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Chapter 13 Bankruptcy Lawyers in Glendale AZ

Why File Chapter 13 over Chapter 7 Bankruptcy?

For most people, chapter 7 bankruptcy is the preferred choice of filing bankruptcy because it is over quickly and in most cases the debtor does not lose any money or property to the court. However, there are times when it becomes necessary to look at chapter 13 bankruptcy. There are 2 instances that occur most often, which cause bankruptcy debtors to file chapter 13 bankruptcy rather than chapter 7 bankruptcy. First, the debtor doesn't qualify for chapter 7 because their income is too high. In bankruptcy law, a median income is set for debtors in chapter 7. A six-month average of all income from all sources is tallied and an average is taken. If the debtor's income is higher than the median set for chapter 7 bankruptcy, then the debtor is forced into chapter 13 bankruptcy. A good bankruptcy attorney may be able to plan around this problem by waiting to file when income is lower. In some cases, the debtor received a boost of income from a bonus or overtime. When that happens, the debtor can wait until that larger paycheck falls off the six-month average to file. But, if all that fails, then the debtor must declare chapter 13 bankruptcy. Second most common reason for chapter 13 filers is because the debtor has assets, he or she would lose in chapter 7, therefore, the debtor must look to filing chapter 13 bankruptcy to avoid the court from taking those assets. This may occur for several reasons including, the debtor has more vehicles than what can be protected, higher equity than what the bankruptcy law allows, or any other unexempt or unprotected property that the debtor does not want to turn over to a chapter 7 trustee. When that happens, a chapter 13 is to only way to protect that property.

A debtor in chapter 13 bankruptcy is afforded all the same protections as a chapter 7 bankruptcy debtor. The debtor receives the automatic stay, which prevents creditors from seeking to sue, garnish, levy, repossess, foreclose on any of the debtor's property. Creditors are forbidden from contacting the debtor for any reason, including reporting on credit, through mail or phone, and email. The debtor also is given the same protections for their property called exemptions. The exemptions protect your property from being taken by a trustee or the court. It is recommended that any debtor wanting to file a chapter 13 should speak with a competent and knowledgeable chapter 13 bankruptcy attorney prior to filing any chapter 13 case. Bankruptcy law is complex, and it takes an experienced bankruptcy lawyer to know the ins and outs of chapter 13 bankruptcy. Therefore, a Chapter 13 bankruptcy stops creditors form doing the following:

Contacting you in any way including stopping the harassing phone calls, text messages, and emails.

Stopping any court action against you including foreclosure, repossession, lawsuits, judgments, garnishments, levies, set off's, etc.

Reporting anything on your credit whether such reporting is good or bad.

Filing bankruptcy does not stop any criminal proceedings against you.

The Chapter 13 Bankruptcy Plan

Chapter 13 bankruptcy is a reorganization of the bankruptcy filer's debt into a plan for repayment. Upon filing a chapter 13 bankruptcy, the debtor must submit a chapter 13 plan to the court for review. Creditors will have the opportunity to file claims to the bankruptcy court stating the amount they believe is owed. Just as in chapter 7 bankruptcy, once your case is filed, a chapter 13 bankruptcy trustee will be assigned to your case. The main difference between chapter 7 bankruptcy and chapter 13 bankruptcy is the chapter 13 trustee will be looking to pay the claims filed by creditors from the payments made from the debtor. The trustee will also determine if the plan meets the bankruptcy law and each creditor is treated properly. The debtor will need to attend a hearing with the chapter 13 trustee to be questioned under oath. After the hearing, the trustee will review the plan submitted by the debtor and all claims submitted by creditors. Then, the trustee will be requiring the debtor to confirm the plan based on recommendations the trustee provides. Once confirmed, the plan is set. Chapter 13 bankruptcy plans typically last from three to five years depending on the debtor's circumstances. Plan payments must be made each month during the pendency of the bankruptcy.

