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What factors help decide if Chapter 13 is the right way to go?

Money problems are not a unique feature of life these days. Many individuals and families in Massachusetts suddenly find themselves in a lurch. All it might take is a serious accident, or unexpected job loss. The need for debt relief can crop up in a flash.

The prospect of going through bankruptcy is one people might rather not consider. However, the negative stereotypes so many associate with the process are just that, stereotypes. And like many labels, they tend to be undeserved. Bankruptcy is the means by which our society allows those in tough financial straits to clear the slate and begin fresh.

Reasons Chapter 13 might do

Accepting that, the question someone considering bankruptcy might want to ask is what form is most appropriate. Chapter 7, often called liquidation, is quick but can be upsetting. It is not the only model available, however. There is also Chapter 13. It might be the right route to take if:

  • You have sufficient and steady income. If you work, earn more than the state's median income, and have funds available to repay some of your unsecured debt, you won't be able to file for Chapter 7. If you truly desire to repay what debt you can, Chapter 13 with its extended period of structured payments might serve.

  • You want to protect your home. Entering bankruptcy stops foreclosure action on the filer's home. The stay can be lifted by the court, but that is more likely to occur under Chapter 7. The stay under Chapter 13 tends to be more durable and the relationship with the lender is governed by the repayment plan.

  • You need to keep your vehicle. In today's world, if you own a car it's probably because you need to. If you owe money on that vehicle, it's easier to keep it from repossession under Chapter 13.

  • You want to protect a cosigner. Many people today carry a great deal of student loan debt. Very often, a parent or other relative has cosigned for that money. If the terms of Chapter 13 repayment are met, the cosigner is protected from collection action for at least as long as the plan is in force.

Finding your financial footing through bankruptcy does not indicate failure, it is a sign of positive intent – something an experienced attorney can help you achieve.

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