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The bankruptcy experience

People living in Massachusetts who are struggling with debt often seek solutions to their overwhelming financial situations. One option is filing for bankruptcy although many people may be unfamiliar with how this process works.

The two most common forms of consumer bankruptcy are Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, a trustee liquidates a debtor's non-exempt assets if any exist. The proceeds from the liquidation are then distributed to the debtor's creditors. After this, all eligible debt is then discharged by the bankruptcy court.

In a Chapter 13 bankruptcy, the debtor is able to keep his or her assets but must agree to complete a repayment plan that takes three or five years to complete. After the repayment plan is completed, the bankruptcy court then discharges the remaining eligible debt.

It should be noted that not all types of debt can be discharged in a bankruptcy. These debts include child and spousal support obligations, court judgments against the debtor that were the result of intoxicated driving and, in most cases, tax and student loan debt. Individuals whose debts are partly or primarily non-dischargeable may still be able to benefit from a Chapter 13 bankruptcy, however, as these debts may be incorporated into the repayment plan.

The bankruptcy process can be confusing for many people. Individuals who are unsure about whether they qualify for a particular type of bankruptcy, or suspect that their debts may not be dischargeable, may particularly benefit from speaking with an experienced bankruptcy attorney. The lawyer may be able to review the client's situation and assist in determining which option will help the client regain control over his or her finances.

Source:, 'Tax Debts in Chapter 13 Bankruptcy," Carron Nicks, Retrieved on March 25, 2018

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