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Arizona Bankruptcy: What debts or bills can be wiped out by filing bankruptcy?

posted by Jeff Judge

Filing Bankruptcy in Arizona can discharge most but not all debts (see chapter 11 bankruptcy in Tuscon for more information).  Bankruptcy can discharge: 

1. Credit Card Debts or other unsecure debts
2. Medical Bills
3. Old Vehicle Repossession Debts
4. Previous House or Apartment Evictions or Home Foreclosure Debts
5. Payday Loans
6. Co-signed Debts – if you co-signed a car, house, credit card debt for another person, you can wipe out your debt but not your co-debtor’s obligation
7. Bank Loans (Credit Union Loans) – However, the bank or credit union may take and close any accounts you have with them.
8. Secured Debts if you are willing to return the property.  With vehicles, if you keep the property then you must agree to keep the debt.
9. Leases or unexpired contracts – For example, if you can’t afford your gym membership, expensive apartment lease, Direct TV contract, cell phone contract, or car lease, you can terminate the contract or lease.

Generally, Bankruptcy does not discharge:

1. Taxes
2. Student Loans
3. Child/Family Support
4. New Debts within 90 days of filing date
5. Court Fines, Fees, and Restitution
6. Drunk Driving Accident Claims
7. Fraudulent Debts or Fiduciary Obligations
8. Business Debts involving Wages and Employee Benefits (see Tucson business work out solutions)

These are considered priority debts.  Generally, a Bankruptcy filing won’t discharge them but you should talk to an experienced bankruptcy lawyer to discuss all your options.  One option is to file for Chapter 13 Bankruptcy protection which can help you avoid collection harassment by setting up a 3 to 5 year repayment plan.

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