If you’re considering bankruptcy in Massachusetts, it’s time to consider whether Chapter 7 or Chapter 13 bankruptcy is right for you. Many people facing financial struggles feel they can’t get any relief from debt collectors or the interest on unpaid balances. Chapter 7 and Chapter 13 bankruptcy are two different tools that can provide you with a new path forward.
The Difference Between Chapter 7 and Chapter 13 Bankruptcy
Chapters 7 and 13 are both types of bankruptcy, a legal process that allows debtors to have some or all of their debts discharged. Chapter 7 bankruptcy involves a quick process of erasing unsecured debts and selling non-exempt assets. It’s helpful for people with lower income or irregular income who need relief quickly. Chapter 13 takes longer, involving a three to five-year payment plan to repay many or all creditors. It’s better suited to people with steady incomes who need relief from debt.
Who Qualifies for Chapter 7 in Massachusetts?
To determine if you qualify to file for Chapter 7 bankruptcy in Massachusetts, you’ll need to take a hard look at your income. People who are eligible for Chapter 7 either:
- Have a monthly income below the Massachusetts median, or
- Pass the “means test”
The “means test” determines whether you have disposable income that could be used to pay back debts. It’s complex to figure out if you pass or fail, so we recommend consulting a lawyer if your income is above the Massachusetts median. The median income in 2025 was $83,430 for a single earner and increases with multiple earners in the household.
Importantly, you can file for Chapter 7 no matter how much debt you have. Both businesses and individuals can file for Chapter 7 bankruptcy, provided they meet the requirements. It’s a powerful and often-used tool to get relief from debt.
Who Qualifies for Chapter 13 in Massachusetts?
People who fail the means test described above can file for Chapter 13 bankruptcy instead of Chapter 7. If you qualify for Chapter 7 but need to keep non-exempt assets, then you can choose to file for Chapter 13. Businesses can’t file for Chapter 13, but you can file individually if you’re self-employed.
How Chapter 13 Repayment Plans Work
Chapter 13 bankruptcy is often referred to as a “wage earner’s plan” because the bankruptcy trustee helps you gather up all your debts and organize them into a single monthly payment that you make for three to five years. Instead of trying to pay back several debt collectors piecemeal, your debts are now consolidated into one payment. When you complete the repayment plan, remaining debts that have not been fully repaid will be discharged (with a few exceptions). Chapter 13 repayment plans help people keep assets while effectively getting out of debt.
We strongly encourage you to speak with a Massachusetts bankruptcy lawyer to determine whether Chapter 7 or 13 is right for you. The means test is complex to apply, and there are many other bankruptcy rules and requirements to follow. It’s important that you go into bankruptcy with a full understanding of the process, and our team is here to help.
Frequently Asked Questions
Do I need to file an individual or business bankruptcy?
Please reach out to Daigle Law Office for a consultation to discuss filing for individual versus business bankruptcy. Depending on your business situation, some people need to file for both. We can review your overall financial picture and discuss your options.
What are exempt and non-exempt assets?
In bankruptcy law, there are specific exemptions that apply to certain assets, preventing the trustee from selling the assets to repay debts. If an asset is exempt, it can’t be sold. To protect as much of your property as possible from sale, you need to determine when exemptions will apply, but the laws are detailed and complicated. Give us a call to get started with your Massachusetts exemption questions.
We’re Here to Help with Massachusetts Bankruptcy
Questions about filing for Chapter 7 or Chapter 13? Then you’re looking for Daigle Law Office’s dependable, experienced lawyers. Our attorneys provide clients with knowledgeable Massachusetts bankruptcy advice. We help clients who need solid and reliable information about their options moving forward. To schedule a consultation, call 508-771-7444 or use our convenient Contact Form.
