Chapter 13 Bankruptcy
Q: What is a Chapter 13 Bankruptcy?
A: Chapter 13 bankruptcy is typically used by individuals and sole proprietors who do not qualify for or desire to file a Chapter 7 bankruptcy. Chapter 13 bankruptcy allows individuals to keep their property and pay off their debt on a bankruptcy schedule over three to five years. Chapter 13 bankruptcy petitioners pay their court-appointed trustee a set amount each month. The trustee then distributes funds to creditors.Individuals filing for chapter 13 bankruptcy protection will pay back their debts in a chapter 13 repayment plan, sometimes for pennies on the dollar.
Filing Chapter 13 bankruptcy in Arizona is an alternative to filing for chapter 7 bankruptcy protection in Arizona. Chapter 13 bankruptcy is often described as a “reorganization” of your secured debts, which refer to debts that are tied to collateral, like your home is collateral for your mortgaged and your car is the collateral for your auto loan.
Often individuals who are considering filing chapter 13 bankruptcy have fallen behind on these types of debts and now face the possibility of losing their home to foreclosure or their car to repossession. By filing Chapter 13 bankruptcy in Phoenix, Mesa, Tucson, Tempe, and Glendale, Arizona, you may be able to stop foreclosure and stop repossession in exchange for agreeing to gradually pay back these debts over time. Discuss if chapter 13 bankruptcy protection is the right choice for you with one of the My AZ Lawyers’s qualified chapter 13 bankruptcy attorneys.
Chapter 13 Bankruptcy provides consumers with a way to consolidate debt under federal law. Debt is restructured to allow the consumer to repay creditors a portion of what is owed over time. The reason for Chapter 13 bankruptcy versus Chapter 7 bankruptcy is that in a Chapter 13 bankruptcy, the consumer makes sufficient income to pay all current living expenses (rent, food, car, utilities, etc.), but not enough to pay all debts in full or meet the creditor’s requirements. When filing for chapter 13 bankruptcy with an experienced Phoenix Chapter 13 Lawyer protection, living expenses are paid first, and then whatever is left over goes into the consolidation plan.
The chapter 13 bankruptcy plan is usually not based on what you owe your creditors; rather, it is based on what you make and your means to repay. Our experienced Tucson, Phoenix, Mesa, and Glendale bankruptcy lawyers will expertly determine what your chapter 13 schedule payment will be. Generally speaking, Chapter 13 repayment plans last anywhere from 3-5 years, thus allowing you the time and peace of mind you need to catch up on your secured debts while getting to keep items like your home and car that are most important to you. Chapter 13 bankruptcy protection allows you to reorganize your debts and get yourself back in charge of your financial situation. Our low cost chapter 13 bankruptcy lawyers and bankruptcy attorneys can help you while filing for chapter 13 bankruptcy protection in Arizona.
The calculation of your plan payments involves many variables, but is primarily based on your income and expenses. Whatever funds are left after monthly living expenses goes into the plan, even if it only pays creditors pennies on the dollar. Chapter 13 is structured to be most useful for consumers with assets over the exemption amounts, or non-dischargeable debts.
The Chapter 13 Bankruptcy Filing Process
The process of filing for chapter 13 bankruptcy protection is much more complicated than a Chapter 7 Bankruptcy. There is significant legal work in obtaining bankruptcy court approval of the debtor’s proposed Plan of Reorganization in a chapter 13 bankruptcy. The help of an experienced chapter 13 bankruptcy lawyer is recommended.
The basic steps for filing Chapter 13 Bankruptcy in Arizona are as follows:
Chapter 13 Bankruptcy Pre-filing: Before a debtor files a Chapter 13 Bankruptcy in Arizona, a significant and detailed review of their personal finances, assets, and recent transactions should be performed by a qualified chapter 13 bankruptcy attorney.
Chapter 13 Bankruptcy Filing: When the debtor files their Chapter 13 Bankruptcy in Arizona, they must submit all requisite forms to the Court and pay a $281 filing fee. The Bankruptcy Court will issue a notice of deficient filing if there are any forms omitted. Failure to timely file the proper forms or pay the fee will result in the case being dismissed. An experienced chapter 13 bankruptcy lawyer from the My AZ Lawyers, PLLC will help assure that your Chapter 13 bankruptcy in Arizona doesn’t get dismissed.
