Chapter 13 bankruptcy in Arizona is also known as a reorganization bankruptcy.  It is typically preferred by debtors who want to keep a valuable asset that is not completely covered by exemptions and who want to pay off their debts over a period of three to five years.  This option is available to some debtors for whom Chapter 7 may not be appropriate.  For example, Chapter 13 may be the best option for people who are at risk of losing a home, who owe taxes, or who owe money on debts that cannot be discharged under a Chapter 7.  This option is only available, however, to debtors who have a consistent source of income and whose income is sufficient to pay both their reasonable monthly expenses and leave enough to cover the repayment amount.  During the period of a Chapter 13 repayment plan, debtors make regular payments to the bankruptcy court to pay down a portion of their total unsecured debt. At the end of the three to five year repayment period the bankruptcy and all remaining unsecured debt is discharged.

Chapter 13 and Chapter 7 bankruptcies are similar in that Chapter 13 debtors are protected from lawsuits, garnishments, and other credit actions during the term of the repayment plan. Unlike Chapter 7 however, debtors who file Chapter 13 must complete the payments required under the plan before the discharge is received.

To learn more about whether or not you qualify for Chapter 13 bankruptcy, contact attorney Joel E. Sannes today at 480-461-5307.