When Should I Consider Bankruptcy in Arizona?

Bankruptcy in Arizona

Debt can weigh you down and make it difficult to take advantage of financial opportunities, so there may come a time when you decide to take action to protect your future. For individuals and married couples, the most common types of bankruptcy are Chapter 7 and Chapter 13. While these cases are different, it is possible to discharge qualifying debt after completing all requirements. Still, there may be reasons you want to move forward right away, or you might hesitate based upon other factors. Timing is an important issue, so you may wonder when to consider bankruptcy in Arizona.

For both Chapter 7 and Chapter 13, it is crucial to take action when you are in the best position to leverage the many benefits. This timing may vary according to your unique circumstances, so getting guidance from an experienced legal professional is a necessity. An Arizona bankruptcy attorney will help you navigate the steps, and an overview about the chronology of a case is useful.

Factors to Consider with Bankruptcy

It is possible to wipe out debt with both Chapter 7 and Chapter 13, but there is a big difference in timing when comparing the two.

  1. With Chapter 7, you may eliminate qualifying debt if you qualify based upon your income. However, the bankruptcy trustee has the power to liquidate your assets to pay creditors, so the process of selling real estate and personal property takes time. These cases typically conclude within approximately 4 to 6 months.
  2. In a Chapter 13 case, the focus is your debt repayment plan. During the process, your debts are restructured and reduced to a single monthly payment. The only eligibility criteria is that you must have a job to pay creditors. You complete the debt repayment plan within 3 to 5 years, so your case will be pending for this duration plus a few weeks court processing time.

Timing and the Automatic Stay

Knowing how long an Arizona bankruptcy case takes is helpful, but there is another factor for when to consider filing. You have the benefit of the automatic stay under US bankruptcy rules, which affects the actions of creditors. They are barred from contacting you or making any effort to collect on your debt. In other words, creditors are prohibited from:

  • Threatening, initiating, or continuing a collection lawsuit;
  • Garnishing your wages;
  • Foreclosing on your home, at least temporarily; and,
  • Attaching or placing liens on other property.

The automatic stay goes into effect the day that you file your Chapter 7 or Chapter 13 petition. Note that the ban on foreclosure actions is only temporary because the lender can request that the court lift the stay related to your mortgage. The bank could then pursue a foreclosure action, though there is a slight delay. Still, during this time delay, you may gain the benefit of catching up on mortgage payments and save your home.

Benefits of Bankruptcy in Arizona

The most impactful advantage of going through Chapter 7 or Chapter 13 bankruptcy is that you are debt-free with respect to most debts. You may qualify to wipe out debts related to credit cards, medical bills, lines of credit, and personal loans. It is not possible to eliminate certain debts, such as child support and alimony. However, you will have more free income to pay these after bankruptcy, when you have cleared many other dischargeable debts.

Additional benefits of bankruptcy apply to your future and the financial doors that open when you have a clear slate as far as credit. Your credit score will rise as you continue to pay monthly bills and exercise financial responsibility, eventually leading to new opportunities.

Legal Help with the Bankruptcy Process

A bankruptcy attorney in Arizona can help you determine when is the best time to consider filing your case, and you can rely on knowledgeable advice for whether to move forward with Chapter 7 or Chapter 13. You will also receive support with the key stages and tasks with a bankruptcy case, including:

  • Gathering and organizing your financial documents;
  • Preparing the bankruptcy petition and schedules;
  • Assessing liquidation issues in Chapter 7 and applying exceptions to protect property;
  • Helping you develop your debt repayment plan for Chapter 13 bankruptcy; 
  • Representing you at the required meeting of creditors; and,
  • Finishing your case and obtaining the bankruptcy discharge order.

Contact an Arizona Bankruptcy Lawyer to Learn More

There are many factors to weigh when considering bankruptcy in Arizona, and working with experienced legal counsel ensures you make informed decisions about your future. To learn more about timing issues and the steps in a Chapter 7 or Chapter 13 case, please contact DebtBusters. You can schedule a free consultation at our offices in Scottsdale, AZ by calling (866) 223-4395 or visiting us online. After reviewing your case, an Arizona bankruptcy attorney will advise you on when to file.