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It is vital that you seek legal advice from a qualified attorney on your individual situation. It will almost certainly cost you less to seek advice before acting than it will to repair your mistakes.


With the filing of a chapter 7 bankruptcy, the debtor’s assets and liabilities are effectively frozen.

a seesaw with boxes on each end

Compare chapter 7 and 13

The debtor preserves the exempt assets, while the bankruptcy trustee liquidates the non-exempt assets and distributes the money to the existing unsecured creditors ( Arizona Exemptions ). The debtor is subsequently relieved (discharged) of the need to pay most existing obligations, and creditors cannot collect the bankrupt’s future earnings. Lenders with home or car loans are either paid in full, the current value, or the objects are surrendered to the lender.

In contrast, a chapter 13 bankruptcy focuses on future income rather than current assets.

The debtor is allowed to keep all of their assets and pay creditors from future earnings. Payments are sent monthly to the bankruptcy trustee, who pays the arrears on the property, vehicles, taxes, and child support; only if there is money left over, the trustee pays the existing unsecured creditors, who file proofs of claims. This is achieved through a three- to five-year court-approved plan. The balance of the unpaid obligations contained in the plan are forgiven at the conclusion of the plan (discharged).


Some debts, such as student loans, survive a chapter 13 bankruptcy.

A few debtors must file chapter 13 because they earn too much money. The means test contained in this form and required by the Bankruptcy Code will help Ms. Drain with this analysis. The good news is that a chapter 13 bankruptcy often allows the debtor to save their home, remove junior liens on their homes and pay off their vehicles.


*The gross income changes every few months.  For the most up-to-date figures, please contact our office.

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There are simply too many wives’ tales about bankruptcy to count; here are just a handful. This list might easily span several pages. Every time I speak with a new client, they have a different story to tell. My advice is to speak with a qualified bankruptcy attorney, who will usually provide a free consultation.

Read the articles about how to choose a good lawyer and how much it costs to hire a terrible lawyer.

FALSE. In a chapter 13, if your income is below a certain amount, you pay only the amount necessary to cure your mortgage arrears, pay certain back taxes, pay back child support and alimony, and pay off your vehicles. If your salary is higher than the median, you will be required to pay a certain amount to your creditors.

FALSE. While purchasing or selling property during a chapter 13 bankruptcy is difficult, it is not impossible. Your attorney can explain the steps that must be followed. While in a chapter 13 bankruptcy, you normally need to get a court order to buy a home or vehiccle.

FALSE. Unless you believe that open-heart surgery is a simple procedure. A chapter 13 bankruptcy is one of the most challenging types of bankruptcy. In Arizona, fewer than 2% of people who file without a counsel succeed. The failure rate for those who choose inexperienced or substandard chapter 13 attorneys is in the 60 to 80 percent range.