Your Creditors Will File a Claim in Your Chapter 13 Bankruptcy

Debtors have different types of claims in their plan. Secured claims are anything purchased by the debtor in which the item or property purchased is collateral securing the loan. For example, a house or car are typical secured debts because the house or car is the collateral for the loan. Another type of claim is Priority debt. There are two common Priority debts, which are taxes owed to either the federal or state government or past due domestic support obligations such as child support or spousal maintenance. Lastly, most all other debts are considered unsecured, which are

Credit Cards

Student Loans

Personal Loans, Lines of Credit

Medical Debt, and

Most Contractual Obligations Unless Specifically Secured to Some Type of Property.

Your Creditors Will File a Claim in Your Chapter 13 Bankruptcy

Chapter 13 bankruptcy plans will pay off the debt in order of secured, then Priority, and lastly unsecured. Another common reason for filing chapter 13 bankruptcy is to avoid foreclosure or repossession. If you are behind on mortgage or car payments and the lender is threatening foreclosure or repossession, in most cases, chapter 13 bankruptcy is the only chapter of bankruptcy that will save your property and allow you to pay off those arrearages in time through the chapter 13 bankruptcy plan.

The chapter 13 bankruptcy plan is drafted so that the debtor can pay their creditors based on how much income the debtor makes. In most cases, the debtor's income is taken, minus expenses, then there must be some amount of money that can be paid into the chapter 13 plan to pay off all necessary debts. Under bankruptcy law, the debtor must be able to pay off any secured debt and Priority debt before the plan will be determined as feasible and approved by the court. If those debts cannot be paid in full during the lifetime of the plan, the court will not approve the plan and the debtor may be forced out of bankruptcy or converted to chapter 7 bankruptcy. The second part of the plan is the chapter 7 liquidation test. If the debtor has assets they would have lost to a chapter 7 trustee, then the value of those assets must be calculated into the plan. It's akin to buying your own property back in the plan.

Chapter 13 Plans Are Three to Five Years

Five years is a long time to be in bankruptcy and many things can happen over the five-year period. For example, job changes, increase or decrease in income, the need for a new car or to have to sell your property. When these things happen, the bankruptcy law provides for remedies. The debtor can ask for permission to incur new debt, buy a new car, sell a property. Or if income has gone down, the debtor can ask for a break from payments if the decrease in income was temporary, or conversion to chapter 7. If all else fails, and the debtor cannot afford to be in chapter 13, debtors have the right to dismiss their case at any time in most cases.

Once all the payments have been made, and the debtor has followed all the procedures for discharge, the court will enter an order discharging any remaining unpaid debt, which was not paid during the plan. The debtor will not be responsible for payment to those creditors discharged and those creditors are forbidden from contacting the debtor for any reason. Shortly after discharge, the court will close the case officially and bankruptcy is over.

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What Our Clients Say About Us

Gaudiosi Law
5 5
I am very pleased with the services of The Jim Gaudiosi Law Firm. During a difficult time of worry and not knowing the outcome I was able to ask for clarification with timely responses in clear language and working together resulted in a successful outcome. I am relieved and grateful.
Gaudiosi Law
5 5

I was stressed out for my own reasons, but Jim was a great lawyer and helped me accomplish what I went to him for. I recommend him if you are looking to file bankruptcy. He definitely knows what he is doing. I basically stressed for nothing.

Gaudiosi Law
5 5

I would highly recommend Jim to anyone. He was very easy to work with and explained everything and helped the process go smoothly. Made us feel at ease during the whole process. Also answered our question in a timely manner which was very much appreciated.

Gaudiosi Law
5 5

Jim and his staff were very pleasant to deal with; very helpful in a difficult time. Jim was very thorough in explaining options and made the process as painless as possible. Christina stayed on top of everything, was very helpful and professional. I would highly recommend.

Frequently Asked Questions About Bankruptcy

When Bankruptcy Makes Sense?

