Chapter 13 bankruptcy in Arizona, also referred to as the “wage earner’s plan,” enables those with consistent and reliable income to construct a plan to repay their creditors over a period of time. This time period is generally between three and five years. During that time, creditors are unable to pursue collective action against the debtor, though interest charges may still be in place. Chapter 13 is the most commonly filed type of bankruptcy among consumers or individuals, but that does not necessarily mean it is any less stressful. An experienced Phoenix Chapter 13 bankruptcy attorney can answer your questions and help you determine what makes the most sense for your situation.
Nearly any individual can qualify for Chapter 13 bankruptcy. As long as you are employed, your unsecured debts total under $383,175, and your secured debts are under $1,149,525, you are likely eligible to file for Chapter 13. Exceptions to this include those who have had a bankruptcy petition dismissed within the past 180 days due to failure to appear, failure to comply with court orders, or a voluntary dismissal following a creditor request for relief to recover property with a lien.
How Chapter 13 Eliminates Your Debts
Filing for Chapter 13 in Phoenix, AZ will impose what is called an automatic stay on collectors. This happens as soon as a petition is filed, and it stops the creditor from taking action against the debtor or their property. Lawsuits, the garnishing of wages, and any sort of contact in an effort to collect debt will be paused while the bankruptcy is in effect. After that, anywhere from 21 to 50 days after the initial petition is filed, there will be a meeting held with the creditors to answer questions and determine a plan. Once the meeting has occurred and the payment plan has been accepted, no further punitive action will be taken against the debtor and the creditors will receive their money in the agreed upon manner. Our Phoenix Chapter 13 bankruptcy lawyers will help you stop creditor harassment and begin your journey to financial stability.
What Is a Discharge?
A discharge is an order given by the courts releasing the debtor from the total of their dischargeable debt. The debtor will no longer be responsible for discharged debts, and creditors will not be allowed to contact them regarding the charge. In Chapter 13, items potentially suitable for discharge include debts for injury to property, those incurred to settle tax obligations, and those stemming from property distribution during divorce proceedings. Many of these types of debts will be discharged during the bankruptcy proceedings unless the creditor takes timely steps to ensure they are declared nondischargeable.
The Benefits of Filing Chapter 13
There are a number of ways filing for Chapter 13 can benefit you during your bankruptcy proceedings and our Chapter 13 bankruptcy lawyers in Phoenix, AZ can help you better understand them. Chief among these benefits is the ability to retain all of your property, including your home and vehicle. While Chapter 7 does provide exemptions, with a Chapter 13 filing, you are guaranteed to retain your property without the need to plead your claim to it. Moreover, if your home is currently in foreclosure, Chapter 13 gives you the opportunity to remove it from this process. Filing under this chapter allows the foreclosure proceedings to be stopped and could remedy delinquent mortgage payments with time.
Additionally, Chapter 13 allows individuals to redistribute and extend their secured, or collateral-bearing, debts. This debt rescheduling offers more time to repay your creditors and often can lower the payments due. Moreover, this type of bankruptcy can act like a consolidation loan, allowing the debtor to make a lump payment to their bankruptcy trustee, who will then allocate the funds to the areas necessary. Instead of having to worry about individual debts, Chapter 13 filers don’t need to have direct contact with creditors for the duration of their bankruptcies.
The process of filing for bankruptcy in Arizona is an involved one. If you have any questions regarding how to best proceed, contact one of our Phoenix Chapter 13 bankruptcy attorneys today.