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How Chapter 13 Bankruptcy Works in Arizona

— August 3, 2022

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

You may have experienced a financial hardship and are considering filing Chapter 13 bankruptcy in Arizona. 

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

  1. How Does Chapter 13 bankruptcy work in Arizona
  2. Do you qualify for a Chapter 7 bankruptcy?
  3. Should you even file bankruptcy or should you pursue an alternative?

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

Let’s get started.

1) Chapter 13 Bankruptcy in Arizona

For those who make above the income limit for Chapter 7, debt relief can still come through filing a Chapter 13 bankruptcy in Arizona. 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 under Chapter 13.

Chapter 13 stops foreclosures, repossessions, and wage garnishments. It also allows you to pay back mortgage payments, past-due car payments, and tax debt over three to five years through a bankruptcy plan. In addition, Arizona allows you to reduce unpaid child support and alimony. 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 erase second mortgages, if they meet certain requirements. 

IMPORTANT: Chapter 13 Payment Estimate

Let’s say you do not qualify for a Chapter 7 bankruptcy in Arizona and are wondering whether you should pursue a Chapter 13 bankruptcy in Arizona. Can you afford it? It may be odd to ask whether you can afford bankruptcy, but it’s an important question to ask.

To understand whether you can potentially afford a Chapter 13 bankruptcy, you may want to take the Chapter 13 calculator to estimate whether you can afford the monthly payment. A calculator is an estimate, but it uses bankruptcy forms and Arizona specific 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 can drive that cost up.

2) Chapter 7 Bankruptcy in Arizona

Filing Chapter 7 bankruptcy in Arizona can erase 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. However, you must first pass an income evaluation to qualify for a bankruptcy discharge (forgiveness of debt) in Chapter 7.

If you pass the Arizona means test (which you can estimate below), you can erase 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 hold debts that are not secured by collateral. 

If, however, 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 must accept the asset as full payment of the amount owed. 

Most people work with a bankruptcy attorney in both a Chapter 7 and Chapter 13, but there is the option to file without a bankruptcy attorney. Read filing a bankruptcy without an attorney in Arizona to learn how. If you go this route, review the Arizona Chapter 7 Pro Se handout 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 against 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. On the other hand, if your median income is above the state median income, you may need to file under Chapter 13. The Means Test is a two-part test, so it is not a simple pass-fail test. If you “fail” the first section, you can “pass” the second section and still qualify 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

You can check the Chapter 7 bankruptcy Arizona income limits to help you understand whether you may qualify. Arizona’s median income figures for the Means Test are adjusted periodically, based on IRS and Census Bureau data. 

3) Alternatives to Filing Bankruptcy in Arizona

Let’s say you either do not qualify or do not wish to do a Chapter 7 bankruptcy, and the Chapter 13 payment estimate does not appear to be affordable. You may still need debt relief, so what are alternative options to bankruptcy. 

a) Debt Settlement 

Debt settlement can be less expensive than both Debt Management and Debt Payoff Planning because the debt management company is negotiating a lower amount on your total debt

b) Debt Management

Debt settlement companies negotiate 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 that debt settlement and some creditors such as personal loan lenders may not work with the debt management company. There may be debt management credit score implications as well.

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

4) Arizona Specific Bankruptcy Information:

Let’s say you went through the above 3 steps and are now considering whether bankruptcy is the right choice for you. Let’s go through some attributes about filing bankruptcy in Arizona that would be helpful to consider.

Arizona Credit Counseling and Debtor Education Courses

Image by Tim Gouw, via
Image by Tim Gouw, via

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

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 small fee.

Arizona Bankruptcy Exemptions

The Arizona bankruptcy exemptions protect the equity in your property in a bankruptcy case. Likewise, property not protected by bankruptcy exemptions may be sold in a Chapter 7 liquidation case. Note also that for Chapter 13 cases, non-exempt equity in property can increase the bankruptcy plan payment. Therefore, it is important to review the Arizona bankruptcy exemptions and choose those exemptions that best protect your assets.

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

However, Arizona has opted out of using the federal bankruptcy exemptions. As a result, you are required to use Arizona bankruptcy exemptions if you have lived in Arizona for two years before filing a bankruptcy petition. Most of Arizona’s bankruptcy exemptions are found in Title 33 of the Arizona Revised Statutes. While some exemptions are found in other statutes.

The Arizona Bankruptcy Court maintains a list of Arizona state bankruptcy exemptions available to the public. The exemption amounts, however, are subject to adjustment. Always check that you use the most current information available when analyzing bankruptcy exemptions. 

Bankruptcy Courts and Trustees for Arizona

Arizona has 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, call the court before visiting its physical location.

Arizona has several bankruptcy judges that hear bankruptcy matters. The court assigns a bankruptcy trustee to each case. The bankruptcy trustee administers the bankruptcy estate. There are 17 Arizona Chapter 7 trustees and three Arizona Chapter 13 trustees.

In addition to the above, review Arizona local bankruptcy rules before filing a bankruptcy case in Arizona. Some local rules may differ slightly from the Federal Bankruptcy Rules.


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