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Why might one choose Chapter 13 bankruptcy over Chapter 7?

When a person in Nashua decides to file for bankruptcy, they may initially think of Chapter 7 bankruptcy. This is the type of bankruptcy in which many of the debtor's assets are sold and the proceeds are used to pay back the creditors. Once that is done, many (but not necessarily all) of the remaining debts are extinguished.

However, not everyone qualifies for Chapter 7 bankruptcy. For example, a person may make too much money to qualify for Chapter 7 under the means test or they may have had a prior Chapter 7 case discharged. People in such situations may want to consider filing for Chapter 13 bankruptcy instead.

In a Chapter 13 bankruptcy, the debtor's assets are not liquidated. Instead, the debtor is given a three to five-year plan to pay back what they owe. Being able to keep one's assets may make Chapter 13 more attractive than Chapter 7. The Chapter 13 plan can also accommodate the repayment of past due income taxes, child support and spousal support.

If the debtor has an automobile loan that is at least two and a half years old, the debtor can establish new terms for paying back what they owe on the loan through Chapter 13 bankruptcy. If the debtor has personal loans that were co-signed by another individual, that individual is protected from liability for those debts under a Chapter 13 bankruptcy. Finally, through a Chapter 13 bankruptcy filing, attorney's fees can be included in the three to five-year repayment plan, rather than having to be paid all at once as they would be in a Chapter 7 filing.

Of course, deciding what bankruptcy options best fit your situation is very personal, and no two bankruptcy cases look the same. Because so much is at stake when you file for bankruptcy, it can help to first seek legal guidance, so you can make an informed decision.

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Whether you have a family law issue, an estate planning question or are considering bankruptcy, I can help you find a sustainable solution that provides relief and hope. Schedule your consultation at my Nashua, New Hampshire office today by calling 603-635-4149 or by sending us an email.

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