How Chapter 13 Bankruptcy Works in Arizona

Filing for Chapter 13 bankruptcy in Arizona is no small feat.

You may have encountered financial difficulties and are considering filing for Chapter 13 bankruptcy in Arizona.

There are 3 extremely important things to consider when filing for bankruptcy in Arizona:

  1. How Chapter 13 Bankruptcy Works in Arizona
  2. Are you eligible for a Chapter 7 bankruptcy?
  3. Should you even declare bankruptcy or should you look for an alternative?

Chapter 7 bankruptcy is a legal debt relief option. Many have gotten rid of their debts and made a fresh start with the help of the bankruptcy system.

Let’s start.

1) Chapter 13 Bankruptcy in Arizona

For those earning above the Chapter 7 income limit, debt relief can still come through filing for Chapter 13 bankruptcy in Arizona. A Chapter 13 bankruptcy case in Arizona allows you to restructure your debts into an affordable monthly plan. By restructuring their debts, many people can afford to keep their homes and vehicles under Chapter 13.

Chapter 13 stops seizures, garnishments and wage garnishments. It also lets you pay off mortgage payments, overdue car payments, and tax debt over three to five years through a bankruptcy plan. Additionally, Arizona allows you to reduce child support and unpaid child support. However, you must resume your normal internal support payments to remain in Chapter 13.

In a Chapter 13 plan, certain debtors (the person filing for bankruptcy) can reduce their car loan payments and erase second mortgages, if they meet certain conditions.

IMPORTANT: Chapter 13 Estimating Payments

Let’s say you don’t qualify for a Chapter 7 bankruptcy in Arizona and you’re wondering if you should pursue a Chapter 13 bankruptcy in Arizona. Can you afford it? It can be strange to wonder if you can afford bankruptcy, but it’s an important question to ask.

To understand if you can potentially afford a Chapter 13 bankruptcy, you can use the Chapter 13 calculator to estimate if you can afford the monthly payment. A calculator is an estimate, but it uses Arizona-specific bankruptcy forms and data that are used to help calculate Chapter 13 plan payments.

Please note that the cost to file bankruptcy in Arizona is $338 for a Chapter 7 bankruptcy and $313 for a Chapter 13 bankruptcy, but attorney fees may increase this cost.

2) Chapter 7 Bankruptcy in Arizona

Filing for Chapter 7 bankruptcy in Arizona can clear your debts in about four to six months. This is the time it usually takes to settle a Chapter 7 case with no assets in Arizona. Chapter 7 bankruptcies are for people who cannot afford to pay some of their debts. However, you must first pass an income test to qualify for a Chapter 7 bankruptcy discharge (debt cancellation).

If you pass Arizona’s means test (which you can estimate below), you can discharge most unsecured debt through Chapter 7. Unsecured debt discharged in Chapter 7 includes medical bills, loans personal, some old tax debts, old utility bills, credit card debts and most personal judgments. Unsecured creditors hold debts that are not secured by collateral.

If, however, you want to get rid of secured debts, such as car loans and Chapter 7 mortgages, you must return the asset to the creditor. The creditor must accept the property as full payment of the amount due.

Most people work with a bankruptcy attorney in both a Chapter 7 and a Chapter 13, but there is the option of filing without a bankruptcy attorney. Read File bankruptcy without a lawyer in Arizona to learn how. If you go this route, check out the Arizona Chapter 7 Pro Se document and check out the required forms.

IMPORTANT: Chapter 7 Qualification via Arizona Means Test

An important element in filing for bankruptcy relief is the bankruptcy means test. The means test is a bankruptcy form that calculates your average monthly and annual income. The test compares your income to the median income of other Arizona households.

If your average annual income or your median income is less than the Arizona median income, you may be eligible for a Chapter 7 bankruptcy discharge. On the other hand, if your median income is greater than the median income of state, you may need to file a Chapter 13 petition. The means test is a two-part test, so it is not a simple pass or fail test. If you “fail” the first section, you can “pass” the second section and still qualify for Chapter 7. You can estimate if you qualify for a Chapter 7 using the Arizona Means Test data below:

Chapter 7 Bankruptcy Arizona Income Limits

You can check Chapter 7 bankruptcy income limits in Arizona to help you understand if you may qualify. Arizona’s median income means test figures are adjusted periodically, based on IRS and Census Bureau data.

