Chapter 13 Bankruptcy Explained
Filing bankruptcy under Chapter 13 allows the debtor to arrange a repayment plan with creditors with the assistance of the Bankruptcy Court. The choice to file Chapter 13 vs filing under Chapter 7 bankruptcy often comes down to how much money the debtor earns after deduction of allowable expenses. Generally speaking, an individual whose earnings are below the allowable threshold will file for bankruptcy under Chapter 7, while someone who earns over this threshold and has assets that he or she wishes to keep will file bankruptcy under Chapter 13.
Eligibility for Chapter 13 in Massachusetts
To begin with, filing for bankruptcy in Massachusetts under Chapter 13 requires the debtor to be eligible to file such a petition with the Bankruptcy Court in Massachusetts. To be eligible to file Chapter 13, the debtor must be within the limits of secured and unsecured debts. Our attorney will assist you in determining whether you meet these eligibility requirements. However, in general the limits are quite high and many bankruptcy filers will not exceed this part of the eligibility test.
The next issue is the Bankruptcy Court requires the petitioner in bankruptcy to have an income that is steady enough to cover both living expenses and the cost of the repayment plan that will be established under Chapter 13. Courts will often not allow a debtor to file bankruptcy under Chapter 13 in Massachusetts if the filer fails to demonstrate a regular income, or the income of the filer is too low to support both living expenses and the cost of the repayment plan.
See our Frequently Asked Questions About Bankruptcy for more information on bankruptcy and the bankruptcy process in Massachusetts….and read a more recent version of this article here.
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