Chapter 13 Bankruptcy in Arizona is often filed by clients who have non-exempt assets they wish to keep, debtors who own their own business, and debtors who are behind on their mortgage or car payments.
The debtors filing Chapter 13 Bankruptcy in Arizona are required to make a regular payment to the chapter 13 trustee. These payments are collected by the trustee’s office and then are distributed to creditors. The amount of the payment is proposed in a chapter 13 plan, and is calculated by your attorney. This amount is determined by the bankruptcy laws, your income, and by which assets you choose to keep.
There are certain distinct advantages to filing Chapter 13 Bankruptcy in Arizona, which are not available in a Chapter 7.
- In many instances, second mortgages on real property can be “stripped”, meaning that the debt becomes an unsecured debt (like a credit card) and the lien against the property is removed. At the end of the bankruptcy, the debt that used to be your second mortgage is discharged and no further payment is required. Note that this option is only available if your house is worth less than the amount owed on the first mortgage, AND you complete the chapter 13 bankruptcy plan.
- Mortgage arrearages can be “cured” through the plan over three to five years, which allows you to keep your house even though you are behind on the monthly payments.
- Automobile debts can be “crammed down” meaning that your debt balance is reduced down to the value of the vehicle, and your interest rate is reduced. Note that this option is available only if the vehicle was purchased more than 2 ½ years prior to the date your bankruptcy is filed, or if the vehicle is not for personal use (i.e. a business vehicle).
- Non-dischargeable Tax debts, unpaid child support, and unpaid spousal maintenance can be paid over the term of the plan so you do not have to come up with all the money when filing your bankruptcy case.
- Monthly Chapter 13 plan payments are flexible and can be changed if your financial situation changes. The plan payment can also be “stepped” meaning that it starts out at a lower payment and then increases in intervals over the life of the plan.
Filing Chapter 13 Bankruptcy in Arizona is complex and it is advisable to seek competent legal counsel to assist you. Legal AZ has over thirty three years of experience and has filed hundreds of successful Chapter 13 Bankruptcy in Arizona. Call today to schedule and appointment and we will help you make a decision that is best for you!
Additional resources:
The Arizona bankruptcy court website also has information for individuals who are filing for bankruptcy.