The filing of a bankruptcy is a big decision for anybody. There are many reasons a person, family or business finds themselves in the unfortunate situation that bankruptcy is on the table. Bankruptcy should be a last resort decision, meaning you have tried all other avenues to clear up debt, stay current on mortgage and car payments, and continue to pay basic living expenses like food and utilities. But when does it make sense to file bankruptcy? Here are some ideas to help with your decision.

  • When your debt is too overwhelming: When looking at the amount of debt you have, does it seem like a lifetime will pass before you will pay it off? Can you only afford to pay the minimum balance on credit cards and other debts? Are you on the verge of just one more thing happening that will tip you over the edge into a debt freefall? If your answer is yes, this might be the time to speak with a bankruptcy lawyer. Our Glendale, Arizona office can speak with you in person or on the phone to answer all of your bankruptcy questions.
  • Are you behind on mortgage payments? Keeping your home is probably the most important thing you can do. Even the loss of a car may not be devastating because of Arizona’s public transportation, Uber or Lift, or maybe you can borrow someone’s car. However, losing your home and becoming homeless is the most tragic thing that can happen. If you are two or more months behind on your mortgage payments, talk to a bankruptcy lawyer right away. Our Glendale Bankruptcy Lawyer can help you keep your home. If you are unable to keep your home, a bankruptcy still might buy you some time to stay in the home, make alternative living arrangements, and eliminate debt by filing bankruptcy. At Gaudiosi Law, we can help you file chapter 7 or chapter 13, whichever would be best for you. Our Glendale Bankruptcy Lawyer knows how to help you.
  • Have you learned that you will soon be incurring a reduction of income or a layoff from your job? How are the job prospects going to find new work? If it is not looking good, maybe it is time to speak with our Glendale Bankruptcy Lawyer for help. Do not let creditors run the show. If you are proactive, you can get ahead of the creditors before they have time to take action against you like lawsuits, judgments, garnishments or bank levy.
  • Are you going through a divorce or separation? Divorce is a big concern because it is likely you are losing half of the household’s income. It is also likely that you are going to have to take on some of the household’s debt as part of a divorce settlement. Once the divorce is over, it is a good time to consider bankruptcy. Get a fresh start after your divorce by wiping the slate clean from any debt you might be carrying. Talk to a bankruptcy lawyer at our Glendale, Arizona firm. We can help you.
  • Have you recently incurred a major medical situation? Whether or not you have insurance, it is likely you are going to get stuck with some portion of the medical bills. Medical debt is another big reason why it might be time to consider bankruptcy. Medical debt can cause more problems with your health. The overwhelming stress of having a medical problem topped off by the now loads of debt you incurred can make your medical situation worse. You can get out from underneath all that debt and stress by filing bankruptcy. Speak about your debt situation with our Glendale Bankruptcy Lawyer today so you can feel better.
  • Has your business suffered because of the recent events surrounding the Covid-19 pandemic? Maybe your business is not doing well for some other reason? Did you personally guarantee any of the debt owed by your business? There are ways to keep your business by filing bankruptcy. In Arizona, we have chapter five or eleven for business bankruptcy. We also have chapter 13 for those that have personally guaranteed debt owed by their business and you want to keep the business. If all has failed, you can consider chapter 7. There are many ways filing a bankruptcy can help you with business debt. Talk to our Glendale Bankruptcy Lawyer today about how we can either reorganize your debt or eliminate it all.

Filing bankruptcy does not need to mean you failed as a person, family or business. Many times, life events happen that are out of our control. These times are when you need to reach out to get the help you need to recover. Call our Glendale, Arizona bankruptcy office today for a free consultation.

Powerful Results

We will go the extra mile to get you to an approved bankruptcy through the court. We will negotiate on your behalf with creditors and the trustee. If your case needs to go to trial for any reason, we are experienced in the bankruptcy courts. We know bankruptcy law and have completed thousands of bankruptcy cases. We have proven time and again that we understand what you are going through in this stressful time in your life. Talk to us today for help with your bankruptcy case.