Many Arizona residents have recovered from the “Great Recession,” and normal life has resumed after an intense period of financial difficulty. However, that does not mean that all Arizona residents are in excellent financial standing. Many people are still struggling with debts they accrued during the financial crisis. If you are in over your head with debts, Chapter 13 bankruptcy might be a useful debt reduction tool to consider.
Chapter 13 bankruptcy is also commonly referred to as “reorganization.” Unlike Chapter 7, which involves the liquidation of assets to pay down debts, Chapter 13 does not include the sale of your personal property. Instead, Chapter 13 creates a scheduled repayment plan that lasts either three or five years. After the plan has been fulfilled and the debtor has made his or her monthly payment obligations, any remaining debts will be cleared. This allows debtors to resume life once again on sound financial footing.
Chapter 13 bankruptcy involves the paying off of a considerable portion of one’s debts; however, debtors are not obligated to pay off all of their debts through the process. In other words, some portion of their debts will be forgiven or absolved, and creditors have to make do with what they get. In this sense, Chapter 13 can represent a considerable amount of savings for someone who is in over his or her head. The idea is to look at what debtors can reasonably afford to pay off over a three to five year period based on income and assets.
If you are currently struggling under a mountain of debt, you might benefit from speaking with an Arizona bankruptcy attorney. At the Dodds Law Firm, PLC, we have qualified bankruptcy attorneys on staff who are available to offer consultation to inform you of your legal rights and options regarding your outstanding debt situation.