Debt Consolidation Credit Counseling In Phoenix

There are two main types of bankruptcy that consumers may file: Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, a person's non-exempt property (this varies from state to state) is liquidated to pay back debts. Even if a liquidation does not generate enough money to pay back all of your debts, whatever unsecured debts (e.g., credit cards) that remain after liquidation are forgiven. The slate is wiped clean.

In Chapter 13 bankruptcy, a person's debt is reorganized for repayment. To be eligible for this type of bankruptcy, you must have a steady source of income from which you can make monthly payments to your creditors for the next 3-5 years. How much you have to pay back and what your monthly payments will be are determined by the bankruptcy court and based on things like how much money you owe, how much money your creditors would have received had you filed Chapter 7 bankruptcy, and how much you can afford to pay per month.

You may want to consider bankruptcy if you are unable to pay the minimum monthly payment on your debt every month, are receiving harassing and threatening phone calls from bill collectors, have recently lost a stream of income, have been diagnosed with a serious illness, or are experiencing some other family emergency that has overwhelmed you with debt that you cannot handle. When you are feeling overwhelmed by debt, it is usually a good idea to consult an attorney to discuss the debt relief options that may be available to you.

Exactly how much debt will be forgiven under a Chapter 13 repayment plan and how much debt must be repaid depends on the financial circumstances and ability to of the debtor to repay the debt. The repayment is generally classified in terms of percentage, for example 70%, 80%, 90%, and 100% forgiveness of unsecured debt. The remaining percentage is paid through a court ordered payment plan monitored by the court appointed trustee. The debtor's secured debt is generally monitored by the plan and must continue to be paid by the debtor. Primarily, this type of filing prevents the distribution and/or sale of many nonexempt assets such as consumer goods purchased with a credit card. An individual person can file a chapter 11, but this should be done only in rare cases where there are many assets. The legal fees associated with the more complex Chapter 11 filings can be astounding.

Exactly how much debt will be forgiven under a Chapter 13 repayment plan and how much debt must be repaid depends on the financial circumstances and ability to of the debtor to repay the debt. The repayment is generally classified in terms of percentage, for example 70%, 80%, 90%, and 100% forgiveness of unsecured debt. The remaining percentage is paid through a court ordered payment plan monitored by the court appointed trustee. The debtor's secured debt is generally monitored by the plan and must continue to be paid by the debtor. Primarily, this type of filing prevents the distribution and/or sale of many nonexempt assets such as consumer goods purchased with a credit card.