Chapter 13 bankruptcy can be pursued by Arizona residents who do not meet the income requirements of Chapter 7 bankruptcy or who have assets they do not want to lose. A Chapter 13 bankruptcy is often attractive to people because payments are spread out and allow the individual to pay off their debt over time.
Filing for bankruptcy is often the last resort for those struggling with debt, and people should not take this decision lightly. However, after reflection people often do realize that they need bankruptcy relief in order for their financial lives to start afresh. However, sometimes the court that evaluates a consumer's circumstances may have a hard time deciding whether the consumer is truly in need of the legal protection bankruptcy offers, and which debts should be erased or reorganized in the filing.
For example, such a situation has recently arisen where a contractor operating his own landscaping business was suspected of swindling customers before declaring bankruptcy.
Several people reportedly paid the contractor for construction work, but he did not complete the work and they ended up hiring other companies to complete the jobs. Now, these customers are listed as creditors in his bankruptcy filing.
When creditors suspect fraud such as this, they may ask the bankruptcy court not to discharge or include certain debts in the bankruptcy.
A Chapter 13 bankruptcy filing would allow this contractor to make court-supervised payments to his creditors over a certain period of time, so it would be up to a court to decide whether this is acceptable.
Declaring a bankruptcy is never easy for any individual, and it can raise difficult questions--but tough circumstances and unexpected events often lead people to this decision, and they are ultimately able to regain solid financial footing.
Source: KMOV, "Crafty contractor files bankruptcy, avoids debt," Chris Nagus, Aug. 30, 2012