Commencement of Chapter 13 Plan Payments: Within 30 days of filing, the debtor must commence making plan payments to their assigned chapter 13 bankruptcy trustee. The debtor must also submit all requisite documents verifying the debtor’s income to their chapter 13 bankruptcy trustee prior to their 341 hearing (meeting of creditors). Failure to do either of these could result in the Meeting of Creditors not being conducted or being postponed until another day.
Meeting of Creditors: The Meeting of Creditors (341 Hearing) usually only takes about 10 minutes or less if the debtors case is properly prepared and all documents were timely submitted. This meeting of creditors hearing gives the bankruptcy trustee the opportunity to question the debtor regarding their financial affairs. During the hearing, the trustee will verify the information in the forms filed with the Bankruptcy Court. The Chapter 13 bankruptcy trustee will also make several requests for documentation or corrections to be made.
Chapter 13 Bankruptcy Trustee’s Opposition: The trustees in the District of Arizona routinely file a Trustee’s Opposition to Confirmation Combined with Recommendation for Dismissal. This is a formal document that is used to block confirmation of the debtor’s plan until all additional documents requested. Your Tucson, Phoenix, Mesa, and Glendale chapter 13 bankruptcy attorney will address any and all trustee’s oppositions.
Creditor Proof of Claims: Creditors are required to file a document with the Court called a “Proof of Claim.” This form is a sworn statement as to the amount and nature of each creditor claim. The plan must provide for the treatment for all claims in some manner or another. Creditors can also make formal objections to a plan if they disagree with their treatment, but their objections must have some basis in law.
Confirmation of Debtor’s Plan: Once the Chapter 13 Bankruptcy Trustee’s objections have been satisfied and all creditor claims have been provided for in the chapter 13 bankruptcy repayment plan, then the debtor’s plan can be approved by the Bankruptcy Court.
Ongoing Responsibilities: The debtor is required to continue making plan payments for the length of the plan, turn over tax returns and refunds to the trustee, and notify the trustee of certain trigger events. As you make your monthly Chapter 13 bankruptcy payments, you will be scrutinized by the chapter 13 bankruptcy trustee to some extent. Any major purchases or sales will need to be cleared with the chapter 13 bankruptcy trustee first.. Sometimes circumstances change and the debtor can either reduce the plan payments, be required to increase plan payments, or even convert to a Chapter 7 Bankruptcy.
Discharge: After a debtor has completed the plan of reorganization, then the Chapter 13 bankruptcy court will grant an order of discharge. This order relieves the debtor of their obligation to any remaining dischargeable debts – whether paid in full through the plan or not.
Using Chapter 13 Bankruptcy to Pay Off Your Debts in Arizona
Filing for Chapter 7 bankruptcy protection is the fastest way to eliminate debts and get the fresh start you need, however, not everyone qualifies. Some people may have already filed for Chapter 7 while others do not qualify due to the results of the bankruptcy means test. If filing Chapter 7 bankruptcy is not a viable option to you, perhaps, Chapter 13 bankruptcy can still allow you to eliminate your debts over time with zero interest. Contact an experienced Chapter 13 bankruptcy attorney or an experienced Chapter 13 bankruptcy lawyer from the My AZ Lawyers, PLLC and find out if which chapter of bankruptcy you may qualify.
Our Phoenix, Glendale, Tempe, Gilbert, Mesa, and Tucson, Arizona bankruptcy lawyers and debt relief specialist are committed to helping consumers in Arizona hit the RESET button and regain control over their finances. Our Arizona bankruptcy lawyers have extensive consumer bankruptcy experience and work closely with our clients, providing them with the personal service they need during a difficult time. Our chapter 13 bankruptcy lawyers will guide you through every step of filing chapter 13 bankruptcy in Arizona.
Get more information about chapter 13 bankruptcy at a FREE bankruptcy consultation with one of our debt relief attorneys. Call (480) 833-8000 or (520) 306-8729 and schedule an appointment today!