If you are overwhelmed by debt and looking for relief or a way out, bankruptcy may be the solution. However, it is important to understand that bankruptcy is simply not a process where you go to court and get your debts wiped out. It’s not that simple. There are different types of bankruptcy. In some cases, most of your debts are erased and in other cases, you may enter into an agreement to pay off your debts with a payment plan.
Filing for bankruptcy can give you instant relief because when you file for bankruptcy protection, creditors cannot garnish your wages, empty your bank account or go after your car or house. They can’t make harassing calls in an attempt to collect from you, under the law. But, how do you know which bankruptcy is best for your situation? Here are a few things to consider.
In a Chapter 7 bankruptcy, the debtor simply receives a discharge of most of their unsecured debt such as credit card and medical debt. Chapter 7 is only available to debtors with little or no disposable income. In other words, they are debtors who have no income to repay their debts. In this type of bankruptcy, you may also be able to keep some of your property that is exempt such as primary residence, a motor vehicle (to a certain value), household furnishings, jewelry, life insurance, pensions, retirement plans, part of your home equity, tools of your trade, and public benefits such as Social Security or unemployment compensation
There are, however, certain situations when you may not be able to file for Chapter 7:
In a Chapter 13 bankruptcy, you propose a three- to five-year repayment plan under which you will pay all, or a portion of, your debts. In general, you are probably a good candidate for Chapter 13 bankruptcy if you owe federal income taxes; if you have property you would lose if you filed Chapter 7 bankruptcy; if you got a Chapter 7 discharge within the last six years; and if you have the ability to repay your debts, but need bankruptcy protection in order to do so.
However, you may not be able to qualify to file for Chapter 13 if your secured debts are over $750,000 or if your unsecured debts exceed $250,000. You’ll need to have a stable income as well as disposable income.
If you are not sure about what step to take or which type of bankruptcy to file, contact an experienced Arizona bankruptcy attorney who can advise you regarding your options. This could be one of the most important steps you take to secure your financial future.
We invite you to contact us at our Chandler Arizona office to schedule a consultation.
Pew Law Center
333 N Dobson Rd #5, Chandler, AZ 85224
Call (480) 745-1770 or fill out our contact form to get help from compassionate professionals. Stop worry and get help today.