Options Before Filing Bankruptcy in Arizona

If you live in Arizona and are considering filing for bankruptcy, contact our Arizona bankruptcy attorneys today so that we can help you to choose the right option for you and protect the maximum amount of assets allowable by law. You have two different options when filing for bankruptcy in Arizona – to file for Chapter 7 or Chapter 13 bankruptcy. We will explain the differences between these two options here.

Chapter 7 – Liquidation Bankruptcy Law

Chapter 7 bankruptcy is the most common form of consumer bankruptcy, and usually is the best option for those with smaller amounts of debt who do not own a lot of valuable property. Chapter 7 bankruptcy in Arizona takes four to six months from start to finish (filing to discharge of debt) and usually requires just one trip to a creditor’s meeting. This type of bankruptcy is recommended most often for individuals filing bankruptcy (including married couples). If you have a mix of consumer and business debt, talk to our bankruptcy attorneys to help you decide if you should file Chapter 7 or Chapter 11 bankruptcy (Chapter 11 is often recommended for corporations and partnerships filing for bankruptcy). In this case, the decision of which type of bankruptcy to file is usually based upon whether the business can be reorganized under Chapter 11 or will be liquidated under Chapter 7.

If your income is high enough to allow you to repay some of your debt, the trustee/court might dismiss your Chapter 7 bankruptcy case, saying that since you have the ability to repay some of your debt, you must do so. Allowing a debtor to skip repaying debts is considered under federal law to be a substantial abuse of the bankruptcy system.

Chapter 13 – Wage Earner Bankruptcy Plan

Chapter 13 bankruptcy allows the debtor to keep most of their property, provided that they are willing to repay their creditors to the extent that they can afford to do so, over a three- to five-year period. This type of bankruptcy filing is most often recommended for those who have debts that are not dischargeable under chapter 7.
If you have the following types of debts, Chapter 13 bankruptcy might be better for you:

  • Family support obligations
  • Recent taxes
  • Debts incurred by intentional wrongdoing
  • Debts incurred by fraud
  • Criminal restitution
  • Criminal fines
  • Drunk driving judgments

Most types of unsecured debt are dischargeable under Chapter 13 bankruptcy in Arizona. The following debts, however, are not dischargeable:

  • Criminal restitution
  • Drunk driving judgments
  • Family support obligations
  • Student loans

Filing a repayment plan under Chapter 13 bankruptcy in Arizona is recommended when:

  • You own debts that are not dischargeable under Chapter 7 bankruptcy (like taxes, child support, fraud judgment)
  • You have liens that are larger than the value of your assets securing the debt
  • Your assets are worth more than available exemptions
  • You are behind on house or car payments
  • You have years of unfiled taxes

All secured debt will remain after filing for bankruptcy. If you owe money that is secured by a vehicle or a home, you will not get that home or vehicle “for free” by filing for bankruptcy. You can, however, give up the home or vehicle, releasing yourself rom any liability on that debt.

Filing for bankruptcy in Arizona can be a complicated process. Many debtors have no idea which type of filling is right for them. Our Arizona bankruptcy lawyers can help you to decide which type of bankruptcy filing fits your situation. We can help to evaluate your debt and protect the maximum amount of assets allowable by law. Call us today to schedule a free consultation and to see how we can help you in your Arizona bankruptcy filing.