Experienced Arizona Bankruptcy Attorney Serving Clients Filing for Chapter 13 Bankruptcy
Are you thinking about filing for personal bankruptcy? There are numerous situations in which Chapter 13 might be the best solution for you. For instance, are you behind on mortgage payments and trying to find a way to prevent foreclosure? Chapter 13 bankruptcy can put a stay on foreclosure proceedings to help you keep your house. Do you want to avoid liquidating your assets while you find a way to manage your debts? Chapter 13 bankruptcy does not require liquidation and can provide a way for you to repay creditors and get a fresh start on your finances. Did you fail to meet the “means test” for Chapter 7 bankruptcy? You may be able to file for Chapter 13 bankruptcy instead.
If you have questions about why Chapter 13 bankruptcy might be right for you, an Arizona Chapter 13 attorney can help.
How Does a Chapter 13 Bankruptcy Work?
Chapter 13 bankruptcies are quite different from Chapter 7 bankruptcies in that they do not require a debtor to liquidate assets. Instead, in filing for Chapter 13 bankruptcy, the debtor develops a “repayment plan” that will take between three and five years. The United States Bankruptcy Court for the District of Arizona provides information about Chapter 13 repayment plans as well as sample forms for developing a repayment plan. As part of that repayment plan, the debtor lists what she or he owes and makes a plan to pay off part or all of those debts from her or his future income. How does this process work in practice?
Once the debtor proposes a repayment plan, she or he will make payments to a bankruptcy trustee who will repay creditors the amounts specified as part of the repayment plan. In some situations, the debtor also may submit certain property to the trustee in order to help repay creditors. In the repayment plan, the debtor will need to list the following:
- Name of the creditor;
- Description of the property; and
- Monthly amount to repay the creditor.
The court must approve the repayment plan before it can take effect. As long as the debtor abides by the repayment plan until it is completed, then the debtor will have a fresh start at the time of the plan’s completion.
Am I Eligible for Chapter 13 Bankruptcy?
Under federal law, an individual (or a business) is eligible to file for Chapter 13 bankruptcy unless the individual has unsecured debts of $383,175 or more or secured debts of $1,149,525 or more. The only other issue that can make an individual ineligible for Chapter 13 bankruptcy is if she or he has filed for bankruptcy under any chapter (including Chapter 13) within the last 180 days and the bankruptcy petition was dismissed.
When an individual is not eligible for Chapter 7 because of an inability to meet the “means test,” that debtor typically still can file for Chapter 13 bankruptcy.
Speak with an Arizona Chapter 13 Lawyer
If you have questions about filing for consumer bankruptcy or how the automatic stay in Chapter 13 can help you avoid foreclosure, an experienced Arizona Chapter 13 lawyer can speak with you about your situation.