Common Options for Bankruptcy

While concluding that you need to file for bankruptcy may not be easy, the process itself doesn’t have to be overwhelming. Once you understand your options, you can determine which chapter you want to file and begin the process.

The two main options for individuals when filing for bankruptcy are Chapter 7 and Chapter 13. Chapter 7 involves liquidating some assets to pay off debts owed and having some of your debts forgiven or discharged.

This option appeals to many as they can eradicate some of their debt and start fresh with a clean slate.

Chapter 13 is the other standard option and involves setting up a payment schedule to be completed within three to five years to pay off most or all of their debt and discharge some at the conclusion of the process.

Each option presents advantages and disadvantages, and depending on your specific scenario, an experienced bankruptcy attorney can help you navigate the best choice for you in a timely fashion.

What Timeline Can I Expect with Bankruptcy?

If you want to resolve your debt issues relatively quickly, Chapter 7 may be a great option if you qualify. Once the process starts, you can finalize the steps within five or six months.

If you are filing for Chapter 13, however, the process will take longer as you will set up a payment plan that gives you three to five years to make payments.

Attending all of your scheduled court dates or any required credit counseling classes is essential to expedite the bankruptcy process. If you miss any important meetings, the process can take longer, or you may be forced to start over.

Another important aspect to remember is to gather the appropriate documents up front and gather any additional information as requested. If you take too long to produce the requested records, this can extend the timeline for the bankruptcy process.

Work closely with your attorney to ensure you comply with the process and aren’t holding up the timeline for a prompt resolution.

What Documents Should I Gather When Preparing for Bankruptcy?

Once you have decided to pursue bankruptcy, you can help expedite the process by gathering the documents ahead of time and meeting with your lawyer.

Some of the most important documents to gather are listed below;

Tax documents – you are typically required to have the most recent year of taxes and the previous one. It can’t hurt to have the last three years if you have quick access to them, but typically, the last two years are the general rule.

Real property value – if you own any real estate, you will want an updated value to determine how much equity you have in your home. Grab your most recent mortgage statement and seek an online source for your current market value, or schedule an appraisal.

You will need to do the same for vehicles you own or any other high-value item, such as jewelry or fine art. You may be able to use an online tool to determine the current value of your vehicle or other assets. For your vehicle, you will need to bring your most recent loan statement to determine the vehicle’s equity or the vehicle’s title.

Proof of income – if you have recent pay stubs, gather those and any information regarding additional income you may have, such as spousal maintenance or child support.

Additional Documents to Gather

Student loan debt – Bring your most recent statement if you owe any student loans.

Payment obligations – if you owe spousal maintenance or child support currently or are past due, you will need to have the information regarding this as well.

Information regarding debt owed – gather all recent credit card statements or other outstanding balances to show the total owed clearly.

Legal documents – if you owe restitution in a past legal case or have litigation pending, you will want to bring all of this documentation.

What Are Exemptions and Why Are They Important to Me?

As you consider filing for bankruptcy, remember that some of your assets may be exempt, meaning you wouldn’t lose them through liquidation to pay off debts.

Common exemptions in Arizona are listed below;

Homestead exemption – Arizona residents can typically protect up to $150,000 of value for a home, condo, or land that their home is on.

Vehicle exemption – Arizona residents typically can protect up to $6,000 of vehicle value

Pension benefits and qualified retirement plans are generally exempt from bankruptcy.

Unemployment or worker’s compensation are both generally exempt from bankruptcy.

Life insurance benefits – up to $20,000 if the amount is payable to a surviving spouse, with a few exceptions.

Up to $6,000 of value in personal household items can be appliances, clothing, funeral deposits, firearms, engagement or wedding rings, computers or other necessary work equipment, and essential tools for trade.

The Legal Advocate With Your Best Interest at Heart

The financial stress that makes you consider bankruptcy can be overwhelming. It’s important to remember that you have options and can obtain a resolution fairly quickly with just a few steps.

Our firm exclusively handles Chapter 7 bankruptcies, and we have helped countless clients over the years to navigate the process by abiding by the strict laws and timeline in place for bankruptcy so they can obtain a fresh start and begin the next phase of their lives with genuine peace of mind.

Contact our office today at (623) 267-0026 to schedule a time to speak with our team and review which options may best fit your specific scenario. Let’s get you out of debt and to a clean slate together.

We look forward to serving you.