Bankruptcy is a legal process that provides a person or business the right to eliminate or reorganize their debts to get a financial “fresh start.” Filing bankruptcy allows a person to:

• Stop collection activities and garnishments
• Allows you to eliminate most types of debt
• Allows you to reorganize your debts
• Catch up on missed payments
• Eliminate most debts or reorganize your debts.

Once a bankruptcy is filed, creditors must (by law) immediately cease all collection efforts of debtors including those by calls, letters, garnishment, foreclosure, repossession, etc. A debtor can file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

Every person who seeks to file bankruptcy is required to take a credit counseling class prior to filing their paperwork. These classes can be taken online or over the phone. The purpose of the credit counseling class is to educate debtors of their debt mitigation options and provide them introductory insight to filing bankruptcy.

Chapter 7

Chapter 7 bankruptcy is known as the “fresh start” bankruptcy and/or the liquidation bankruptcy — exempt assets are protected and cannot be liquidated. There are certain non-exempt assets which may be sold by the bankruptcy estate, and the profits used to repay creditors. However, this greatly depends on your individual case. Contact an Arizona bankruptcy lawyer to go over your exempt and non-exempt assets.

Filing Chapter 7 requires qualifying based on income and your household size. If you qualify for a Chapter 7, your case should remain open for approximately 180 days. Chapter 7 is ideal for discharging unsecured debts, like credit cards, medical bills, and personal loans. It will also not help with student loans but may assist with eliminating some tax debts depending on the age of the tax debt.

Chapter 13

Chapter 13 is known as the reorganization bankruptcy — debts are restructured, a payment plan established, and certain debts are repaid over time, in a three-to-five-year time period. At the end of that period and after completion of all required plan payments, most of the remaining debts that have been scheduled and unpaid will be eliminated.

Chapter 13 has its advantages, such as permitting debtors to keep their unexempt assets and assistance with secured debts, like mortgages or auto payments. You also will not have to deal with creditors directly, as a trustee in charge of your repayment plan distributes the money to creditors. Speak with an experienced bankruptcy attorney to find out if Chapter 13 bankruptcy is right for you.

The Help You Need

Bankruptcy permits individuals an answer to their debt issues. Bankruptcy does not have to be a scary process and a knowledgeable bankruptcy attorney will assist you in properly navigating the process. Consult a bankruptcy attorney at Perez Law Group, PLLC. We can discuss debt relief options and determine if bankruptcy is the right step for you. Call our office today for a free consultation: (602) 730-7100 or 1 (888) 59-PEREZ.

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