Dealing with debt problems can cause significant stress. For some individuals, debt problems can affect their physical health and mental health. Struggling to pay debts you cannot afford to pay impacts all areas of your life, including your enjoyment of life, your family relationships, and your work performance.
The Arizona bankruptcy attorneys of Allegiant Law Group understand the stress and anxiety that accompany debt problems. We assist individuals, companies, and businesses seeking debt relief in Arizona.
Contact our office by calling 602-562-1000 or by completing our online contact form to request your free consultation with a Phoenix bankruptcy attorney. Learn more about bankruptcy and debt-relief options from a trusted bankruptcy attorney.
Common Reasons Why People File for Bankruptcy Relief
A variety of situations can lead to debt problems. Once you fall behind on debt payments, it is difficult to catch up with debt payments without assistance. The bankruptcy process gives you the help you need when you experience problems with debt.
Common reasons that people seek help from the bankruptcy court include, but are not limited to:
- Unsecured debts that they cannot pay, including credit card debts and medical bills
- Unemployment or reduction in income
- Divorce, alimony, or child support
- Death of a spouse or other family member
- Sudden illness or accidental injury
- Failure of a business or business debt
- foreclosures, repossessions, and wage garnishments
- Depletion of retirement savings
Seeking bankruptcy relief does not mean that you mismanaged your finances or abused credit. However, bankruptcy relief is available even if that is the reason you are unable to pay your debts. The bankruptcy process is not judgmental. It exists to give individuals a fresh start to recover from a financial crisis so that they can improve their finances for a more secure future.
What Types of Debt Can Be Forgiven Through Bankruptcy?
Most debts are dischargeable through Chapter 7 or Chapter 13. Examples of debts that you can eliminate in bankruptcy include, but are not limited to:
- Credit card debts
- Medical bills and expenses
- Personal loans
- Non-purchase money security liens on household goods
- Some old income tax debts
- Money judgments
- Repossession and foreclosure deficiencies
- Old utility bills and old rent
However, some debts are not dischargeable in bankruptcy. You owe these debts even though you filed a bankruptcy case. Examples of debts that you cannot discharge in bankruptcy include, but are not limited to, domestic support obligations (spousal support and child support), most taxes, student loans, restitution, and most debts owed to the government.
Secured creditors have liens on collateral, such as car loans and mortgages. Filing bankruptcy does not get rid of a secured lien. However, you can surrender the collateral in full satisfaction of the debt, if you desire.
Chapter 7 vs. Chapter 13 — Which Chapter of Bankruptcy is Best for Me?
Deciding between Chapter 7 and Chapter 13 involves several factors. First, Chapter 7 is intended for debtors who cannot afford to pay their debts. Therefore, you must meet certain income requirements to qualify for a discharge under Chapter 7. Chapter 13 is a wage-earners plan. You must have sufficient income to fund a Chapter 13 plan to qualify for Chapter 13.
Chapter 7 is a liquidation bankruptcy. Property that is not exempt is subject to being sold to repay your unsecured debts. However, most Chapter 7 cases filed in Arizona are no-asset cases. In a no-asset Chapter 7 case, you keep all your property. No-asset cases usually take between four to six months to complete. If you need assistance filing, get in touch with our Chapter 7 bankruptcy lawyer today for a consultation.
A Chapter 13 case is a reorganization plan. You repay some of your debts through a Chapter 13 repayment plan. Filing for Chapter 13 allows you to save your home and car by repaying past due payments through your bankruptcy plan. It also allows you to repay non-dischargeable debts over a three to five-year period. In some cases, a Chapter 13 plan may also allow you to value a secured lien to pay less to satisfy that lien.
Each bankruptcy chapter has advantages and disadvantages. Our Phoenix bankruptcy lawyers carefully analyze your financial situation to determine which chapter of bankruptcy is best for you.
Call Allegiant Law Group to Request a Free Consultation with an Arizona Bankruptcy Attorney
If you are unsure whether bankruptcy is right for you, contact our office to talk to a Phoenix bankruptcy attorney. You can get the advice you need to make an informed decision about how to resolve your debt problems.