Debt is something most people have to deal with at some point in their lives. It’s how the country we live in works. You rely on your credit to propel you forward in life. But what happens when you fall too far behind?
Paying off debts becomes harder over time due to interest rates.
There were a total of 833,515 bankruptcies filed by both businesses and non-businesses in 2016. A majority of the filings were from individuals.
There are four different bankruptcy chapters you can file for – 7, 11, 12 and 13. The most popular is Chapter 7. It has nearly 500,000 filings, while Chapter 13 had almost 300,000 filings.
In the state of Arizona, 78% of bankruptcy filings fell under Chapter 7 and 22% fell under Chapter 13.
If you’re currently in debt and looking for a way out, Arizona bankruptcy is definitely an option. But before you decide to file, here are five things you should know.

1. Not All Retirement Funds Are Exempt from Arizona Bankruptcy

You’re about to file for bankruptcy – the last thing you need is to have your hard-earned retirement funds taken away. This is why it’s essential to learn whether your retirement dollars will be exempt.
The exempt retirement funds include:

  • 401(k)s
  • 403 (b)s
  • Most profit-sharing
  • Most money purchase plans
  • Defined benefit plans
  • SEP and Simple IRA’s
  • Pension plans (firefighters, police officers, admin officers and board members of regents)
  • Retirement and disability for state employees, public safety workers, etc.
    ERISA-qualified benefits

2. Student Loans Can’t Be Charged Off

However, you can file for a Chapter 13 bankruptcy to reorganize debt, so you can pay it off within three to five years. The purpose of bankruptcy is to protect you from debts you can’t pay back.
But student loans aren’t eligible for discharge, so repayment is required. The only way out is if the repayment causes substantial hardship on you or your family. And if it makes it difficult for you to afford life’s necessities.

3. You Get to Keep Your Home (In Most Cases)

This is great news for homeowners who want to file for bankruptcy. In Arizona, you can file for a Chapter 7 bankruptcy and still retain up to $150,000 of your home’s equity,
However, if you file for Chapter 13, and aren’t up-to-date with your payments, you may still be able to keep your house. If you have other types of property, Arizona’s liberal exemption laws may qualify them as exempt.
This allows residents to keep all or most of their other assets.

4. What Happens Immediately After Filing for Bankruptcy

After you’ve completed the bankruptcy filing, an automatic stay goes into effect right away. What this means is creditors won’t be able to directly contact you. Nor can they stake claims on your property.
In other words, this will prevent foreclosure proceedings. This can be used strategically, so it’s important to consult with an attorney as soon as possible.

5. You Will Have a Bankruptcy Trustee Appointed by the Court

Once you’ve filed for bankruptcy, your debts and property not exempt by Arizona’s laws will be in control of the court.
A trustee is appointed, whose job is to ensure your creditors are paid as much as possible.
Hiring an attorney before you file for bankruptcy is your best bet for overcoming your debt woes. This will ensure you file for the right chapter and get the best outcome possible.
The attorneys at Zolman Law are knowledgeable in Arizona bankruptcy. Contact us today to receive a free consultation!