A Path to Being Debt Free: Chapter 13 Bankruptcy in Arizona

For debtors who have significant assets, who have a regular income or who want to keep their homes or cars, Chapter 13 bankruptcy presents some benefits over Chapter 7 plans.  However, it is important to understand the requirements for Chapter 13 in Arizona before choosing to file this type of bankruptcy.

What Happens in a Chapter 13 Bankruptcy?

When a debtor files a Chapter 13 petition, he or she proposes a repayment plan that will cover most or all of the debt.  This repayment plan typically lasts three to five years and requires debtors to make payments to a bankruptcy trustee on a regular basis.  If the debtor fails to make these payments, the bankruptcy case can be dismissed and the automatic stay lifted. Chapter 13 can provide many benefits to debtors, including:

• Prevent foreclosure. If you want to keep your home, Chapter 13 may be the only way to do so.  Many Chapter 13 debtors reaffirm their mortgage debt in order to keep their homes.  However, you may also be entitled to exempt a certain amount of home equity under Chapter 7, so review your options with your attorney before deciding between the two types of bankruptcy.
• Make up missed car payments. If you have car payments that are overdue, you may be able to incorporate them into your Chapter 13 bankruptcy plan.  You may also be able to lower your interest rate to make your payments go farther toward paying off your car.
• Pay taxes and stop interest on tax debt. If you owe back taxes to local agencies, the state of Arizona or the federal government, you may be able to incorporate payments for those taxes into your Chapter 13 plan and even reduce or eliminate interest on the tax debt.

One of the most important aspects of Chapter 13 is that it also allows you to take advantage of certain exemptions.  These valuable exemptions can help you shelter important assets and reduce your debt significantly, making it more likely that you can pay off the debt in a timely manner.  Exemptions let you keep more of your hard-earned money and property. If you need help with choosing the right type of bankruptcy for your needs, speak to the experienced bankruptcy attorneys at Oswalt Law Group in Phoenix.  We can help you choose the right bankruptcy to discharge your debt and protect your assets.