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Chapter 13 filing may prevent asset forfeiture

Arizona residents struggling with debt may be aware that, in addition to the stress of paying off debt, they may also face creditor harassment, wage garnishment and fear of asset repossession. These burdens may end up being overwhelming, but it may be possible for Arizona residents to fight their way out from the debt by availing the options of personal bankruptcy in the form of Chapter 7 or 13 bankruptcy.

Those who have unsecured debt and various financial obligations such as medical bills, credit card bills, civil judgments, payday loans and utility bills may want to consider filing for Chapter 7 bankruptcy. Known as liquidation bankruptcy, it is the fastest and easiest form of bankruptcy for which to file. However, it is important to remember that child support and alimony payments are not discharged through Chapter 7 bankruptcy.

Those debtors who want to prevent foreclosure or have some secured assets they would like to keep possession of may want to look into Chapter 13 bankruptcy. Chapter 13 does not wipe out debts like Chapter 7-it works more like a reorganization of finances where debtors who have a regular income can work out a plan to repay their debts over a period of three to five years. Once someone files for it, an automatic stay is issued to prevent creditors from any collection activities. This stay also includes co-signors of debts, which means that creditors must also refrain from harassing people who are also liable for the same debt.

Depending on an individual's circumstances, they can choose either Chapter 7 or 13 bankruptcy protection to prevent asset forfeiture and find some relief not only from their debt but also from creditors.

Source:, "The different degrees of bankruptcy, explained," Lynnette Khalfani-Cox, June 19, 2014