Under a Chapter 13 bankruptcy, the debtor petitions the court for approval of a 3- to 5-year monthly repayment plan.
The plan is also presented to the creditors for review and approval. Typically, the plan is created in such a way that a debtor can pay off all or part of the debts out of future income. The amount to be repaid in the plan is calculated on your disposable monthly income. If a debtor can follow the repayment plan, any remaining dischargeable debt is released at the end of the plan. It is important to remember that if you pursue a Chapter 13 bankruptcy, creditors must receive at least as much as they would have through a Chapter 7 bankruptcy.
Many debtors elect to use Chapter 13 rather than Chapter 7 because it is better equipped to prevent things like repossession and foreclosure actions. You can utilize Chapter 13 to make up for missed payments (on a car or your mortgage, for example), stop interest from accruing on tax debt, keep certain non-exempt property, and more. Often, debtors will use Chapter 13 when they want to keep secured assets that have more worth in equity than would be provided by Arizona bankruptcy exemptions.
One fear that debtors have going into a Chapter 13 bankruptcy is in regard to what will happen if they are unable to follow the plan or make the payments. What if they suddenly lose a source of income that they were counting on? What if they have unexpected extra expenses? You can take comfort in the fact that people understand the difficulties you are going through. Yes, that normally includes your creditors and the court. They know you didn’t get into this situation on purpose. Because of the inherent assumptions that a Chapter 13 plan relies on, it is possible under certain circumstances to modify a plan if there is a reasonable cause for doing so.
There can be many unexpected challenges that arise during bankruptcy. Every case can prevent unique challenges, so it is crucial that you get help from a firm that won’t simply glance at your case and provide you with a one-size-fits-all solution. At The Peterson Law Firm, our main focus is you. We are committed to evaluating your specific situation and the challenges you are facing and providing you with an effective resolution. It is a lot easier to decide on your next move when you know that your case is being handled by someone who actually cares about what is best for you and your family.
Much like Chapter 7 bankruptcy, Chapter 13 bankruptcy Arizona debtors must meet certain requirements. Similar to the Chapter 7 requirements, the bankruptcy code requires that a debtor be domiciled in Arizona for at least 90 days and undergo credit counseling from an approved agency within 180 days of filing.
On top of that, you must be able to show that you will have sufficient income, after subtracting expenses, to meet the repayment obligations under the repayment plan. Additionally, the bankruptcy code, in a Chapter 13, requires that your secured debts and unsecured debts not exceed certain limits. If you have debts that exceed the limits, then you may not qualify for Chapter 13. Another requirement is proof of filed tax returns for the four years leading up to your bankruptcy filing. These additional requirements are just a few of the hurdles you may face when considering a Chapter 13 bankruptcy, so contact The Peterson Law Firm to determine if a Chapter 13 is the correct route for you.
If you find yourself in a financial position where you are wondering if bankruptcy is the right option for you, contact The Peterson Law Firm. Declaring bankruptcy can be a very scary and daunting concept, which is why you need an experienced attorney who can go over the details to your case with you and explore the best possible options with you to work out a plan to efficiently deal with your debt. Let us help you get back on your feet again.