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July 9, 2018

Knowing which Chapter of Bankruptcy to file

Filing for bankruptcy can be a stressful and confusing time. You might be facing seemingly insurmountable debt, receiving threatening calls from creditors, and/or facing the loss of your car, home, and other property. Your head might be swirling wondering how to go about the process, and which Chapter could be right for you, with the most common for individuals being Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy is only offered to those who qualify based on a means test. Most (but not all) of your debts are discharged, and creditors are immediately barred from contacting you to collect debts. Although this may seem like an attractive opportunity, it is important to emphasize that there are penalties for filing improperly or incorrectly. For example, if you’ve had more than two cases dismissed within the last year (maybe because you filed the wrong form of bankruptcy), the automatic stay on creditors will not necessarily be implemented.

Chapter 13 Bankruptcy is for those who may be able to pay back parts of some of their debts. It creates a reorganization plan for repayment that can satisfy debtors and creditors alike, over three to five years. This is for people who might have a steady income, and the court will certify which debts, and what percentage that is owed, must be paid by the debtor.

Indeed, figuring out which option you qualify for, let alone which option will ultimately be best for you, is a tough decision to make. It takes an experience bankruptcy attorney to advise you on the process to ensure the smallest impact on your credit score, home security, and general debts.

As mentioned above, there can be severe penalties for incorrect filing, so if you’re looking for a skilled bankruptcy attorney, contact the Boston Bar Association Lawyer Referral Service at 617-742-0625, or fill out the online form here.