Bankruptcy in Arizona
Bankruptcy is the legal process in relation to persons or businesses who cannot afford to pay their remaining debts. Bankruptcy laws are designed to help debtors who are unable to pay their outstanding balances and help the creditors get relief from whatever kind of assets the debtor has no need for. Bankruptcies are often used as a last resort but it is a not sure way to solve all your financial problems. Only certain debts that are eliminated when you file for bankruptcy.
In declaring bankruptcy in Arizona, you need to know the following prerequisites:
- Means Test – it is one of the requirements you need to pass in order to qualify for either Chapter 7 or Chapter 13 of the Bankruptcy Code. If your family income is lower than the average income of your estate, you are qualified for the means test but if it is higher, you might need to deduct the pre-set expenses before passing.
- Credit counseling providers – everyone must first finish a credit counseling course by approved credit counselors and then completing it by taking debt management before filing for bankruptcy.
Arizona Bankruptcy Exemptions
There are different kinds of bankruptcy protection and bankruptcy forms depending on your circumstances, one may be a good solution for you while another may not help you at all.
Chapter 7 – is the most common type of bankruptcy form usually availed by individuals who wish to wipe out their debts and get a fresh start. A bankruptcy trustee will collect all of your assets and liquidate every asset as long as it is not exempted. Upon selling your assets, you will be paid off any exempted amount and the proceeds of the liquidation will be distributed to the creditors. However, not all debts can be discharged using Chapter 7. Child support, student loan, alimony, medical bills, fraudulent debts, and certain nonexempt debts are not included. You may, however, keep your car, house, furniture and other secured items by signing a “reaffirmation agreement.” Not everyone is eligible for this kind of bankruptcy so consulting a bankruptcy attorney may enable you to open up your options.
Chapter 13 – is when you have a secured monthly income but it is not enough to pay off your debts to your creditors so you will propose a 3-5 year repayment plan. If you can stick to the terms of the monthly payments, you will be out of debt by the end of the plan. The payment will be deducted from the debtor’s future income. This kind of bankruptcy is usually used by people who want to retain their secured assets such as a house and a car. In some ways, Chapter 13 may be the same as Chapter 7. The only difference is that Chapter 13 gets you back your financial bearings through reorganization while Chapter 7 does it through liquidation.
If spouses who jointly own their property file together for bankruptcy in Arizona, double exemptions will apply for their owned property aside from the homestead exemption.
Homestead Exemption in Arizona
Each debtor may protect up to $150,000 for their house, mobile home, condo or other kinds of property under the homestead exemption law.
Motor Vehicle Exemption in Arizona
Motor vehicle exemptions in Arizona will allow you the protection of up to $6,000 for one motor vehicle up to $12,000 if the debtor is elderly or disabled.
Other Bankruptcy Exemptions in Arizona
- Bank deposits
- Personal property
- Tools of the trade
- Fraternal benefit society benefits
- Life insurance benefits
- Alimony and child support
- Pension benefits
- Tax-exempt retirement accounts
- Qualified retirement plans
- Unemployment compensation
- Workers’ compensation
Discharge of debts
There is debt relief once a bankruptcy discharge has been issued so the debtor is not legally bound to pay back the debts which have been discharged by the bankruptcy. Creditors are also prohibited from debt collection once the debts are discharged. However, there are exemptions to the kinds of debts and some cannot be discharged by filing a bankruptcy and only those discharged by it removes the debtor from the debts.
Are you in hot water because of mounting financial debt? You may need to speak to a bankruptcy attorney.
While bankruptcy filing may be done by any person without a bankruptcy lawyer, you will be responsible for fully understanding everything related to bankruptcy law. We at Phoenix Fresh Start have experience in bankruptcy cases. If you want to know how to file for bankruptcy but you are not sure of what form of bankruptcy to avail or maybe you’re just worried about forthcoming liabilities, our bankruptcy attorneys may help clear the air for you especially on terms which may be mind-boggling for you such as bankruptcy exemptions, debt settlement, insolvencies, mortgage payments, debt management and many more. Do not hesitate to ask for advice. Call us at Phoenix Fresh Start now for a free initial consultation.