3) Alternatives to Filing for Bankruptcy in Arizona

Let’s say you don’t qualify or don’t want to file for Chapter 7 bankruptcy, and the Chapter 13 payment estimate doesn’t seem affordable. You may still need debt relief, so what are the alternative options to bankruptcy.

a) Debt settlement

Debt settlement can be less expensive than debt management and debt repayment planning because the debt management company negotiates a lower amount on your total debt.

b) Debt management

Debt settlement companies negotiate a lower amounts. Debt management companies negotiate lower interest rates. This is the key distinction. Often these programs last 3 or 5 years. This option is often more expensive than debt settlement and some creditors such as personal lenders may not work with the debt management company. There may also be credit rating implications of debt management.

Who might Arizona debt management be best for? Debt management may be best for those who all have high interest credit card debt, and a reduction in interest rate from 22-30% to 10% interest would continue to make debt affordable.

4) Specific information about bankruptcy in Arizona:

Let’s say you’ve followed the 3 steps above and are now wondering if bankruptcy is the right choice for you. Let’s go over a few attributes about filing for bankruptcy in Arizona that would be helpful to consider.

Credit Counseling and Debtor Education Courses in Arizona

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When you file for relief under Chapter 7 or Chapter 13, you must complete two bankruptcy courses to receive a bankruptcy discharge. This includes a credit counseling course before filing for bankruptcy; and a post-filing debtor education course.

The United States Trustee’s Office has approved state-specific companies that offer bankruptcy courses. You can access a list of companies in Arizona offering bankruptcy courses on the UST website. Both courses are available online for a nominal fee.

Arizona Bankruptcy Exemptions

Arizona bankruptcy exemptions protect the equity in your property in the event of bankruptcy. Similarly, property not protected by bankruptcy exemptions can be sold in a Chapter 7 liquidation case. Also note that for Chapter 13 cases, non-exempt equity in the property can increase the bankruptcy plan payout. . Therefore, it is important to review Arizona bankruptcy exemptions and choose the exemptions that best protect your assets.

Federal bankruptcy exemptions are detailed in 11 US Code §522. The National Center for Consumer Law maintains a list of federal bankruptcy exemptions on its website.

However, Arizona chose not to use federal bankruptcy exemptions. Accordingly, you must use Arizona bankruptcy exemptions if you lived in Arizona for two years before filing for bankruptcy. Most of Arizona’s bankruptcy exemptions are found in Title 33 of the Arizona Revised Statutes. While some exemptions are found in other laws.

The Arizona Bankruptcy Court maintains a list of Arizona State bankruptcy exemptions available to the public. However, the amounts of the exemptions are subject to adjustment. Always verify that you are using the most recent information available when analyzing bankruptcy exemptions.

Bankruptcy Courts and Trustees for Arizona

Arizona has a district for bankruptcy filings. However, there are five Arizona bankruptcy court locations throughout the state. Each bankruptcy court handles cases from specific counties in Arizona.

  • United States 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. Magistrates 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 any questions, call the court before visiting its physical location.

Arizona has several bankruptcy judges who hear bankruptcy cases. The court assigns a bankruptcy trustee to each case. The trustee in bankruptcy administers the bankruptcy estate. There are 17 Arizona Chapter 7 administrators and three Arizona Chapter 13 administrators.

In addition to the above, review local Arizona bankruptcy rules before filing for bankruptcy in Arizona. Some local rules may differ slightly from federal bankruptcy rules.


Filing for Chapter 13 bankruptcy in Arizona is no small feat. After reading this article, you may be wondering, “Should I file for bankruptcy?” and a bankruptcy quiz can help you estimate your costs and options. After all, the goal may be to make the most informed decision.

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