Chapter 13 Reorganization

Chapter 13 Bankruptcy in Arizona involves a repayment plan. The length of the repayment plan will depend on how much you earn and whether or not you have nonexempt assets.

To qualify for a Chapter 13 Bankruptcy, your debts must fall within specific limits. Your unsecured debts can’t be more than $307,675. Secured debts can’t exceed $922,975.

There are certain debts called priority claims which must be paid in full over the life of the Chapter 13 plan. The most common priority claims are support obligations and recent taxes. If you owe more back child support or taxes than you can pay in the five-year plan, then you will not be eligible for a Chapter 13.

You pay all or part of your debts during a three to five year period. You propose a payment plan that has to be approved by the court and creditors won’t bother you as long as you’re paying the payments. This can be a relief and help you live by a budget.

Qualifications for a Chapter 13 bankruptcy in Arizona

In every plan you will have to satisfy two tests: the best interest test and the best efforts test.

  • The best-interest test. This test mandates that unsecured creditors be paid at least as much as they would have if you had filed a Chapter 7 bankruptcy.
  • The best-efforts test. This test requires that you pay all of your disposable income to the trustee for at least 36 months of your plan. If your monthly income exceeds the median, allowable expenses are based on Internal Revenue Collection Financial Standards and the plan must run for 5 years. Otherwise, the amount of your payment will be based on your actual expenses, as long as they are reasonable.

When you are done with that creditors won’t get much more from you.

Call 480-755-8000 to speak with our Arizona bankruptcy attorney today for immediate help.