Chapter 13 Bankruptcy Phoenix

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is not just a repayment plan.  In fact, in many Chapter 13 plans, you do not pay any more than in a Chapter 7 bankruptcy.  In some cases, Chapter 13 is the only option.  In other cases, Chapter 13 works better than Chapter 7 bankruptcy.  They are two doors to the same house.  Both Chapter 7 and Chapter 13 will discharge your debt.

What is Chapter 13 Bankruptcy

How Do I File Chapter 13 Bankruptcy

How Much Does Chapter 13 Bankruptcy Cost

How Do I Pay for Chapter 13 Bankruptcy


Which is Better?  Chapter 7 or Chapter 13 Bankruptcy

Why Chapter 7 Bankruptcy is Better

Chapter 7 bankruptcy seems like a better, and quicker option.  There are no payments to the court.  The debt is just discharged quickly and quietly.  However, there are times when Chapter 13 works better.  There are also times when Chapter 13 is your only option.

Chapter 7 Bankruptcy Works Better if you Make Less than the Mean Income in the State or Pass the Bankruptcy Means Test

Sometimes, you are not able to file a Chapter 7 bankruptcy.  For example, if you make too much money, the court will want you to repay some of your creditors.  It's only fair.  So, how do you know if you make too much money to file Chapter 7 bankruptcy?  There are a couple of ways.

  1.  Make Less than the Mean Income in the State of Arizona

    Every year, the bankruptcy court updates the mean incomes for each state.  The amount of income allowed goes up as the size of your household goes up.  For example, in Arizona, at the time of this writing, the mean household income for a household of 3 in Arizona is about $70,000.  The mean income for a household of 1 is about $50,000.  Take your gross household income and compare it to the most recent mean income in your state for your household size.  If your gross income is less than the mean income in your state for the size of your household, you pass.  Your income qualifies to file a Chapter 7 bankruptcy.

  2.  Pass the Bankruptcy Means Test

    Even if you make more than the mean income in the state, all is not lost.  There is a test to see if you should be able to file a chapter 7 bankruptcy regardless of your actual gross income.  That test is called the Arizona bankruptcy means test.  The Arizona bankruptcy means test takes into account many factors besides the gross Arizona income.  For example, if you have expenses that other people in Arizona might not have, you might still qualify.  These expenses could be medical expenses.  If you have a special condition or you are in charge of taking care of someone with a special medical condition, that will reduce your income.  Student loans, government fines, owe the IRS?  All of these cannot necessarily be discharged in bankruptcy.  Therefore, they will have to be considered when calculating your gross income.  The Arizona bankruptcy means test give you a second chance to qualify for chapter 7 bankruptcy.

Why Chapter 13 Bankruptcy is Better






Chapter 13 Bankruptcy

Chapter 13 bankruptcy does not mean you have to repay all of your debts.  In fact, a very small number of chapter 13 plans provide for repayment of 100% of the debt.  Chapter 13 bankruptcy is used by people who make too much money to qualify for the chapter 7 bankruptcy means test, or by people who are too far behind in payments on their home or car and want to keep the home or car.  Chapter 13 bankruptcy provides for repayment of the back payments through the court.  This is especially useful in cases where the mortgage company or bank will no longer work with debtors on payments or payment plans.  If this happens, the court will tell the creditor in chapter 13 bankruptcy what the repayment plan will be.  There is no application or bargaining.  The court will dictate the repayment over three to five years.