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What is Chapter 13 bankruptcy?

Financial difficulties are problems not only for people who cannot manage money or who make bad monetary decisions-Arizona residents who have lost a family member or are recovering from a severe illness may also be plagued with financial difficulties. For those struggling with debt, the emotional decision to file for bankruptcy is often much more difficult than going through the actual legal process that can sometimes eliminate most of a person's bills.

Many debtors may feel they have failed when they consider filing for bankruptcy, but the truth of the matter is that many outside factors influence the decision to declare bankruptcy, including age, illness or an accident. When it becomes clear that it may not be possible to clear all the bills, filing for Chapter 13 or 7 bankruptcy may be smarter than waiting at home for some solution.

Chapter 13 bankruptcy is a form of personal bankruptcy, also known as reorganization bankruptcy. Filers make payments based on income over a period of five years. Filing provides immediate relief from creditor harassment and wage garnishment. Contrary to popular belief, filers do not lose all their property when they file-the list of exemptions can be comprehensive.

Some professionals think people should start considering bankruptcy if their vehicles are facing repossession, their wages are being garnished and if they are behind on their mortgage payments. Arizona residents should not take the financial decision lightly, as it is likely to affect their future, but they should also not be putting off the decision because of perceived social stigma. Bankruptcy protection is a viable option for those considering restarting their financial lives anew.

Source: The Dickinson Press, "Bankruptcy: A clean slate, but at what cost?" Sherri Richards, July 25, 2013