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I am an Arizona bankruptcy attorney serving clients primarily in Phoenix, Tempe, and Scottsdale. Often I have clients in the Phoenix metro area that are disappointed that they cannot file a Chapter 7 Bankruptcy. This disappointment often ends up being unwarranted because a Chapter 13 Bankruptcy provides numerous benefits, especially in regards to real estate.

1) Lien Strip: A debtor who has filed a Chapter 13 bankruptcy may have the option to “strip” off junior liens on a primary residence if the 1st mortgage value is higher than the value of the house. This is tricky because even if the value of the house is worth just one more dollar than the 1st mortgage, the junior (aka 2nd or 3rd) lien on the house cannot be “stripped”. Once the “strip” is executed, the junior lien becomes unsecured and will be treated as just another unsecured creditor in the bankruptcy plan. As such, they will only receive a percentage recovery, dependent on what your Chapter 13 plan calls for you to pay. There are a couple different ways that a bankruptcy attorney can effectuate a successful lien strip, I will not go into these in detail so ask your attorney to explain how they perform a Chapter 13 lien strip if you need more information.

2) strong>Cram down of rental property: This is tricky so I will not go into too much detail on this. But it is possible to cram down the mortgage on a rental property (i.e. not your principal residence) to the actual value of the real property. I could easily write a couple of pages on this topic and this is meant to be a brief article so, if you need this done, make sure you talk to an experienced bankruptcy attorney. If you need help and are located in Arizona, give me a call.

3) Ability to pay off arrearages in the Chapter 13 plan: A debtor who is behind on their principal residence mortgage payments can include the amount they are behind in their 36 or 60 month bankruptcy plan. The same benefit is not afforded to debtors who file Chapter 7 bankruptcies; therefore, in most cases to avoid a trustee sale, a Chapter 7 debtor would need to catch up on their arrears in full to avoid the sale and keep your principal residence. Dependent on the circumstances, this often is a huge benefit for the Chapter 13 debtor. For example, say a potential bankruptcy filer (call her Phillis Filer) is trying to decide on whether to file a Chapter 7 or Chapter 13 bankruptcy. Phillis is $15,000 behind on her house payments. If she is on a 60 month (most common length of plan) Chapter 13 bankruptcy plan, $250 per month will be paid from her bankruptcy plan towards the $15,000 that she is behind. And, at the end of 60 months, she will be all caught up on her house payments. On the other hand, if Phillis files a Chapter 7 bankruptcy, she will have much less time to catch up on the amount she is behind to avoid a trustee sale.

Keep in mind, there are many factors as to whether or not a certain Chapter in bankruptcy is filed. Not everyone will qualify to file a Chapter 13 or a Chapter 7 bankruptcy. This is only meant to give a brief summary of certain advantages a Chapter 13 bankruptcy may offer. This is not a substitute for the advice of an attorney who knows your situation in detail and is licensed to practice in your state.

I am an Arizona attorney and my articles only deal with Arizona and Federal Bankruptcy law. All legal services offered to Arizona Residents Only. This article should not be construed as legal advice, if you need to file a bankruptcy, contact an attorney in your state.

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  • Phoenix Office – New
    Wright Law Offices 
    2999 N. 44th St., Ste 600
    Phoenix AZ 85018 

    Telephone: 602-456-6085 / 866-703-3287
    Phoenix Law Office
  • Phoenix Office – Old
    Wright Law Offices 
    668 N. 44th St., Ste 320
    Phoenix AZ 85008 

    Telephone: 602-456-6085 / 866-703-3287
    Phoenix Law Office
  • Scottsdale Office 
    Wright Law Offices 
    7135 East Camelback Road, Ste 230
    Scottsdale AZ 85251 

    Telephone: 480-845-0145 / 866-703-3287
    Scottsdale Law Office

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    Wright Law Offices 
    2238 S. McClintock Dr.
    Tempe AZ 85258 

    Telephone: 480-845-0145 / 866-703-3287
    Tempe Law Office

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    12725 W Indian School Rd, Suite E-101
    Avondale AZ 85392 

    Telephone: 623-258-4480 / 866-703-3287
    Avondale Law Office

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    4856 E. Baseline Rd.
    Suite #104
    Mesa, AZ 85206
    Telephone: 480-845-0145 / 866-703-3287
    Mesa Law Office

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    Wright Law Offices 
    20325 N. 51st Ave., Suite 134
    Glendale, AZ 85308
    Telephone: 623-258-4480 / 866-703-3287
    Glendale Law Office

What our clients are saying…

TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Mr. Wright and his staff were amazing. They made a negative situation a lot better and turned it into a positive. Could really tell they care helping people and I will refer their Phoenix Bankruptcy Attorney firm to friends and family. Thanks again.

Tara
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

I called around looking for the right bankruptcy lawyer and came across Benjamin Wright. He personally called me for the consultation seeing how I live in Kingman AZ. He was very helpful from the start and his staff was very friendly and explained any questions I had, sorry for all the questions. I would definitely recommend Wright law offices, and I do!! Thanks for everything, you made what seemed like a hard thing to do simple!! You guys rock!!!

Steffanie
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Great lawyer, he really helped my mother out of a jam. She was totally new to bankruptcy and he talked with us for about an hour and a half to make sure she wouldn’t be worried.

Damian
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Ben is a kind and down to earth attorney. He worked around my busy schedule as a single mom (school, full-time job, and daycare pick up and drop off times). He explained absolutely everything to me and was good about e-mailing. I am writing this review as a THANK YOU.

Shannon
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

I had a very positive experience with Attorney Wright. He or his staff returned my e-mails and calls promptly (even after business hours occasionally). His fees were reasonable. He was patient with me when I showed up in court missing an important document. He is aggressive, but fair and nice.

Jenna