When Should I Consider Bankruptcy?

If you find yourself cringing every time a new bill comes in the mail, not opening letters from creditors, or hiding from the phone when it rings in case it is a collections agency or biller on the other end of the line — it may be time to call a bankruptcy lawyer in Phoenix and discuss the option of bankruptcy.

It can be surprisingly easy to lose your financial footing. A medical problem may lead to very expensive bills, or lost employment can put an entire household on the brink of disaster. Even small bills can add up quickly if you cannot pay them on time, and interest charges and financing fees only add to the stress.

In fact, the most common reasons for people to turn to bankruptcy include: divorce, unemployment and expensive medical bills.

If your financial situation seems bleak, like you will never be able to get out from underneath your mountain of debt, filing for bankruptcy can be the breath of fresh air you need, allowing you to get back on your feet.

The idea of considering bankruptcy can feel overwhelming and disappointing, but a good bankruptcy lawyer in Phoenix will walk you through the process, including chapter 7 bankruptcy requirements and choosing chapter 7 vs. chapter 13 bankruptcy.

Chapter 7 vs. Chapter 13 Bankruptcy

These two types of personal bankruptcy offer different options for consumers. Your bankruptcy lawyer in Phoenix will explain which is best for you, but here are some basic facts:

  • Chapter 7 (vs. chapter 13 bankruptcy) is most common.
  • Chapter 7 bankruptcy removes your liability to almost all personal debts, while chapter 13 bankruptcy involves creating a plan with your bankruptcy lawyer in Phoenix, to make payments in installations and keep your assets.  Payments are based on your ability to pay.
  •  Chapter 7 bankruptcy liquidates nonexempt assets while chapter 13 bankruptcy reorganizes debts and will usually allow you to keep your assets.

In plain language, if you are unable to make any payments, you should consider chapter 7 vs. chapter 13 bankruptcy.

Chapter 7 Bankruptcy Requirements

In the event that you are totally overwhelmed by debt, you will have to meet chapter 7 bankruptcy requirements. This involves your income — if you are above the median for Arizona, you will have to pass a means test. Chapter 7 bankruptcy requirements also involve previous bankruptcy discharges and can be complex. If you are considering chapter 7 bankruptcy, it is a good idea to call a bankruptcy lawyer in Phoenix.

If you do not meet chapter 7 bankruptcy requirements, a chapter 13 bankruptcy discharge could be another option. Filing for bankruptcy, like any major financial decision requires you to gather  information– it’s best to be proactive and consult with a knowledgeable bankruptcy lawyer in Phoenix as soon as you begin considering bankruptcy.


This blog is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. No attorney-client relationship is created by this blog. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.

This blog article was created by Larry P. Karandreas, Esq., on behalf of the Law Offices of Larry P. Karandreas, P.L.L.C., A Lawyer Who Cares™, which concentrates its practice of law to Chapter 7 and Chapter 13 Bankruptcy, and in Debt Negotiation. If you live in or near Phoenix, Glendale, Scottsdale, Peoria or the Surprise, Arizona area and want legal advice or help – please visit the firm website for more information. 
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