Arizona Bankruptcy Facts
Are you having a tough time lowering your debts in Arizona? Are you struggling with late payments and accrued interest that you just can’t pay off? Do you have creditors threatening to seize your property? If so, you are not alone. Thousands of people across the country are struggling with debt, but luckily, there is a way to get rid of it.
Whether you have amassed an unmanageable amount of debt due to medical bills, business expenses, taxes, or even lawsuits, bankruptcy protection may help you get back on your feet and creditors off your back.
What is Bankruptcy?
Bankruptcy is a declaration by an individual or business that that are unable to pay creditors what they owe. It is a federal process that can take anywhere from a few months to five years to emerge from, but once you do, your financial burdens are eliminated. Bankruptcy can help to reduce or even completely wipe out your unsecured debt (debts that are not backed by assets), so if you are up to your neck in impossibly high payments, you may benefit from filing for bankruptcy protection in Arizona.
Learning About Bankruptcy Petitions
There are several types of bankruptcies that can be filed in Arizona, but most people turn to either Chapter 7 liquidation bankruptcy or Chapter 13 reorganization bankruptcy. Each is unique and results in widely different outcomes, so let’s explore more about each chapter so you can gain a better understanding of which petition you might most benefit from.
Arizona Chapter 7 Bankruptcy:
If you have incurred a significant amount of debt beyond the point that you foresee a possibility in paying off, you might benefit the most from Chapter 7 bankruptcy. This petition involves liquidating your assets (surrendering them to creditors) to be used as payment for your debts. In Arizona, you must first undergo 6 months of credit counseling before even being allowed to file for Chapter 7. Once you have completed the counseling, you must pass what is called a “means test,” which determines if your income is within the right range for bankruptcy protection.
Arizona bankruptcy courts will examine your income, and if it falls under the state median for a family of your size, then you qualify to file for Chapter 7 bankruptcy. At this point, you can expect to have all but your non-exempt assets seized by creditors to lower your debts. Assets that are exempt include your home, certain personal effects, social security benefits, and other wages.
Arizona Chapter 13 Bankruptcy:
Another option for Arizona debtors who are facing financial hardship is Chapter 13 bankruptcy protection. Unlike liquidation bankruptcy, Chapter 13 is known as the “reorganization bankruptcy” because your assets are never seized. Instead, a payment plan is devised for you to pay off your debts lasting anywhere from 3 to 5 years.
Most debtors who have a consistent flow of income are approved for Chapter 13 bankruptcy in Arizona. This is an especially popular petition because it benefits individuals whose assets have already been threatened to be seized by creditors. Many Arizona residents whose homes are on the verge of being foreclosed or who are behind on car payments turn to Chapter 13 because it can buy them some time to get their debts down without having to worry about losing their property.
Working with an Arizona Bankruptcy Attorney
Aside from Chapter 7 and Chapter 13 bankruptcies, there are a slew of other petitions debtors may file, which can lead to confusion and an even greater accumulation of debt. And because the slightest error on a bankruptcy petition can lead to years’ worth of credit damage, it’s important that all creditors obtain reliable counsel from a trusted expert in U.S. Bankruptcy Code to ensure a favorable resolution to the case. If you are considering filing, turn to an Arizona bankruptcy lawyer today for assistance with your petition and making sure everything runs smoothly. Bankruptcy attorneys in Arizona work diligently to protect your rights so your debts can be eliminated as quickly as possible.