Phoenix Chapter 13 Bankruptcy Lawyer
How Does Chapter 13 Bankruptcy Work?
Those facing insurmountable debt need to evaluate the options that are
available to them. Chapter 13 bankruptcy allows debtors to restructure
their debts into one reasonable payment plan. The payment plan will generally
last either three or five years, and the debtor will pay a set monthly
amount with a lower, fixed interest rate. When you have completed the
payment plan, most remaining debts can be discharged.
Why Should I Consider Chapter 13?
Chapter 13 bankruptcy is not for everyone; however, it can be a viable
solution for many people. If you are currently struggling with debt and
thinking about bankruptcy, we encourage you to discuss your situation with a
bankruptcy attorney in Phoenix.
Some reasons why Chapter 13 may be better for you than
Chapter 7:
-
You are not eligible for Chapter 7.
To file for Chapter 7 bankruptcy, you must pass the means test, which
will compare your personal income with the median state income in Arizona.
If you are unable to pass this test, you will not be allowed to file for
that chapter.
-
Stop foreclosure.
If you have fallen behind on your mortgage payments and are being threatened with
foreclosure, filing for Chapter 13 may be your best option. This will put a halt on
any foreclosure proceedings—giving you the breathing room you need.
-
Deal with debts that cannot be discharged by Chapter 7.
Not all debts can be discharged by filing for Chapter 7 (ex: child support
/ alimony). With Chapter 13, you can put a plan in place to repay them.
Who Is Eligible for Chapter 13 Bankruptcy?
If you are considering Chapter 13, there are a few factors that will determine
eligibility. If your debt is directly correlated to your business, you
will not be able to file for Chapter 13 unless you file under your own
name. Business owners are typically guided toward Chapter 11 bankruptcy
if they need help managing debts associated with their business. If you
file as an individual, you may still include any debts that are related
to your business. In order to file Chapter 13, you must be able to show
the bankruptcy court that you have enough income available to start repaying
your creditors. You must be able to present the judge with a plan to pay
off your debts in full.
Your plan may include several different sources of income:
- Routine wages or salary
- Income from seasonal work
- Wages from self-employment
- Disability
- Unemployment
- Social Security
If your secured debts surpass $1,150,000, you will not be eligible for
Chapter 13. A secured debt relates to a particular property you stand
to lose if you don't uphold your financial obligations. Examples of
secured debts would be mortgages or car loans. You would also be ineligible
for Chapter 13 if your unsecured debts exceed $383,175. Unsecured debts
are those that cannot be taken in the form of physical property.
In order to file for Chapter 13, you must prove to the bankruptcy court
that you have filed your income tax returns for the four years prior to
the date you file. If you need time to obtain all of the proper tax returns
and transcripts, you can ask the court for a postponement, but you will
not be able to file until you have presented these documents to the court.
Our team can help you present all required documentation.
Take the First Step Today with a Free Consult
At Leonard V. Sominsky, ESQ., PC, we are devoted to passionately pursuing
an appropriate solution to your debt issues. Before you can file for bankruptcy,
you will need to receive credit counseling from an approved agency. Once
the credit counseling is completed, you will need to pursue bankruptcy
very quickly. As you work to create a repayment plan, our firm can help
ensure all necessary steps are taken.
Contact us at your earliest convenience for your
free case evaluation!