I am a bankruptcy attorney in Arizona, and clients frequently come to me hoping to file Chapter 7 bankruptcy to expunge most of their debt. But Chapter 7 isn't for everyone. The alternative is to file Chapter 13, which won't erase most of your debt, but will reorganize it so you can pay off smaller amounts over a period of 3-5 years. Here are some scenarios where Chapter 13 might be a better option:
1) You own nice cars and have paid them all off. A Chapter 7 bankruptcy in Arizona only lets you keep one car with $5,000 or less equity in it (or one each if it is a married couple filing bankruptcy). For example, if you have a new Chevy Tahoe worth $12,000 that is all paid off, it will be seized and divided up among your creditors if you file Chapter 7. The only way to avoid that is either to sell it (and you must sell it for fair market value), take out a title loan on it, or file Chapter 13 bankruptcy.
2) You have a second mortgage on your home. You cannot strip a second mortgage lien from your home in a Chapter 7 bankruptcy, although you can eliminate your personal liability. You can strip both in a Chapter 13 bankruptcy. If the bulk of your debt is in your mortgages, and not in credit card debt or other debt that is dischargeable in a Chapter 7 bankruptcy, you might be able to eliminate more debt in a Chapter 13 bankruptcy. When your home increases in value, it could hurt. Read more about it here.
3) You have a significant amount of non-dischargeable debt, such as taxes, student loans, or back child support. Those "priority debts" are not dischargeable in a Chapter 7 bankruptcy, but can be restructured in a Chapter 13 bankruptcy to make them affordable.
Alexander Bankruptcy Law Firm provides low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 and $2500 Chapter 13 plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. Conveniently located in Central Phoenix along the Camelback corridor. Check out our FAQ here, and our Bankruptcy Myths here.