Most individuals who file for personal bankruptcy will have two options to choose from. Those options are Chapter 13 and Chapter 7 bankruptcy. When most people think of bankruptcy, they generally think of Chapter 7 bankruptcy, which involves the liquidation of assets to pay back creditors. However, Chapter 13 bankruptcy may be another option, which does not involve the liquidation of assets but also works to resolve one’s debts. So, what are the basics you should know about the Chapter 13 process?
First, you should know the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is kind of like a financial reset button, where all of your debts covered by the bankruptcy will immediately be resolved and discharged as a result of the liquidation process. Conversely, with Chapter 13 bankruptcy — which is also known as reorganization — filers have the ability to repay a portion their debts over time via a court-approved repayment plan. This repayment plan will usually last from three to five years. Generally, the Chapter 13 repayment process involves paying a set amount of money each month to the bankruptcy court, which then disperses the money to creditors. After the repayment plan has been successfully concluded, any remaining debts covered by the bankruptcy will be resolved.
Second, you should know the main reasons why Arizona residents choose to pursue Chapter 13 proceedings. These reasons include:
— It gives individuals a little bit more time and breathing room in order to repay their debts
— It allows for the discharging of a large portion of one’s debts
— You can stop home foreclosures in their tracks
— It can end creditor harassment immediately
— It can put a stop to wage garnishment
— It can prevent auto repossession
— It can allow debtors to receive valuable debt relief.
At the Dodds Law Firm, PLC, we help Arizona residents suffering from debt problems decide if Chapter 7 proceedings, Chapter 13 proceedings or some other kind of debt resolution strategy is most appropriate for them. Best of all, we offer consultations to anyone interested in exploring what bankruptcy can do for him or her.