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Chapter 7 Bankruptcy in Arizona – What You Need to Know

Chapter 7 bankruptcy in Arizona is a complicated matter and there is lots that you need to consider before you decide where and how to file for bankruptcy and get credit card debt relief.

Most people who file for bankruptcy file under Chapter 7 of the U.S. Bankruptcy Code. Chapter 7 is known as “Fresh Start” or “Liquidation” bankruptcy, because all eligible property is sold (liquidated) and creditors get the proceeds. Once all liquidation funds have been distributed, all unsecured debts are discharged and creditors are forbidden from any further collection efforts against you. This gives you a fresh start so you can re-establish your financial situation without burdensome debt holding you back.

While Chapter 7 bankruptcy in Arizona is the fastest, easiest and least expensive form of bankruptcy, you do have to qualify for it and it will not necessarily discharge all your debts. To find out whether you qualify, read this article: Chapter 7 bankruptcy in Arizona – Do I Qualify.


File for Bankruptcy? Which Debts Get Discharged?


Most unsecured debts are discharged in a Chapter 7 bankruptcy. Secured debts can also be discharged if you are willing to return the property. However, if want to keep the property, you must pay the secured debt. A secured debt is any debt for which you have promised to turn over property to the creditor if you cannot pay your debt. Your mortgage and car loan are examples of secured debt. So even if your home is exempt from liquidation under Chapter 7, your mortgage company can still foreclose on it if you fall behind on your payments.

Other forms of debt that are not discharged under Chapter 7 include:

  • Child support
  • Income taxes
  • Property taxes
  • Student loans
  • Fines and restitution imposed by a court for crimes
  • Spousal support or property settlements ordered as part of a divorce



Chapter 7 Bankruptcy in Arizona requires Credit Counseling


The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added a law requiring anyone filing Chapter 7 or Chapter 13 bankruptcy to take a credit counseling briefing within 180 days before filing. The briefing must be from a non-profit budget and credit counseling agency approved by the U.S. trustee or bankruptcy administrator.

After filing, you must take another course on personal finance management provided by an agency approved by the U.S. trustee or bankruptcy administrator. If you file for Chapter 7 and do not complete both courses, the bankruptcy judge may deny your discharge of debts.



Other Facts You Need to Know about Chapter 7 Bankruptcy in Arizona


  • In Arizona, certain kinds of property are exempt from liquidation, including limited equity in a car or house, tools of your trade, and some personal effects.
  • Chapter 7 bankruptcy stays on your credit report for 10 years
  • If the U.S. trustee can show you could afford to repay some of all of your debt within 5 years, they may prevent a Chapter 7 discharge and force you into Chapter 13 bankruptcy
  • If you have moved to Arizona within the past two years, you maybe required to use the exemptions from your previous state.
  • There is a cap to how much of your home equity can be exempted


Need more information on Chapter 7 bankruptcy in Arizona? Check out these additional articles:
Tucson Chapter 7 Bankruptcy – Do I Qualify?
How to File for Chapter 7 Bankruptcy
Bankruptcy Chapter 7 Exemptions in Arizona


Want to talk with an attorney that is experienced in Chapter 7 bankruptcy in Arizona at no cost or obligation then click now. Or call us today: Judge Law Firm 520-745-1500


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