Bankruptcy stays on a filer’s credit report for some years. Notwithstanding that, it still gives a former debtor a chance to start over. If you yourself are experiencing financial distress and unable to pay your debts, filing for bankruptcy may just be the solution. To get legal advice on your best course of action, consult a bankruptcy attorney

Personal Bankruptcy Chapter

There are different types of bankruptcy detailed in the United States bankruptcy code, but for an individual bankruptcy case, it’s either a Bankruptcy Chapter 7 or 13 filing. How are these two chapters different from each other?

  • Function – Chapter 7 is all about liquidation, selling certain assets in order to pay back debts. Chapter 13 involves debt reorganization, arranging a debt repayment plan with which debtors have to abide if they want to keep their property.
  • Duration – Chapter 7 is a shorter process, taking only three to four months until bankruptcy discharge. It offers no repayment option to stop repossession or foreclosure. Chapter 13 takes much longer. Filers have to pay their debts to the bankruptcy trustee in monthly installments for three to five years in order for them to hold on to their property.
  • Exemptions –Both chapters allow the filer to keep exempt property. Chapter 13 has a much longer list of bankruptcy exemptions, however. This bankruptcy law provision varies from state to state, so if you’re filing bankruptcy in Arizona, it’s best to verify with your bankruptcy lawyer which of your belongings are exempted in your state.
  • Credit Report – Chapter 7 bankruptcies stay on credit reports for up to a decade. Chapter 13 bankruptcy filings linger for up to seven years.

Different Bankruptcy Proceedings

Bankruptcy cases follow different steps, depending on the chapter under which they are filed. Here are the usual stages a bankruptcy petition goes through.

Chapter 7

  1. Filers complete bankruptcy forms and along with the required documents, file them under Chapter 7 with the bankruptcy court.
  2. They pay court fees that currently total to $335 for Chapter 7 filings.
  3. They attend the Meeting of Creditors where the trustee reviews their bankruptcy case and asks questions.
  4. They take care of secured debts before discharge of debts so their creditors can agree to hold off on seizure of attached property.
  5. They get a discharge where the bankruptcy judge officially recognizes and verifies all of their dischargeable debts.

Chapter 13

  1. Filers fill out forms and file the petition for bankruptcy under Chapter 13 with the court.
  2. They pay bankruptcy fees currently amounting to $310 and trigger the automatic stay, which protects them from the debt collection attempts of creditors and collection agencies.
  3. They submit their proposed payment plan with accompanying relevant documents, such as their tax returns.
  4. They make the first payment according to their proposed repayment plan within 30 days of filing.
  5. They attend the Creditors’ Meeting, where it’s possible that a creditor shows up and challenges the proposed payment plan.
  6. They attend the confirmation hearing where the court approves the final version of their repayment plan.
  7. They carry out the terms of the plan. Upon fulfillment, they get their discharge.

Going through Serious Financial Problems? Call an Arizona Bankruptcy Attorney Today!

Hiring the legal services of bankruptcy lawyers isn’t a requirement in filing bankruptcy, but it’s what smart filers do, especially if the case is complicated. Legal aid from bankruptcy attorneys does make the process smoother for debtors. They can ensure that they make informed decisions and file correctly, as well as rest easy that they have legal representation from attending meetings and hearings to communication with difficult creditors.

If you want to do bankruptcy correctly and obtain the best outcome possible, get legal assistance from a bankruptcy law attorney. Call us at Zolman Law and schedule a free consultation with an experienced Arizona bankruptcy attorney.