Is it Wise to Keep My House When Filing for Bankruptcy in Arizona?
Posted on behalf of Phillips Law Group on Sep 26, 2010 in Local
When people face difficult financial situations that deteriorate to the point where filing for bankruptcy becomes a real and potentially positive option, most have one question that dominates all others in terms of number of times it's asked: Can I and should I keep my house? The answer to this question depends on several different factors, and a few of them will be discussed below. In the meantime, if you're ready to put an end to your financial stress and you'd like to restart your financial life in a positive manner, contact Phoenix bankruptcy attorneys for help as soon as possible.
The Arizona Homestead Statute in Filing Bankruptcy
When someone files for a Chapter 7 bankruptcy, it involves the liquidation of that person's assets so that his or her creditors can be partially paid off before the remaining debts are discharged. However, the person filing for protection, known as the debtor, does not have to completely liquidate his or her assets. There are exemptions in the law, which means that the debtor retains certain pieces of property and assets up to a certain value. In Arizona, a debtor can keep up to $150,000 in home equity. Therefore, for those who have less than $150,000 in equity, a Chapter 7 filing could make sense, as it will generally allow those people to keep their homes.
Arizona Bankruptcy - Chapter 13 Filings
In addition to the situations that revolve around Chapter 7 filings, debtors may also consider filing for Chapter 13 protection if they have more than $150,000 in home equity. Filing under this chapter for protection will allow the debtor to pay off his or her debts to creditors on a monthly basis over time, and he or she will usually get to retain his or her home. In addition, it's possible under a Chapter 13 bankruptcy filing to work through lien stripping, which in effect converts second mortgages and the like into unsecured debt in certain situations, which means that when the Chapter 13 case and payment plan are complete, the remaining amount of that debt can be discharged.
Overall, no two financial situations are ever exactly alike. However, there are options for financial relief for just about everyone, and many of them allow a person to keep his or her home. If you would like to take that all-important first step towards financial freedom, contact the Arizona bankruptcy lawyers at the Phillips Law Group today to schedule a free initial consultation.