Are you facing insurmountable debt? Is that debt burdening you and your family? Is the debt wearing you down and depressing you? If so, you may or should be thinking of the opportunities that filing for bankruptcy provide. Chapter 13 bankruptcy is an option that can allow many people and their families to get back onto solid financial ground again.
At The Law Offices of Shawn B. Hamp, we help our clients determine if bankruptcy is right for them, and if so, which type of bankruptcy: Chapter 7 or Chapter 13. Only one will work for you. Here's an overview of what Chapter 13 bankruptcy entails. To get specific answers to your questions, contact our office today. We represent clients in Kingman and throughout Northern Arizona.
Who Qualifies for Chapter 13 Bankruptcy in Arizona?
Chapter 13 bankruptcy is typically for individuals who do not qualify for Chapter 7 bankruptcy and whose secured debt does not exceed $1,184,200 or unsecured debt does not exceed $394,725. (These amounts change from time to time; the most current amounts came into effect on April 1, 2019.) Secured debt includes things like automobiles and homes while unsecured debt includes things like credit card or student loan debt.
If you qualify for Chapter 13 bankruptcy, you must be able to show the bankruptcy court that:
- Your income is enough to start paying creditors;
- You filed your taxes for the last 4 years immediately before the date you file for bankruptcy – copies of the tax returns are required before you file for bankruptcy; and
- You have a plan to pay back creditors using all forms of available income, like
- wages or salary
- seasonal work income
- self-employment wages
- Social Security checks
- Disability checks.
Payment plans are key to Chapter 13 bankruptcies. Each plan will be different but typically they last establish a plan to repay creditors during a three to five year period. The interest rate is set monthly at a lower, fixed rate. Though you have a repayment plan, some debt may be discharged. Specifically, if you successfully complete the payment plan, it may not have covered all the debt, but the remaining debt may be discharged.
Apart from restructuring and paying back debt, Chapter 13 bankruptcies do not require filers to liquidate all their assets. That means you can often keep what you have without risking your home, your vehicles, and other assets when you file for bankruptcy.
What's the Process to File Chapter 13 Bankruptcy in Arizona?
Though each case is different, thee process to file Chapter 13 bankruptcy is pretty standard.
- You have to determine your eligibility.
- You have to complete credit counseling.
- You must create and submit a proposed repayment plan constituting all required debts – some debts must be paid in full, like:
- Priority unsecured debt like child support, alimony, or non-dischargeable taxes,
- Non-priority unsecured debt of non-exempt property you intend to keep (payment at least of the value of the property), like furniture or household appliances,
- Secured debt that must remain current during the repayment plan, like mortgages or auto loans, and
- Secured debt that must be paid in full during the repayment plan, like tax liens or judicial liens.
- You have to file the petition, statement of financial affairs, and schedules, including
- a list of all creditors and the amounts and nature of each;
- the source, amount, and frequency of your income,
- a list of all your property, and
- a detailed list of monthly living expenses (e.g., food, clothing, utilities, shelter, medicine, transportation, etc.).
- A trustee is appointed to administer the case.
- The repayment plan must be filed within 14 days after the bankruptcy petition is filed.
- The trustee holds a chapter 13 meeting involving you, your spouse (if applicable), and the creditors (about 21 to 50 days after you file the bankruptcy petition).
- A hearing on the repayment plan is scheduled, and any creditors at the initial meeting with you and the trustee can attend the hearing.
- If the repayment plan has not been approved within 30 days of the creditors' meeting, you must start making payments on your debt.
- The court must hold a confirmation hearing and decide on the repayment plan's feasibility within 45 days of the creditors' meeting.
- The court approves or denies the repayment plan. If the plan is approved, the trustee begins distributing funds. If the plan is denied, you can file a modified plan.
- Upon completion of payments according to the repayment plan, you are typically entitled to a complete discharge of all debts.
To avoid having to submit a modified repayment plan or to avoid any other hiccups along the way, it is important to retain an attorney who understands Chapter 13 bankruptcy and who is willing to be honest and up-front about what's feasible and what's not.
Contact an Honest, Resourceful Chapter 13 Bankruptcy Attorney in Northern Arizona Today
Chapter 13 bankruptcy is a complex process, but one that will allow you to maintain the assets you have while restructuring and dealing with debt directly and adequately. After the repayment period is over, you will have a clean slate with respect to the debt that constituted the bankruptcy in the first place.
One word of caution, you cannot file for Chapter 13 bankruptcy if you have recently filed for bankruptcy – whether it was a Chapter 7 or another Chapter 13 bankruptcy. To make sure you meet the requirements of a Chapter 13 bankruptcy, contact The Law Offices of Shawn B. Hamp today.