Chapter 13 Bankruptcy

~ Personal Bankruptcy Attorney in Gilbert & Phoenix ~

What is a Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy in Arizona is an option for folks who need debt relief, but learn that Chapter 7 is not the best option for them.

A Chapter 13 bankruptcy is normally a 5 year or 60 month repayment plan of some, or in rare cases, all of your debt.  It is not accurate to say that filing a Chapter 13 bankruptcy is “just like a debt settlement or debt consolidation”. 

No.  It is much more than that.  A Chapter 13 bankruptcy in Arizona takes your debt and applies federal laws to determine which creditors get paid based on a tiered system of priority and secured interests. 

What does that mean?  It means that your car and recent taxes get paid, but your credit cards and medical bills may not be paid.  Those debts might be discharged.

A Chapter 13 bankruptcy also has the power to allow you to catch up on missing mortgage payments over time and avoid foreclosure on your family home, keeping your family safe and secure during such uncertain times. If you live in Phoenix or Gilbert and would like to consult with a nonjudgemental attorney about filing bankruptcy, click the button below.

~ Common Questions On Filing a Personal Chapter 13 Bankruptcy ~

Chapter 13 Bankruptcy in Arizona

What is a Chapter 13 Plan?

A Chapter 13 plan is the legal document that is filed and spells out which creditors will get paid, when, and by what means (usually your income).  The plan can be as short as 36 months (depending on your household income) or as long as 60 months (most plans are)

A Chapter 13 plan must get “confirmed” after it is filed.  Attorney Chris Dutkiewicz and his paralegal April Mercer have assisted hundreds of Chapter 13 filers get their plans confirmed over the years they have been practicing bankruptcy law in Arizona.  Many Chapter 13 bankruptcies filed by folks not represented by an attorney or an attorney with very little experience do not get confirmed, and then ultimately dismissed.  This is a waste of time and money and may lead to foreclosure, wage garnishment, or a bank levy.

What Is the means test?

The means test is a formula that determines a person’s eligibility for Chapter 7 bankruptcy in Arizona.  Essentially the means test requires that the person’s last six months of income be evaluated to determine whether they have the “means” to pay creditors a reasonable amount of what is owed to those creditors.  If the means test determines that you do not have the means to pay a reasonable amount to your creditors, then generally you would consider filing a Chapter 7 bankruptcy.  If the means test determines you do have the “means” to pay, then Chapter 13 bankruptcy is often the only bankruptcy choice for you.

What is a “cramdown”?

The word “cramdown” when used in the context of a Chapter 13 bankruptcy filing refers to the process of getting the Arizona Bankruptcy Court judge to sign an order stating that you are only required to pay the fair market value of your (usually) vehicle or other personal property instead of what is actually owed on the property.  A cramdown is only available in a Chapter 13, not a Chapter 7.  There are very specific rules as to when this can apply. Attorney Chris Dutkiewicz from the D.M. Bankruptcy Law Group, LLC can help you understand whether a cramdown is available to you.

What is a “lien strip”?

The term “lien strip” is used when a Chapter 13 bankruptcy is filed and the debtor wants to argue that there is not enough value in their real property (land and home) and that second (or third or fourth, etc) liens (think your equity loan) can be stripped or removed from your house.  This is a powerful tool in Chapter 13 bankruptcy.  It takes an experienced Chapter 13 bankruptcy attorney to properly prepare a Chapter 13 plan that can lead to an order for a lien strip.  Allow Attorney Chris Dutkiewicz and his experienced paralegal April Mercer at the D.M. Bankruptcy Law Group, LLC to evaluate your case and pursue, if appropriate, a lien strip on your home.

How does a Chapter 13 bankruptcy stop a foreclosure on your home?

Filing a Chapter 13 bankruptcy may often be the most effective way to stop a foreclosure on your home. Often, a person receives a “Notice of Trustee Sale” 90 days prior to the date they are going to lose their home through auction or “foreclosure”.  This is a horrifying experience.  People become frozen with fear and either wait for their lender to offer some help or simply do nothing.  Do not let this be you!

Filing Chapter 13 in Arizona with an experienced bankruptcy attorney can immediately stop a foreclosure as long the bankruptcy is filed BEFORE the date of the sale.

Once you file the Chapter 13 bankruptcy, the bankruptcy code allows you to make payments on the arrears, or back payments you owe your lender.  You can take as long as 5 years to cure those arrears. During that time, your lender cannot foreclose on you as long as you stay current on your “plan”. 

What about Homeowner’s Association Fees in a Chapter 13 Plan?

Arrears or back payments on Homeowner’s Association fees can be paid back through in Chapter 13 bankruptcy.  It is important not to neglect these costs because an HOA has a lien by statute on your house and can, in certain circumstances, take your home from you.  Do not let this happen. Contact D.M. Bankruptcy Law Group, LLC today and make sure you speak to Chris Dutkiewicz about your options.

Will I lose my vehicle in a Chapter 13 Bankruptcy?

Nearly all vehicles with money owed on them are paid through the plan.  Sometimes we can even reduce the interest rate on the amount owed.

Can Federal and State income taxes be addressed in a Chapter 13?

Yes.  Federal and state income taxes can be REPAID or DISCHARGED in a Chapter 13, depending on the year of the tax obligation, when it was filed, and what activity has occurred on the account since filing.  Paying back taxes through bankruptcy is OFTEN less expensive than paying them directly to the IRS or state department of revenue.  Talk to your Chapter 13 bankruptcy attorney today!

How much does it cost to file a Chapter 13 at D.M. Bankruptcy Law Group, LLC?

The District of Arizona bankruptcy court has pre-approved a “flat fee” for Chapter 13 bankruptcy:  $4,500 for most cases.  Business cases are $5,500, as a flat fee.  Nearly all attorneys charge this amount. 

The difference is how much is paid up front?  At the D.M. Bankruptcy Law Group, LLC, our goal is to obtain $1,000 up front and allow the rest to be paid through the plan.  We do made concessions on a case by case basis.  We’re not allowing some to lose their home to foreclosure because they had $800 up front.  We will work with you!

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