Individual bankruptcy filers in Arizona can typically choose between Chapter 7 and Chapter 13. Chapter 13 is sometimes referred as wage earner’s bankruptcy, but it is open to those who are self-employed or who operate a business that is unincorporated as long as certain requirements are met. However, an individual may not file for bankruptcy if an earlier bankruptcy case was dismissed during the previous 180 days due to the person’s failure to appear in court or failure to comply with court orders. Furthermore, corporations and partnerships may not file for bankruptcy under Chapter 13.
In order to be eligible for protections, within the 180 days prior to the initiation of the case, the filer must have completed a pre-bankruptcy credit counseling course provided by an approved agency. The debtor may develop a debt management plan during the credit-counseling course, and that plan must be filed with the court.
Chapter 13 filers are subject to limits on the amount of debt that can be included in the bankruptcy. The amounts are established in statutes and are adjusted from time to reflect variations in the consumer price index. As of this writing, the individual must have secured debts totaling less than $1,149,525 and unsecured debts of less than $383,175. In most successful Chapter 13 cases, individual debts are adjusted, and the debtor makes monthly payments for a period of between three and five years.
This blog post is meant to provide a general overview of the Chapter 13 requirements and is not meant to constitute legal advice. Each individual situation presents unique circumstances, which may affect the legal analysis. Those who have questions about the process may wish to consult a bankruptcy attorney for an examination of the facts of their case or for assistance in bankruptcy planning. An attorney may be able to help debtors organize their financial information and prepare the documents necessary to initiate a Chapter 13 case.
Source: United States Courts, “Individual Debt Adjustment“, September 21, 2014