Two primary bankruptcy options are available to Arizona consumers:
Chapter 7 (Liquidation): Chapter 7 bankruptcy is known as a liquidation bankruptcy because the filing party’s liquid assets are generally used to repay debts immediately. In return, many of their unsecured debt obligations are discharged. Chapter 7 can be powerful. However, it is not available to all individuals. People who have incomes substantially above the Arizona median generally cannot apply for this type of protection.
Chapter 13 (Restructuring): A Chapter 13 bankruptcy is available to consumers of all income levels. It generally does not result in most debt being immediately discharged, though. Instead, the filing party is put on a payment plan. This plan will usually roll all qualifying debts into a single (far more affordable) payment. Once the payments are made, the remaining unsecured debt is discharged.
In order to determine which type of personal bankruptcy is right for you, you should consult with an experienced Surprise or Peoria bankruptcy lawyer. First, your lawyer will need to see if you qualify for Chapter 7 under the “means test.” Additionally, even if you do qualify, your lawyer will need to review your available liquid assets and types of outstanding debts (secured vs. unsecured) to determine if Chapter 7 offers benefits over Chapter 13.