Is an Arizona Chapter 13 Bankruptcy Right for You? Part I

In this sluggish economy, many Americans have found themselves weighed down by debt. Living paycheck to paycheck, dodging harassing creditors, and fear the loss of their home or vehicle, these individuals often begin to look towards bankruptcy as a potential answer for a fresh financial beginning. Though Chapter 7 is generally the first bankruptcy type considered, many people find they do not meet the restrictive means test. Further, some who do meet the test are afraid to proceed with a Chapter 7 bankruptcy because they will lose important assets.

Bankruptcy is not a one size fits all financial tool. While Chapter 7 is the most common form of bankruptcy, it is not right for everyone. For many Tucson residents, Chapter 13 bankruptcy provides the ideal solution to the problem of crushing debt. Chapter 13 bankruptcy allows you to keep your property and pay back some or all of your debt over time. Unlike Chapter 7, which eliminates your debt, Chapter 13 restructures it so that payback becomes manageable. Very few people file Chapter 13 bankruptcy without a bankruptcy attorney.

In Part I of this twAt Ariano & Reppucci, PLLC we will guide you through the complex Chapter 13 process, towards the ultimate goal of achieving relief from crushing financial burdens. o part series, we examine the following is a list of questions designed to help you determine whether Chapter 13 bankruptcy is right for you. While this list cannot replace the advice of a licensed Arizona bankruptcy attorney, it can provide a starting point towards your quest of financial freedom.

1. Do you have a steady income?

Chapter 13 bankruptcy will require you to enter into a long term repayment plan that will involve making regular monthly payments for the next three to five years. Therefore, it is imperative you have a reliable source of income or a friend or relative willing to assist you if ever you are unable to make a payment. While the Trustee may be willing to work with you concerning occasional late payments, the failure to comply with your repayment plan can result in the cancellation of your case.

• Do you have disposable income each month?

In order to pursue a successful Chapter 13 bankruptcy, you must have sufficient income to pay off your monthly expenses and necessities, with enough left over to pay the Trustee. The Trustee will use your disposal income, as agreed to in the Chapter 13 plan, to repay creditors.

Income from the following sources can be used towards your Chapter 13 repayment plan:

• Regular wages and salary
• Self-employment wages
• Commission payments
• Seasonal wages
• Social security benefits
• Workers' compensation or disability benefits
• Child support or alimony
• Rents collected
• Unemployment benefits
• Public benefits
• Pension payments

You are also permitted to sell assets or interests in property to satisfy repayment. In addition, with a spouse's or family member's consent, their income can be used for repayment.

1. Are you current on your income tax filings?
2. In order to file for Chapter 13, you must submit proof you have filed your federal and state income tax returns for the previous four years. Having tax debt will not disqualify you, but failing to file will.
3. Ariano & Reppucci, PLLC: Leading You to a Successful Chapter 13 Filing

Chapter 13 bankruptcy provides the ideal alternative for many individuals struggling under debt who cannot, for various reasons, seek a Chapter 7 bankruptcy. At Ariano & Reppucci, PLLC we will guide you through the complicated process of filing Chapter 13 bankruptcy.