Can You Choose What Debts are Included in Bankruptcy?

Filing for bankruptcy isn’t like going shopping. You can’t choose which debts you want to keep and which ones you want to get rid of. For the most part, it’s an all or nothing scenario. With a few exceptions, if you’re filing bankruptcy, you must include all your debts. And an Arizona bankruptcy lawyer can help you do that.

When you think about this, it makes sense. Imagine that you are a creditor and John Debtor owes you money. John also owes another creditor the same amount of money. You get a copy of John’s bankruptcy petition in the mail and find out that your account is being discharged. John will no longer have to pay you back. Then you look over and see that John has decided to pay his debt to the other creditor. That hardly seems fair, now does it?

Do You Know Which Chapter You Will Be Filing?

Whether or not you can include your debts in your petition may depend on which chapter you file. If you file a chapter 7 bankruptcy, then you will be able to discharge most if not all of your unsecured debt. If, on the other hand, you file a chapter 13, you’ll have to reorganize almost all of your debt. Your Arizona bankruptcy lawyer will help you decide which chapter is in your best interests. Depending on your assets, it may make sense to just file the chapter 7. This way, you get as much of your debt discharged as possible.

There’s a Difference Between Secured and Unsecured Creditors

Aside from which debts you want to include or exclude, there are different types of creditors. A secured creditor has a better shot at having their debt paid off than an unsecured creditor. This is why there’s a much higher chance of your mortgage being kept out of the bankruptcy as opposed to a credit card debt.

There are Certain Debts that You May Be Allowed to Keep Out of the Bankruptcy

When you decide to file your petition, there are certain debts that you can try to redeem. When you sit down with your Arizona bankruptcy lawyer, let them know what your goals are. Hopefully, they can get your bankruptcy approved. It really depends on your total debts and asset. As in the example discussed above, you can’t just pick and choose which creditors you want to pay back. However, the Bankruptcy Code does allow for certain debts to be kept out of the bankruptcy.

Your Arizona Bankruptcy Lawyer Can Try to Work Out the Best Arrangement with the Trustee

If you know you want to file bankruptcy, the only question left is whether you want to do it yourself or hire an attorney. Having an Arizona bankruptcy lawyer by your side is probably for the best. When it comes to your bankruptcy petition, if you fill one form out wrong, the whole thing can be dismissed. This can cost you a lot of time and a lot of money. Your Arizona bankruptcy lawyer will make sure it is done properly the first time.

If you do have certain debts that you want to keep out of the bankruptcy, your attorney can try to work it out. For example, if you want to keep your home, the trustee may allow you to keep your mortgage. The same may go for a car loan depending on how much equity you have in the vehicle. What you should do is talk to an experienced Arizona bankruptcy lawyer as soon as possible.