Reorganizing Your Debt under Chapter 13 Bankruptcy
Huge debts can become overwhelming. However, you may try to pay them off, but your credit card interest rates just keep resetting higher and higher as your credit score suffers, making it harder for you to pay down the balances. Also. you may want to pay what you owe to your mortgage, but your lender won’t work with you. Plus, you may want to pay off your medical debts, but the sums are just outrageous, and it feels like you will never be able to pay them.
Another possible solution is getting the debt relief you need by filing for bankruptcy. Chapter 7 bankruptcy tends to offer the most relief since it liquidates your unsecured debts, relieving your need to pay them. However, you must pass a means test in order to file for Chapter 7 bankruptcy, and some people make too much money or have too many assets to file. In that case, you can still get debt relief by filing for Chapter 13 bankruptcy in Mesa.
Debt Repayment Plan
What Mesa Chapter 13 bankruptcy does is put you on an affordable debt repayment plan. This type of bankruptcy is often known as “debt reorganization.” Your Mesa bankruptcy attorney and the bankruptcy trustee create a repayment plan that prioritizes your secured debts, such as your home or car loans, and creates a monthly payment for all your debts that you can actually afford. The repayment plan takes into consideration your income as well as your debts. The plan is designed to last only three to five years.
Under a Chapter 13 bankruptcy repayment plan, certain debts must be paid in full, including:
- Your mortgage
- Your auto loan
- Back taxes
- Student loans
You will also be responsible for continuing to pay your alimony and child support.
In some cases, your Phoenix bankruptcy attorney may be able to negotiate a lower interest rate for some of these payments so that it is easier for you to pay off your debts. Under this plan, you may be able to pay what you owe on your mortgage to keep your house out of foreclosure or to save your car from repossession. The plan allows you to catch up on what you owe while also making your debt more manageable.
Your unsecured debt will also be included in your Chapter 13 bankruptcy repayment plan, including credit cards, medical bills, and some personal loans. Often, you’ll save money on these debts because you’ll be paying under a lower interest rate and you’ll be avoiding late charges and other penalties.
At the end of the repayment period, you may not have paid back all your unsecured debt. If that is the case, that debt will likely be discharged. Therefore, you will only pay back a portion of your unsecured debt, based on your ability to pay, as determined by the bankruptcy courts.
While Chapter 13 bankruptcy does not completely eliminate debts, it is often preferable to Chapter 7 bankruptcy because it allows you to keep all of your assets, such as your home and your car. Chapter 13 bankruptcy can also help you save your house from foreclosure or your car from repossession, which you cannot do with Chapter 7 bankruptcy. With Chapter 13, you can get a greater handle on your debt, while also freeing yourself of the burden of some of your unsecured debt. Talk to an experienced bankruptcy attorney serving Gilbert to review your finances and determine whether Chapter 13 bankruptcy would be right for you, or whether you would benefit more from other debt relief options.
The bankruptcy attorneys at My AZ Lawyers can help you learn about your bankruptcy options and how each of them might provide you with debt relief so that you can regain control of your finances. We will thoroughly review your finances to better understand your debts and your financial means so we can suggest the best path forward. Our goal is to help you get the maximum debt relief possible. We help individuals and businesses with multiple bankruptcy filings, including both Chapter 7 bankruptcy and Chapter 13 bankruptcy for individuals. We serve clients throughout the Phoenix, Mesa, Tucson, and Glendale areas. Contact us today to talk to a bankruptcy attorney about your options.
Arizona Chapter 13 Bankruptcy Offices:
Mesa Chapter 13 Bankruptcy Law Office Location:
1731 West Baseline Rd., Suite #100
Mesa, AZ 85202
Office: (480) 448-9800
Glendale Chapter 13 Bankruptcy Law Office Location:
20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308
Office: (602) 509-0955
Tucson Chapter 13 Bankruptcy Law Office Location:
2 East Congress St., Suite #900-6A
Tucson, AZ 85701
Office: (520) 441-1450
Avondale Chapter 13 Bankruptcy Law Office Location:
12725 W. Indian School Rd., Ste E, #101
Avondale, AZ 85392
Office: (623) 469-6603