personal possessions
A few disadvantages of Chapter 7 bankruptcy include giving up credit cards, losing luxury possessions (like art) and making it difficult to secure a mortgage.
What are the benefits of Chapter 13 bankruptcy?
Choosing Chapter 13 means that you are reorganizing your debts to make them easier for you to handle. Those that take pride in owning and paying their debt may prefer this type of bankruptcy. Other benefits include:
- Keeping the family home
- Reducing credit report impact (compared with Chapter 7 bankruptcy)
- Lowered payments on total debt during the reorganization
One of the most disadvantageous aspects of Chapter 13 is that it takes several years to conclude. However, it is still a beneficial option for those facing insurmountable debt.
We recommend learning more about Chapter 13 and Chapter 7 bankruptcy laws before you make your final decision.