Which Chapter of Bankruptcy is Right For Me?

Chapter 7 vs. Chapter 13 Arizona Bankruptcy

Which bankruptcy chapter is right for me and my debt relief needs?

Deciding which chapter of bankruptcy in Arizona is right for you is dependent on your goals and your income. Chapter 7 is usually the best option if you are looking to get rid of all of your debt and not have payments.  A Chapter 13 bankruptcy allows you to keep property and vehicles that you have equity in and want to keep.  Each chapter has their unique benefits.

If you have too much equity in your home, you may lose it if you file a chapter 7 bankruptcy.  Thus, if you have too much equity in your home and want to keep your home, you should be considering a chapter 13 bankruptcy and save your family home.  It is important to consult an experienced bankruptcy attorney to make sure you are choosing the right form of debt relief to save your property.

Some people considering bankruptcy are not good at making timely payments on bills.  If you struggle with payment plans, you may want to consider filing a chapter 7 bankruptcy as there are no payment plans to keep. Additionally, Chapter 7 takes less time and typically results in a smaller total payment, making it attractive to many debtors. However, the law limits who can file under each bankruptcy chapter in Arizona.

Chapter 13 Bankruptcy in Arizona

What is a Chapter 13 bankruptcy exactly?  A Chapter 13 Bankruptcy is a government-sponsored debt consolidation plan with some extraordinary twists. First, the plan term cannot be shorter than 3 years and cannot be longer than 5 years. Second, contrary to popular belief, most chapter 13 debtors do not have to pay their debts in full. In fact, a super majority do not. 

In a chapter 13 bankruptcy, you make payments back to the chapter 13 trustee based on your ability to pay.  The chapter 13 trustee figures your income and what you can afford to make for payments.  For example, if you can only afford to pay 300.00 a month for 36 months, the remaining unpaid debt gets wiped out/dismissed in the chapter 13 bankruptcy.  Thus, if you only pay $10,800.00 (36 x $300 payments) toward $60,000.00 in unsecured debt, then the other $49,200.00 unpaid debt gets wiped out, tax free in the Arizona chapter 13 bankruptcy.  Not a bad deal at all to get out from under all of that debt.

Qualifying for a Chapter 7 Bankruptcy in Arizona

Chapter 7 bankruptcy in Arizona is right for many people but not for everyone.  You must qualify to file chapter 7 bankruptcy.  In order to qualify for Chapter 7 bankruptcy in Arizona, you must prove that you really need Chapter 7 relief. The law is designed so that people who don’t actually need to file a bankruptcy don’t use the system to get out of paying debts that they can actually pay. So, to file under Chapter 7, you either must earn less than the state median income or you must pass the Arizona bankruptcy means test.

The means test can be somewhat complex. Contact our Chapter Bankruptcy Lawyers to assist you with the Arizona Means Test and find out if you qualify for a Chapter 7 bankruptcy or if perhaps a Chapter 13 bankruptcy better suits your debt relief needs.

We are a debt relief agency. We help people in Arizona file for bankruptcy relief under the Bankruptcy Code.

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