Chapter 7 Bankruptcy Lawyer Phoenix, AZ
There are two basic types of personal bankruptcy: Chapter 7 and Chapter 13. While there are some similarities and common features, the two methods differ significantly. This is an overview of Chapter 7 bankruptcy. If you have questions about which type of personal bankruptcy is right for you, please contact our firm to speak with a Chapter 7 bankruptcy lawyer Phoenix, AZ residents trust today. Although Chapter 7 bankruptcy can be an excellent way to manage debt, not everyone qualifies for this option and not everyone should choose this option over Chapter 13 bankruptcy and/or some debt relief alternatives. Working with an experienced Phoenix, Arizona Chapter 7 bankruptcy lawyer from Kamper & Estrada, PLLC will help you to make an informed decision about the debt relief solution that best fits your unique circumstances.
Chapter 7 Focuses on Discharging Debts
Unlike Chapter 13, which reorganizes debts into a manageable repayment plan, Chapter 7 allows you to simply discharge most of your debts. They are forgiven and don’t need to be repaid. This means that the bankruptcy process can be finished quickly (within a period of months) rather than three to five years.
While this sounds ideal, this process does have some drawbacks and caveats, including limits on which debts can be discharged, the loss of some property and limits on who can qualify for Chapter 7.
Which Debts Can Be Discharged and Which Cannot?
Chapter 7 allows you to discharge nearly all “unsecured” debts, meaning debts for which there is no collateral. These include:
- Credit card balances
- Medical bills
- Back rent
- Utility bills
- Personal loans
If your home and car are not yet paid off, these debts are not dischargeable, because both the home and the car can be repossessed as collateral for defaulting on the debt. There are certain other debts that cannot be discharged including federal student loans, certain taxes, child support and spousal support payments.
Will You Lose All Your Possessions?
Chapter 7 is often referred to as “liquidation bankruptcy,” because some of your assets may need to be liquidated (taken and sold) in order to partially repay your creditors. But thankfully, this doesn’t mean taking every last penny and possession you own. That would leave you in even worse financial shape, which would defeat the purpose of bankruptcy.
There are assets considered exempt from liquidation and those that are considered non-exempt. In many cases, courts will let you keep your most important possessions (like your home and vehicle) so long as you can continue to afford them. Our Phoenix, AZ Chapter 7 bankruptcy lawyer team can help you better understand what property you can keep and what may need to be liquidated as part of the bankruptcy process.
Qualifying for Chapter 7 Bankruptcy
One of the drawbacks to Chapter 7 is that it is not available to everyone. You need to pass what’s called a “means test,” to determine whether or not you have the available income to repay your debts. It considers factors such as income, family size and expenses. If you do have enough income to repay your debts (with some restructuring help), you will not qualify for Chapter 7 and will need to file Chapter 13 instead.
Consult with a Chapter 7 Bankruptcy Attorney
You likely have many questions and concerns, and that is perfectly reasonable. Before deciding whether and which type of bankruptcy is right for you, it is a good idea to speak with a knowledgeable and experienced Phoenix, AZ Chapter 7 bankruptcy lawyer. Please contact us today so that we can schedule a consultation designed to answer any and all questions you may have about your options. We look forward to speaking with you.