Consumer Bankruptcy

There are two types of bankruptcies that are most applicable to consumers:
Chapter 7 (Straight Bankruptcy) and Chapter 13 (Consumer Reorganization).

Chapter 7

A Chapter 7 Bankruptcy, commonly known as liquidation, is most beneficial to individuals or businesses with unsecured debt. Typically, individuals are allowed to exempt their personal assets and eliminate their debts, tax-free. This form of bankruptcy is ideal for individuals with large amounts of credit card debt. For homeowners in Massachusetts, the Homestead Act protects the residence of the debtor from being sold, as long as the individual is current on his/her mortgage payments. Almost all unsecured debt is able to be eliminated in a Chapter 7, with few exceptions such as some taxes, child care, and student loans. Chapter 7 cases generally take four to five months to complete, and the filer usually only needs to appear at one hearing, known as the meeting of creditors. There, the bankruptcy filer meets with the Chapter 7 Trustee (who is appointed by the Bankruptcy Court) to discuss the circumstances that led the filer to bankruptcy. Creditors are allowed to appear as well, but only in very rare instances actually do.

Chapter 13

A Chapter 13 Bankruptcy, commonly known as reorganization, is especially helpful for individuals who have fallen behind on mortgage payments for their residence. Like a Chapter 7, most unsecured debts can be eliminated completely, or reduced to pennies on the dollar. Chapter 13 cases require a court-approved plan, which basically entails spreading missed mortgage/car payments (or any other secured debt) over three or five years, and thus requires some disposable monthly income. Similarly to a Chapter 7, certain debts such as some taxes, child care, and student loans are non-dischargeable and must be paid pursuant to the plan.

Timothy M. Mauser has practiced Bankruptcy Law for over 20 years, for both consumer and business bankruptcy clients. The attorneys and staff at the Law Offices of Timothy M. Mauser, Esq. practice bankruptcy law and consumer debt relief exclusively. Whether you are interested in a Short Sale or a Bankruptcy, please call Mr. Mauser to arrange for a personal free consultation.