If you are considering filing bankruptcy, you may wonder exactly how to do it, and who you can count on to assist you through the bankruptcy process. Today, we’ll go over the different types of bankruptcy, how to qualify, and exactly how the Arizona bankruptcy and debt relief attorneys at Lerner and Rowe Law Group can help you through the process.
Chapter 7 and Chapter 13 Bankruptcy
In general, the process to file a personal bankruptcy is the same nationwide. However, there is a difference between filing a business vs. personal bankruptcy. At Lerner and Rowe Law Group, our award-winning legal team assists those seeking personal debt relief through Chapter 7 and Chapter 13 bankruptcies.
- Chapter 7 is what most people think of when they consider filing bankruptcy. It involves discharging troublesome credit card debt, medical bills, and more, as well as putting a stop to harassing debt collection calls. You may, however, forfeit some assets. Additionally, Chapter 7 bankruptcy does not get you out of student loan debt, child support payments, alimony, or owed taxes.
- Chapter 13, or a wage earner’s plan, lets you create a plan to repay all or part of your debts by making monthly payments over a three to five year period. It is often used to save a home from foreclosure or automobile from repossession, to repay tax debt, to catch-up child support and spousal support arrearages, and to keep assets that would be forfeited in Chapter 7 bankruptcy.
How to Determine Which Personal Bankruptcy Type Is Right for You
Ultimately, the type of personal bankruptcy you file will be determined by your income and goals. Most people are better served by filing Chapter 7 bankruptcy, but they must pass a mandatory income test known as the Means Test, be willing to give up unprotected assets, and show that they are filing Chapter 7 in good faith.
There are two ways to pass the Means Test. The first part of the Means Test is known as your Current Monthly Income (“CMI”). If your CMI is lower than the Median Family Income for the state you live in based on your family size, you pass the Means Test. Your CMI may include funds you don’t typically think of as income, and may exclude funds you might typically think of as income. If you pass the first part of the Means test, you will not have to take the second part of the Means Test.
If you don’t pass the CMI portion of the Means test, the second part of the Means Test will consider monthly expenses. Monthly expenses will be determined by the Internal Revenue Service, your actual monthly expenses, or expenses related to your actual monthly expenses. Passing the second part of the Means Test, like passing the first part of the Means test, is the first step to filing a Chapter 7 bankruptcy in Phoenix.
Note: Most people who pass the Means Test are able to file Chapter 7, but not all. If you don’t pass the Means Test, you cannot file Chapter 7 bankruptcy, but may be able to file Chapter 13 bankruptcy. To file Chapter 13 bankruptcy, you must have enough regular income to make monthly payments to pay creditors that must be paid under a Chapter 13 Plan lasting 36-60 months.
Consider Exemptions When Filing a Personal Bankruptcy in Phoenix
You will also need to think about exemptions before choosing which type of bankruptcy you would like to file for. Exempt assets are protected and you get to keep those assets in bankruptcy; non-exempt assets are not protected in bankruptcy and you may lose these assets in Chapter 7 bankruptcy. If you file for Chapter 13, you will have an opportunity to keep non-exempt assets. Exemptions are generally based on where you lived during either the two years before filing, or the 180 days before the two years before filing.
Property exemptions are one of the most important things to consider, as it they can allow you to keep your home, your automobile , and certain personal items.
Find Affordable Bankruptcy and Debt Relief Attorneys in Phoenix, Arizona
If you need help to file a personal bankruptcy in Phoenix, Arizona, it’s time to connect with the affordable debt relief lawyers at Lerner and Rowe Law Group. As soon as you sign on with us, we will file your bankruptcy petition, putting a halt to harassing calls and wage garnishment. We also offer $0 down bankruptcy plans to help you get back on your feet sooner than later.
With Lerner and Rowe Law Group, One Call…Does It All®. Just dial 602-667-7777, fill out a FREE online form, or text with us through our convenient LiveChat feature. So, contact us today and find out more how our award-winning Arizona bankruptcy lawyers can help you take back control over your finances!