What is Chapter 13 Bankruptcy?

Of the two common types of bankruptcy used by individuals in Arizona, chapter 13 is broader and allows for some flexibility in retaining assets.  This bankruptcy filing may allow a debtor to keep certain assets, such as a home or other valuable, while completing a plan to make overdue payments.  These assets are considered by the court to be exemptions from the bankruptcy proceedings, and must be court-approved.  Chapter 13 bankruptcy filing also allows for a great range of debt to be included.

When filing for chapter 13 bankruptcy, the debtor submits a plan to repay some of the debts over 3-5 years.  The plan must be approved by the court at a confirmation hearing.  If approved, the debtor will retain the assets during the repayment period.  However, any debts that are not to be repaid are not immediately discharged; the discharge will not occur until the payment plan is complete.  During the repayment period, the debtor is protected from legal action by all creditors, whether included in the repayment plan or scheduled for discharge.

In Phoenix, AZ, the decision to file for chapter 13 bankruptcy should be made with legal counsel.  There are a number of details and factors that weigh on this decision, and it is wise to consult with an experienced bankruptcy attorney.