How Does a Chapter 13 Bankruptcy Work in Arizona?

Most people understand how a Chapter 7 bankruptcy works. You file your bankruptcy petition, list all your debts on there and the court will discharge all of them. Once the bankruptcy is complete and you won’t owe a dime. You’ll get a clean slate. A Chapter 13 is a completely different thing. Basically, with a Chapter 13, the court puts all your debts into a pool, and you make payments to then all for a period of years. Once your payments are completed, the debts will be marked settled. You can call a bankruptcy lawyer in Arizona, and they can explain what chapter would work better for you.

A Chapter 13 is Different from a Chapter 7

There’s a big difference between a Chapter 7 and Chapter 13 bankruptcy. With a Chapter 7, all your debts are wiped away and you get to start over. Your creditors are not allowed to come after you for the money you once owed. Slowly you’ll be able to build your credit back to a respectable level. With a Chapter 13, none of your debts are forgiven. All your creditors are going to want a piece of the pie. Your bankruptcy lawyer in Arizona will list all your debts on your bankruptcy petition. The creditors will be notified that you’ll filing a Chapter 13 bankruptcy. The bankruptcy trustee will then work out a long-term repayment plan with your creditors. Once your payment plan is complete, things will go back to normal, and you can get started on fixing your credit.

In a Chapter 13, Your Debts Will Be Reorganized

A Chapter 13 bankruptcy is referred to as a reorganization. Your total debt will be reorganized and overseen by the bankruptcy trustee. They will receive your monthly payments and divide them up amongst your creditors. While you’re making your payments, your creditors are not allowed to contact you about payment. If they do, you need to let your bankruptcy lawyer in Arizona know immediately. They’ll reach out to the trustee and let them know what’s going on.

You’ll Still Have to Pay Most of Your Debts Back

When you meet with a bankruptcy lawyer in Arizona to discuss your Chapter 13 bankruptcy, they’ll explain how the process works. Some clients are upset when they’re told they will still need to pay off their debts. Most people think that, once they file bankruptcy, all of their debts disappear. This does not happen with a Chapter 13.

Why Would You Want to File a Chapter 13 Instead of a Chapter 7?

If you are in over your head financially, bankruptcy may seem like your only option. You figure you can file a Chapter 7 and never hear from your creditors again. With a Chapter 13, this isn’t the case. You may wonder why bother filing for bankruptcy at all if you still must pay back your debts? Typically, it is the trustee who recommends you file a Chapter 13. If they feel you make enough money to pay back your debts in full, they aren’t going to approve a Chapter 7.

You Should Meet with an Experienced Bankruptcy Lawyer in Arizona

If you’re prepared to file a Chapter 13 bankruptcy, you should make sure you understand the process. Call and speak with one of our skilled bankruptcy lawyers in Arizona. They can answer any questions you may have and get started on your petition.