You’ve been contemplating looking into Arizona bankruptcy lawyers when you wonder, “What is bankruptcy exactly? And how can it help me?”
If you’re contemplating bankruptcy you no doubt have some questions. Below, we’re going to answer the most common questions about bankruptcy. If you don’t see your question here, be sure to write it down so we can answer them when we meet.
Bankruptcy gives you the chance to start fresh.
What Is Bankruptcy?
In simple terms, bankruptcy is like a financial reset button. If you cannot pay your bills, filing for bankruptcy can stop creditors from trying to collect the debt you owe until figure out a financial plan. It is also a legal process provided by federal law and must be handled in a federal court.
Bankruptcy can stop annoying calls from creditors.
What Can Bankruptcy Do?
Bankruptcy and Arizona bankruptcy lawyers can do several things:
- Prevent repossession of a car or other property and return any repossessed items.
- Stop a foreclosure on your home while you figure out a better payment plan and catch up on mortgage payments.
- Turn your utilities on if they’ve been turned off or make sure they’re not turned off in the first place.
- Challenge a creditor’s claims that you owe more money when you might not owe anything more.
- Allows you to not pay most, if not all, of your debts. This process is called “discharge of debt.”
- Halts all creditor harassment such as wage garnishment.
What Can’t Bankruptcy Do?
It’s important to understand that as great as bankruptcy is, it has limits on what it can do. There are some types of debt that bankruptcy can’t fix and it’s important to understand that when you consider filing for it.
Three major things that filing for bankruptcy can’t do are:
- Protect your cosigners. If you had a cosigner on a car or home loan, they may be asked to pay all or part of the loan once you’ve discharged that debt.
- Stop or “discharge” you from certain debts like student loans, child support payments, alimony, certain taxes, or fines.
- If you have a property that’s being used as collateral in a loan, creditors can still ask for payment on that loan. Creditors can, however, be forced to make payments on a spread out schedule. Creditors can also be forced to stop asking for payment if the property has been taken.
The most common types of bankruptcy individuals file is Chapter 7 or Chapter 13
What Types of Bankruptcy are There?
There are four different types of bankruptcy that people can file:
Chapter 7- sell your assets or property to pay your debts which are then forgiven. Because you are essentially “liquidating” what you have, Chapter 7 is often called liquidation or “straight bankruptcy.”
Chapter 11- is usually filed by businesses or partnerships. It’s often called “reorganization” because a business or partnership files a plan to reorganize their business so it’s still operating and will pay off creditors over time.
Chapter 12- Is mostly used by family farmers or family fishermen to rearrange their finances so they won’t foreclose on their property or liquidate what they have. They also file a plan to repay creditors.
Chapter 13 is often called “debt adjustment” because it allows people going through bankruptcy to file a debt repayment plan that’s based on your income.
What Type Is Right for Me?
Many people going through bankruptcy either file chapter 7 or 13.
When you file chapter 7 you go to the court and ask them to discharge (get rid of) your debts, and in return, you sell property that is not exempt and give whatever money you made from the sale to your creditors. If you want to keep the car or home you’re still paying off after you file chapter 7, you will have to pay any missing payments you owe and continue to make payments as you had before you filed.
In chapter 13 you file a plan for how you will repay your creditors within three to five years. This is the best plan for people wanting to keep their car or home since you won’t have to sell it.
So, which one is right for you?
The only real way to know what’s best for you is to speak to your Arizona bankruptcy lawyers and figure out what will produce the best outcome. What might work well for one person, might not work for you. Keep that in mind when considering your options.
Interested in Discharging Student Loan Debt in Bankruptcy?
If you’re considering bankruptcy, you need to consult with an expert. Talk to an experienced bankruptcy attorney at Davis Miles McGuire Gardner, PLLC, today! Call (480) 733-6800 or click below to see what type of bankruptcy is right for you. Get the clear financial future you need.
Frequently Asked Questions About Bankruptcy in Arizona| Davis Miles McGuire Gardner, PLLC – Phoenix, AZ