When you struggle to pay monthly bills and cannot get ahead with debt, you might consider bankruptcy as a legal option to get a fresh start. For some individuals and married couples, Chapter 13 might be the right option when they do not qualify for other bankruptcy cases. A Chapter 13 debt reorganization plan could help you get control over your finances, while also protecting your assets. As you might guess, there is a significant amount of information you will need to file. One of the first tasks is determining what documents are required for Chapter 13 bankruptcy in Arizona.
Generally, you will need to gather all paperwork regarding your financial circumstances and debt situation. Your Arizona Chapter 13 bankruptcy lawyer will review these items to advise you on the legal process and prepare the bankruptcy petition. An overview on what documents you will need is also useful as you prepare to file your Chapter 13 case.
Documents Necessary for Bankruptcy
Under Chapter 13 bankruptcy rules, you can discharge qualifying debt by completing a debt repayment plan to satisfy debt to creditors. During the process, your debts are reorganized and reduced into a single monthly payment amount that you can afford based upon your income. For 3 to 5 years, you will continue to make payments on your debt repayment plan. Once you complete all terms, your bankruptcy case concludes and you eliminate qualifying debt.
Based upon this overview of the Chapter 13 process, you should collect such documents as:
- Payroll details and income tax records;
- A list of all assets, including real estate, vehicles, and personal property;
- Paperwork representing all debts, including your mortgage;
- Bills and invoices reflecting your monthly expenses; and,
- Other relevant financial paperwork.
Additional Requirements in Chapter 13
To qualify for Chapter 13 bankruptcy, you must meet one simple criteria. You need to have a job as a source of income to pay the debt repayment plan. For this reason, Chapter 13 is sometimes called the wage earner’s bankruptcy. There is a limit on how much debt you can discharge, so you qualify if you have less than $2.75 million in secured and unsecured debt combined.
Another rule regarding Chapter 13 covers the filing of subsequent cases. If you are planning to file Chapter 13, you must wait 4 years after going through Chapter 7. You need to allow 2 years after a previous Chapter 13 case.
As a practical matter, another requirement is that your debt repayment plan must be accepted by creditors. When you have assistance from a Chapter 13 bankruptcy lawyer, you will be able to develop a plan that meets creditors’ expectations and suits your needs.
Treatment of Debts in Chapter 13
According to the Federal Reserve Bank of New York, the household debt in the US increased to $17.5 trillion during the fourth quarter of 2023. Auto loans and credit card debt represent $2.74 trillion, and mortgages reached $12.25 trillion. Not all of this debt can be discharged through Chapter 13 debt reorganization bankruptcy. For instance:
- You cannot wipe out debt related to alimony, child support, and certain lawsuits.
- Chapter 13 only eliminates unsecured debt, such as credit cards, medical debt, payday loans, and lines of credit.
- Contrary to misconception, you can discharge student loans and tax debt in bankruptcy. These cases involve extremely rigid rules to qualify.
Secured debt, such as your mortgage, cannot be wiped out because the lender has other options to enforce payment. The bank could foreclose on your home, because you have pledged it as collateral to secure the loan. However, Chapter 13 allows you to keep your home if you continue to pay the mortgage, and you may be able to discharge any arrearages.
How an Arizona Chapter 13 Lawyer Can Help
There is more to success with Chapter 13 than collecting documents and filling out forms. It is important to have legal representation to guide you through the process. Your bankruptcy attorney will provide support through:
- Preparing the bankruptcy petition and schedules;
- Helping you develop the Chapter 13 debt repayment plan;
- Attending the 341 meeting of creditors with you, where creditors will ask questions about your bankruptcy petition and debt repayment plan; and,
- Wrapping up your case and obtaining the court order discharging debt.
Get Chapter 13 Help from an Arizona Bankruptcy Attorney
Though it is crucial to know what documents are required for Chapter 13 bankruptcy in Arizona, you should rely on skilled legal counsel for assistance with your case. At DebtBusters, our team will guide you in collecting important information as we prepare your petition and handle other essential tasks. To learn more about our services, please contact our offices in Scottsdale, AZ. You can call (866) 223-4395 or visit us online to schedule a free consultation with an Arizona bankruptcy lawyer.
