How Much Debt Qualifies Me for Bankruptcy in Arizona?

How Much Debt Qualifies Me for Bankruptcy in Arizona?

You have struggled for months or even years with overwhelming debt, and you just haven’t been able to make a dent. In fact, your debt may have just gotten worse in that time since you don’t have the money to manage your basic expenses, and you may have taken out more debt to handle that. Or you may have taken on more debt in an attempt to pay off other debt, and the interest and fees just spiraled to make the situation even worse.

Now you are considering bankruptcy. But you may have heard that there are restrictions on who can file for bankruptcy in Gilbert. Your first question may be about your debt. Do you have enough debt to qualify to file? However, the question is not actually about how much debt you have, but about your ability to pay.

Woman calculating how much debt qualifies her for bankrupcty in Arizona

The Chapter 7 Means Test

Chapter 7 bankruptcy is the “total liquidation” bankruptcy that can discharge all of your unsecured debt, including credit cards, medical bills, and personal loans. In order to file for Chapter 7 bankruptcy in Gilbert, you must be able to pass the means test.

The means test starts by looking at how much money you make. You cannot make more than the median income in Arizona for a household your size. For example, if you have a household of four, you cannot make more than $86,950 per year and qualify for Chapter 7 bankruptcy.

After looking at how much you make, the means test is going to look at how much you spend each month on things like housing, food, and transportation. The goal is to determine how much disposable income you have and what could be used to pay your debts. To be able to file for Chapter 7 bankruptcy, you need to show that you have negative disposable income. Therefore, you may have a small debt amount and still be able to file for bankruptcy. It just depends on your income and overall expenses.

Filing for Chapter 13 Bankruptcy

It is much easier to file for Chapter 13 bankruptcy in Arizona. In a Chapter 13 bankruptcy filing, you enter into a debt repayment plan that lasts three to five years. The monthly payment is based on your ability to pay, and it may have a lower interest rate or result in a lower overall payment. You may even be able to have some of your debt discharged at the end of the repayment plan.

You do not have to meet any income requirements to file for Chapter 13 bankruptcy, but there are debt limits. You cannot file for Chapter 13 bankruptcy if you have more than $394,725 in unsecured debt or $1,184,200 in secured debt. You will also have to meet additional requirements, such as that you have filed your income tax returns, you are filing as an individual and not a business, and you have not had another bankruptcy dismissed within the last 180 days.

It can be confusing to try to wade through the rules surrounding bankruptcy and who can file and what can be discharged. It is much better to consult with an experienced Gilbert bankruptcy attorney and to hire an attorney to create the filing for you. Your attorney will help you understand all the ins and outs of the bankruptcy filing and will ensure that every form is completed properly and every guideline met so that nothing jeopardizes your bankruptcy filing. With the right bankruptcy attorney in Gilbert, you can get the maximum debt relief available under the law, and you can get it quickly.

Call Gilbert Bankruptcy Lawyers today to learn whether you qualify to file for Chapter 7 bankruptcy or to learn about your options with the different chapters of bankruptcy. Our team will analyze your finances and give you a comprehensive understanding of the best path forward through bankruptcy. We’ll work to help you get the maximum debt relief you can, and we’ll work to do it as quickly as possible. Call our bankruptcy law office today to schedule a consultation with a dedicated bankruptcy lawyer and learn how to get out from under your overwhelming debt. We’re ready to help you start your new financial life.

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Gilbert Bankruptcy Lawyers
Office: 480-448-9800