Whether you are facing home foreclosure or wage garnishments due to unpaid debts, you can find several debt relief options in Arizona. Non-profit credit counseling services as well as local divisions of the United States Bankruptcy Court District of Arizona typically offer affordable options to help you get out of debt faster while keeping as many of your personal assets as possible.
Credit Counseling
Non-profit organizations such as Money Management International, headquartered in Phoenix, offers a variety of credit counseling and education programs. Some counselors can help citizens rearrange their budgets, while others provide workshops designed at preventing home foreclosures. Most programs require a nominal fee, though in some cases fee waivers may be available. Credit counseling is a required step before filing any type of bankruptcy.
Debt Management Plans
Some Arizona residents qualify for a debt management plan. A credit counselor contacts the debtor's creditors to renegotiate the amount owed and payment terms. This service will not impact most debts secured by collateral or government-oriented obligations such as taxes and student loans. The debtor makes one monthly payment to the credit counseling service; the credit counselor distributes the proceeds to the creditors as agreed. But Arizona debtors cannot get any new credit while on a debt management plan.
Chapter 7 Bankruptcy
If you have lived in Arizona for at least six months and earn less than the state's annual median income level, you can potentially discharge most of your debts through Chapter 7 bankruptcy. As of 2011, the annual median income figure for a single Arizona resident was $42,603, while the yearly level for a couple was $55,404, according to the U.S. Trustee Program. The annual median income level for a three-member Arizona household was $59,659, while the yearly figure for a family of four was $67,113. Chapter 7 bankruptcy may erase many of your debts, but will also harm your credit rating for 10 years from the date of filing.
Chapter 13 Bankruptcy
If you are economically ineligible for Chapter 7, you can partially repay your debts under court supervision in Chapter 13, according to the United States Bankruptcy Court District of Arizona. Regardless of which type of bankruptcy you file, if you have lived in Arizona for at least two years you can use state asset exemption laws to keep most of your assets. As of 2011, you could keep up to $150,000 of homestead equity and $25,000 in life insurance proceeds, according to Bankruptcy Action.
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