Last year proved to be better in terms of bankruptcy filings across the country, with total bankruptcy petitions dropping by 13 percent compared to 2012. The drop in bankruptcies was reflected in Arizona as well, with the number falling by 19 percent in the Arizona and Tucson area, according to the U.S. Bankruptcy Court. Bankruptcy filings started increasing right before the recession in 2007, 20113's drop echoed the trend started in 2011, when bankruptcy fell 15 percent and 2012, when it dropped 22 percent.
Personal bankruptcy may take many forms. Amongst these are Chapter 7 and 13 bankruptcies. Eligibility for Chapter 7 bankruptcy depends on income. Once Arizona residents pass the income test then a court appoints a trustee to determine which assets can be sold to pay off debtors in order of priority. Through the Chapter 7 process, any debt left over after assets are sold may be forgiven. Under Chapter 13 bankruptcy, debt is restructured in a way to allow the debtor to keep his or her assets while finding an easier way to pay down debt.
Though bankruptcy may seem scary, even asset forfeiture should not deter debtors from filing bankruptcy to obtain debt relief. Many assets, such as the residential home,car and furniture may be exempted to a certain extent, thereby providing the opportunity for such property to be retained by the debtor. Not only does filing for bankruptcy put an automatic stay on foreclosure proceedings, but it may also put an end to wage garnishment and creditor harassment.
Financial troubles hit many people across the country in the recession, and those still facing overwhelming debt should not hesitate to seek debt relief, including exploring bankruptcy options. Bankruptcy may not only liquidate debt, but it may also eliminate tax debt. But most importantly, bankruptcy allows debtors to avoid asset forfeiture and obtain the second chance at a strong financial future they deserve.
Source: The Arizona Daily Star, "Bankruptcy filings continued to fall statewide in 2013," David Wichner, Jan. 13, 2014