People accrue debt for many reasons, be it, medical bills, unemployment, marital problems, or just plain bad luck. Despite the different reasons people accumulate debt Chapter 13 Bankruptcy offers a person a scheduled plan to help rework and organize their debt into a manageable and workable situation.
A chapter 13 bankruptcy enables individuals with a regular income to develop a plan to repay all or part of their debts. This is different than Chapter 7 which allows a lower income individual to discharge their debt at the price of liquidating most of their assets. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years and are able to retain more assets than if they were in a Chapter 7 Bankruptcy.
If the debtor’s current monthly income is less than the applicable Arizona median, the plan will be for three years unless the court approves a longer period. If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years.