Chapter 7 vs. Chapter 13 Bankruptcy in Massachusetts: Which One Is Right for You?

By Attorney Michael Goldstein, a licensed Massachusetts attorney handling bankruptcy cases since 2006

Chapter 7 wipes out most unsecured debt in a few months by liquidating non-exempt property, though most Massachusetts filers keep everything they own under state exemptions. Chapter 13 is a three-to-five-year repayment plan that lets you keep property and catch up on missed mortgage or car payments. Which one fits depends on your income, your home equity, and what you are trying to protect.

That is the short version. The rest of this article walks through what each chapter actually does, whether your income lets you file Chapter 7 in Massachusetts, how the state homestead law can change the whole calculation, and how to think through the choice. This is general information, not legal advice, and reading it does not create an attorney-client relationship. Bankruptcy is fact-specific, so treat what follows as a framework for understanding your options, not a substitute for sitting down with an attorney about your actual numbers.

What is Chapter 7 bankruptcy?

Chapter 7 is the “liquidation” chapter. In exchange for discharging (permanently erasing) most of your unsecured debts, the law technically allows a trustee to sell your non-exempt property to pay creditors. In practice, the great majority of Massachusetts consumer cases are what the system calls “no-asset” cases, meaning everything the filer owns is protected by an exemption and nothing actually gets sold.

A Chapter 7 case is fast. Most run about three to six months from filing to discharge. It works best for people with limited income and little non-exempt equity, who mainly need to clear credit card balances, medical bills, personal loans, and similar unsecured debt. You can read more about how we handle these cases on our Chapter 7 bankruptcy page.

What Chapter 7 does not do well is help you catch up on secured debt you have fallen behind on. If you are months behind on a mortgage or car loan, Chapter 7 does not cure those arrears. That is where Chapter 13 comes in.

What is Chapter 13 bankruptcy?

Chapter 13 is the “reorganization” chapter for individuals. Instead of liquidating anything, you propose a repayment plan that runs three or five years, and you make monthly payments to a trustee who distributes the money to creditors. At the end of the plan, remaining eligible balances are discharged.

The defining advantage of Chapter 13 is that it lets you keep property while catching up on what you owe. If you have fallen behind on your mortgage, a Chapter 13 plan can spread those missed payments across the life of the plan while you stay current going forward, which is one of the most common reasons people choose it. If you are facing foreclosure, filing can stop the process and give you a structured way to cure the default; we cover that specific situation on our page about whether a Chapter 13 will stop a foreclosure. Chapter 13 also fits people whose income is too high to qualify for Chapter 7, and people who have non-exempt equity they want to protect. Our Chapter 13 representation page explains how the plan process works from start to finish.

Chapter 7 vs. Chapter 13: the core differences

Here is the comparison at a glance.

The rows that decide most cases are the eligibility gate (the means test) and how each chapter treats property and missed secured payments. The next two sections take those in turn.

Do you make too much for Chapter 7 in Massachusetts?

The means test is the income gate for Chapter 7. The first step compares your household income to the median family income for a Massachusetts household of your size. If you are below the median, you generally qualify for Chapter 7 without further income analysis.

What is the Massachusetts median income for the means test?

For cases filed on or after July 15, 2026, the Massachusetts median family income figures are:

So a Massachusetts family of four is measured against $178,524. These numbers come from the U.S. Trustee Program’s median income tables, which are revised roughly twice a year on an April and November cycle. The figures above took effect July 15, 2026. Because they change, the figure that matters in your case is the one in effect on the date you actually file, so confirm the current number before relying on it.

What happens if I’m over the median?

This is the point that trips up the most people: being over the median does not automatically disqualify you from Chapter 7. It just means you move to the second half of the means test, the disposable-income calculation. That step subtracts allowed living expenses from your income to see how much you could realistically pay toward debt. Plenty of above-median households still qualify for Chapter 7 once those expenses are accounted for. The takeaway is simple: an income above the median is a reason to run the full test, not a reason to assume Chapter 7 is off the table.

The real question: which problem are you solving?

Choosing between the chapters is less about the labels and more about what you are trying to protect. If your problem is unsecured debt and you have little equity to lose, Chapter 7 usually solves it fastest. If your problem is that you are behind on a house or a car you want to keep, or you have equity that Chapter 7 would put at risk, Chapter 13 is often the better tool. In Massachusetts, one factor moves that line more than people expect: the homestead exemption.

How Massachusetts homestead protection changes the math

Massachusetts protects home equity through M.G.L. c. 188, and there are two tiers. Conflating them is the single most common mistake people make when they try to work this out on their own.

