Advantages and Disadvantages of Filing for Massachusetts Chapter 7 Bankruptcy

By Samantha Taylor, guest author

Any petition for a Massachusetts bankruptcy is filled so that you, the debtor can come out of your financial crisis and can start afresh. Most of your assets are likely exempt from your creditors. Thus your debt is discharged. It usually works best for those who have a large amount of unsecured debts. It does not pardon mortgage payments or other secured debts, however, the Massachusetts homestead law protects most homes. If you are not able to make mortgage payments, however, you need a lawyer to determine how to proceed. If you home is underwater, you may be able to allow a foreclosure and walk away without owning anything to the lender, or you may qualify for a mortgage modification.

There are many advantages and disadvantages of Chapter 7 bankruptcy. They are as follows.


1. Your debt is eliminated: Most forms of your unsecured debts are eliminated when you file for Chapter 7 bankruptcy. All bills ranging from credit card bills, unpaid medical bills, unsecured loans as well as payday loans get eradicated.

2. You do not need to make repayments: If you comply with the new bankruptcy laws, then it is not necessary for you to offer your creditors a monthly repayment. This could be especially advantageous to you if you’re unemployed or do not have much disposable income.

3. Reduction in stress: As your debts get discharged you become financially free. This further leads to being emotionally free. You no longer need to worry about how to pay off your debts or how to make ends meet. When the stress and anguish go away from your life you are able to take better decisions and can further handle your financial life better.

4. Quickly eligible for loans: In most cases if you file for a Chapter 7 bankruptcy, then your debts will be discharged within 3 months of filing. Thus, within a very short span of time you will become eligible for new loans. This implies that you have a chance to rebuild your credit so that you can start afresh in life.

5. Protection from court: You must remember that your creditors cannot call you or contact you in anyway and ask for repayment, once you have filed for Chapter 7 bankruptcy. Trying to contact you and asking you for repayment will be considered illegal. The moment you file a petition with the court the protection arises. However, there are cases in which they can call you. The only time they are permitted to call you is for re-affirming your debts, and, if you don’t have a bankruptcy lawyer in Massachusetts.

6. Advice from credit counselor: When you file for Chapter 7 bankruptcy you must get bankruptcy credit counseling as per the new law. This credit counseling has to be from a source which is approved by the United States Trustee’s office. When you take this advice you learn how to take care of your finances. This is designed to help you to handle your money better in future and stay out of debt.


1. Low credit score: A major disadvantage of bankruptcy is that if you file, then it is recorded by credit reference agencies. This information may be visible to any company that for at least 10 years, if the company performs credit search. However, your credit score may already be weak due to delinquencies, so you may be able to rebuild your credit score quicker following a bankruptcy.

2. Doesn’t work for all debts: Chapter 7 bankruptcy cannot protect you from all debts. Some debts are not covered. Loans such as student loans, secured loans, federal taxes that you haven’t paid, child support and alimony are not generally discharged by chapter 7 bankruptcy. These will have to be paid separately.

3. Hand over non- exempt assets: In case of chapter 7 bankruptcy it is necessary to hand over all your non-exempt assets to a trustee. This could include a second home, a car or a valuable collection. The assets that you hand over will be sold off and the money that will be collected will be distributed among your creditors. However, with pre-Petition planning with a qualified Massachusetts bankruptcy lawyer these assets can be kept to a minimum.

4. Negative impact on employment: After you file for bankruptcy you may not be able to work in some jobs. These may include financial, legal as well as some government positions.
These are the advantages and disadvantages of chapter 7 bankruptcy. Only you can decide whether or not you want to opt for it.

About the guest author: Samantha Taylor is the Community Mentor of MortgageFit and has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry. A few of her popular articles would include names like ‘Mortgage that you can afford’, ‘Mobile Home Loan with Bad Credit’, and How much mortgage can I borrow?’