On behalf of John Dorris of Dorris Law Group posted in Personal Bankruptcy on Tuesday, September 1, 2015.

Arizona homeowners who find themselves in the midst of overwhelming debt might consider filing for bankruptcy. While this decision may seem to be drastic, the sluggish recovery has made it less of a stigma for many. By declaring bankruptcy, homeowners can find a real solution to managing their debts and rebuilding their financial circumstances.

Individuals with excessive liabilities and minimal assets can particularly benefit from a Chapter 7 or Chapter 13 bankruptcy filing. The type of filing a person chooses depends on certain details regarding the filer’s income and debts. Additionally, filers who wish to declare a Chapter 7 bankruptcy will be required to pass a means test to determine if they are eligible for the filing.

Most people who declare bankruptcy do so through a Chapter 7. This type allows individuals to discharge many of their unsecured debts through a liquidation process, which can be completed in several months. The process requires a designated trustee who will make sure that the proceeds from the sale of the person’s assets are distributed to the creditors.

Chapter 13 bankruptcy filings are for individuals whose income level disqualifies them from filing for a Chapter 7, and who have a regular source of income. This form requires the approval by the court of a repayment plan that lasts from three to five years.

Many individuals who wish to free themselves from the choke hold of their debts retain an experienced attorney to help them choose the type of personal bankruptcy filing that fits their circumstances. The attorney can explain the various eligibility and other requirements.

Source: FOX News, “Using personal bankruptcy to hit the reset button on distressed properties”, Robert Massi, Aug. 27, 2015