• Automatic homestead: $125,000. This applies to your primary residence with no filing required.
• Declared homestead: $1,000,000. This requires recording a written Declaration of Homestead at the Registry of Deeds under M.G.L. c. 188, § 3.

The $1,000,000 figure comes from the 2024 Affordable Homes Act, effective August 6, 2024, which raised the declared exemption from $500,000 to $1,000,000. If you recorded a declaration before that date, you received the increased protection automatically, without having to re-file. There is also added depth for certain owners: under § 2, elderly (age 62 or older) or disabled owners may each declare separately, and those can stack, which is how a qualifying couple can reach a high combined protection amount.

Here is why this ties directly back to the Chapter 7 versus Chapter 13 decision. In Chapter 7, home equity above the applicable exemption can be at risk. A well-timed declared homestead may change whether Chapter 7 is safe for you, or whether Chapter 13 is the better route to protect the home. Whether that applies depends on your actual equity and the timing of any declaration, so this is exactly the kind of question worth reviewing with an attorney before you file rather than after.

Can I keep my house and car under each chapter?

For most Massachusetts filers, the answer is yes, but the mechanism differs.

Massachusetts exemptions do a lot of the work in Chapter 7. Beyond the homestead, filers can protect property through exemptions for a motor vehicle, household furnishings, tools of the trade, and a wildcard exemption, among others. Massachusetts filers may in many cases choose between the Massachusetts state exemption set and the federal exemptions under 11 U.S.C. § 522(d), and which set protects you best is fact-specific. That election is one of the more consequential early decisions in a case, and it is worth getting right.

This is also where the most common fear about bankruptcy turns out to be mostly wrong. A lot of people assume filing Chapter 7 means losing their house. In Massachusetts, once the homestead exemption is applied, that is usually not what happens. We address that worry in more detail on our page about whether you will lose everything if you file bankruptcy.

Chapter 13 protects property differently. You keep everything and repay value through the plan, and crucially, missed mortgage or car payments can be cured over the plan’s three to five years. If keeping a home you have fallen behind on is the whole reason you are considering bankruptcy, that curing ability is often the deciding factor.

How long does each one take, and when is my debt discharged?

Chapter 7, step by step:

1. Complete pre-filing credit counseling from an approved provider.
2. File the petition and schedules.
3. Attend the 341 meeting of creditors.
4. Complete the financial management (debtor education) course.
5. Receive your discharge, typically around three to six months after filing.

Chapter 13, step by step:

1. File the petition along with a proposed repayment plan.
2. Attend the 341 meeting of creditors.
3. Get the plan confirmed by the court.
4. Make plan payments for three or five years.
5. Receive your discharge at the successful completion of the plan.

The headline difference is time to relief. Chapter 7 gives you a discharge in months. Chapter 13 gives you a discharge at the end of a multi-year plan, but along the way it gives you something Chapter 7 cannot: a structured way to catch up on secured debt while keeping the property behind it.

How do I decide between Chapter 7 and Chapter 13?

Work through it in this order:

1. Run the means test. If you are below the Massachusetts median for your household size, Chapter 7 is likely available. If you are above it, do not stop there. Run the disposable-income calculation before ruling Chapter 7 out.
2. Look at your secured debt. If you are current on your mortgage and car and mainly need to clear unsecured debt, Chapter 7 often solves the problem fastest. If you are behind on a house or car you want to keep, Chapter 13’s ability to cure those arrears may be decisive.
3. Look at your equity, especially home equity. Compare your equity to the applicable Massachusetts exemptions. If a properly declared homestead protects your home equity, Chapter 7 may be safe. If not, Chapter 13 may be the better route to protect it.
4. Get the exemption election right. Whether the Massachusetts or federal exemption set protects you better is fact-specific and worth reviewing carefully.

None of these steps produces a clean answer in isolation, which is the honest reason this decision is hard to make from an article. The chapters interact with your specific income, equity, and timing in ways that change the recommendation. If you are weighing the two, the most useful next step is to have a bankruptcy attorney run your actual numbers against the current figures, rather than trying to reverse-engineer the right chapter from general information.

Sources

• M.G.L. c. 188 (Massachusetts homestead), including § 2 and § 3
• Massachusetts Affordable Homes Act, effective August 6, 2024
• U.S. Trustee Program, Census Bureau median family income tables (Massachusetts figures effective July 15, 2026)
• 11 U.S.C. § 522(d) (federal bankruptcy exemptions)