Do you qualify for bankruptcy?



There are 2 main kinds of (most common)  bankruptcies in Mesa, Arizona.Fotor0205152829

Chapter 7

To allow one to eliminate most unsecured debts in return for giving up all “non-exempt” property.  It may be a good choice for persons who have no available non-exempt property or equity.  Sometimes referred to as “no asset” bankruptcies, many bankruptcies filed are Chapter 7.

Chapter 13

Allows a person to repay a portion of debt (instead of giving up property), and the person lives within a budget plan monitored by the bankruptcy court trustee.  This process takes 3 to 5 years, and it requires a person to make the monthly payments agreed upon in the Chapter 13 payment plan.  Commonly, Chapter 13 is used for those behind on secured debt payments (mortgages…) and want to catch up on these payments over time.

A “means test” will establish the initial determination of the kind of bankruptcy that you qualify for.  For example, Chapter 7, 13, or either.

The means test basically takes the following information and plugs it into a formula:  monthly income, the amount of your debts and kind of debts, and other aspects of your financial situation.

You can file for Chapter 7 or Chapter 13 if you meet the qualifications / guidelines.  In order to do so, your annual income must be less than the Arizona median income for your household size.  You must complete a long list of expense deductions if your income is higher than the state median income.  This is done in order to estimate what your disposable income would be over the next 5 years.  The result of your “disposable income determines whether you can file for Chapter 7 or 13.

At this point, we recommend consulting with a Mesa bankruptcy attorney at My AZ Lawyers, as the means test and the expense deductions form is long and complex.