Over 16,000 bankruptcies were filed in Arizona in 2019. Many people are able to get rid of debts and get a fresh start with the help of the bankruptcy system. You may be in a position where you are being negatively affected due to a coronavirus hardship. If you are struggling to pay your debts, Ascend wants to help. Below is information about filing bankruptcy in Arizona.
Chapter 7 Bankruptcy in Arizona
Filing Chapter 7 bankruptcy in Arizona can get rid of your debts in about four to six months. That is the typical time it takes to complete a no-asset Chapter 7 case in Arizona. Chapter 7 bankruptcies are intended for people who cannot afford to pay any portion of their debts. You must pass an income requirement test to qualify for a bankruptcy discharge (forgiveness of debt) in Chapter 7.
If you pass the Arizona means test, you can get rid of most unsecured debts through Chapter 7. Unsecured debts discharged in Chapter 7 include medical bills, personal loans, some old income tax debt, old utility bills, credit card debts, and most personal judgments. Unsecured creditors have debts that are not secured by collateral.
If you want to get rid of secured debts, like car loans and mortgages, in Chapter 7, you need to surrender the asset to the creditor. The creditor has to accept the asset in full payment of the amount owed. For more information about Chapter 7 bankruptcies, check out our Chapter 7 Bankruptcy Process article.
Many people work with a bankruptcy attorney in both a Chapter 7 and Chapter 13, but there is an option to file with a bankruptcy attorney. You may want to read filing a bankruptcy without an attorney in Arizona. If you go this route, you may want to review the Arizona Chapter 7 Pro Se handout and the required forms.
Arizona Means Test
An important factor in filing for bankruptcy relief is the Bankruptcy Means Test. The Means Test is a bankruptcy form used to calculate your average monthly and annual income. Your income is compared to the median income of other households in Arizona.
If your average annual income or median income is below Arizona’s median income, you may qualify for a bankruptcy discharge under Chapter 7. If your median income is above the state median income, you may need to file under Chapter 13. However, the Means Test is a two-part test, so it is not a simple pass-fail test. If you “fail” the first section, you could “pass” the second section and file under Chapter 7.
You can estimate whether you qualify for a Chapter 7 using the Arizona means test data below:
Chapter 7 Bankruptcy Arizona Income Limits
The median income figures for the Means Test are adjusted periodically. The figures are based on IRS and Census Bureau data. Arizona’s median income for bankruptcy cases filed on or after May 1st, 2020, is:
|# of People||Annual Income|
For households that have more than four members, add $9,000 for each additional family member. Make sure that you always check the US Trustees website for the most current figures to use when calculating the Means Test.
Chapter 13 Bankruptcy in Arizona
If you make too much money to file under Chapter 7, you can get debt relief by filing a Chapter 13 bankruptcy. A Chapter 13 Bankruptcy in Arizona case allows you to restructure your debts into an affordable monthly plan. By restructuring debts, many people can afford to keep their homes and vehicles in Chapter 13.
Chapter 13 stops foreclosures, repossessions, and wage garnishments. You can pay back mortgage payments, past-due car payments, and tax debt over three to five years in a bankruptcy plan. You can also get rid of back child support and unpaid alimony in a Chapter 13 plan. However, you must resume your normal domestic support payments to remain in Chapter 13.
In a Chapter 13 plan, some debtors (the person filing the bankruptcy case) can lower their car loan payments and get rid of second mortgages, if they meet certain requirements. Learn more about filing Chapter 13 in Arizona in our Chapter 13 Guide. You can estimate your Chapter 13 plan payment using the calculator below.
Arizona Credit Counseling and Debtor Education Courses
When you file for bankruptcy relief under Chapter 7 or Chapter 13, you must complete two bankruptcy courses as part of your filing. A credit counseling course is required to file a bankruptcy case. The debtor education course is required to receive a bankruptcy discharge.
The United States Trustee’s office has approved state-specific companies that can offer the bankruptcy courses. You can access a list of companies in Arizona that offer bankruptcy courses on the UST website. Both courses can be completed online for a small fee.
Arizona Bankruptcy Exemptions
Bankruptcy exemptions protect the equity in your property in a bankruptcy case. Property that is not protected by bankruptcy exemptions may be sold in a Chapter 7 case. In a Chapter 13 case, non-exempt equity in property can increase the bankruptcy plan payment. Therefore, it is important to analyze the bankruptcy exemptions and choose the exemptions that give you the best protection of assets.
However, Arizona has opted out of using the federal bankruptcy exemptions. You are required to use Arizona bankruptcy exemptions if you have lived in Arizona for two years before filing a bankruptcy petition. Many of the Arizona bankruptcy exemptions are found in Title 33 of the Arizona Revised Statutes. Some exemptions may be found in other statutes.
The Arizona Bankruptcy Court has a list of Arizona state bankruptcy exemptions that is available to the public. However, the exemption amounts are subject to adjustment. You should also check to ensure that you are using the most current information available when analyzing bankruptcy exemptions.
Bankruptcy Courts and Trustees for Arizona
Arizona is considered one district for bankruptcy filings. However, there are five Arizona bankruptcy court locations throughout the state. Each bankruptcy court handles cases for specific counties in Arizona.
- U.S. Courthouse and Federal Building, 230 North 1st Avenue, Suite 101, Phoenix, AZ 85003
- James A. Walsh Federal Courthouse, 38 South Scott Avenue, Ste 100, Tucson, AZ 85701
- John M. Roll U.S. Courthouse, 98 West 1st Street, 2nd Floor, Yuma, AZ 85364
- U.S. Magistrate Courtroom, AWD Building, 123 North San Francisco Street, Flagstaff, AZ 86001
- Mohave County Superior Court, 2225 Trane Road, Courtroom R, Bullhead City, AZ 86442
Some locations may not accept bankruptcy filings or accept cash payments for filing fees. If you have questions, it is best to call the court before going in person to the court’s physical location.
Arizona has several bankruptcy judges that hear bankruptcy matters. Bankruptcy trustees are assigned to each case. A bankruptcy trustee administers the bankruptcy estate. There are 17 Arizona Chapter 7 trustees and three Arizona Chapter 13 trustees.
You should also read the Arizona local bankruptcy rules before filing a bankruptcy case in Arizona. Some local rules may differ slightly from the Federal Bankruptcy Rules.
Alternatives to Filing Bankruptcy in Arizona
Are you unsure whether you should file a Chapter 7 or Chapter 13 case? Are there other alternatives to filing bankruptcy? Explore Ascend’s Debt Settlement Guide and Debt Consolidation Comparison Guide to learn more about debt relief options that do not involve bankruptcy.
Ascend has numerous resources that can help you get out of debt. Contact us at Ascend for more information about bankruptcy and debt relief options.