How Much Do You Have to Be in Debt to File Chapter 7? 8 May 2024 8:55 PM (10 months ago)
If you find yourself struggling with debt, you may be considering filing for bankruptcy. Bankruptcy can provide a fresh start and the opportunity to rebuild your financial life. But how much debt do you need to have in order to qualify for a Chapter 7 bankruptcy? There is no specific amount of debt that you need to file, as each situation is unique.
Every situation is different, and you should consider many factors before filing for bankruptcy. Discuss your options with Phoenix bankruptcy attorney today.
When to File for Bankruptcy
Filing for bankruptcy is a serious decision that should not be taken lightly. It is important to carefully consider your financial situation and explore all possible alternatives before deciding to file. Bankruptcy should be considered as a last resort when all other options have been exhausted. When you and your bankruptcy lawyer believe there are no other viable debt relief options, it is likely the right time to turn to bankruptcy.
Factors That Will Help You Decide When To File Bankruptcy
Before filing for bankruptcy, there are several factors that you should consider.
Level of Debt
The first factor to consider is the amount of debt you have. While there is no minimum amount of debt required to file for bankruptcy, there is a maximum limit for some cases. In order to qualify for Chapter 7 bankruptcy, your unsecured debts (such as credit card debt, medical bills, and personal loans) should generally exceed your income and the value of your assets.
Ability to Repay
Another important factor to consider is your ability to repay your debts. If you cannot pay your debts, it might be time to file a Chapter 7 case. If you have a steady income and are capable of repaying your debts through a repayment plan, Chapter 13 bankruptcy may be a more suitable option for you. This type of bankruptcy allows you to reorganize your debts and create a manageable repayment plan.
Consultation with a Bankruptcy Lawyer
Ultimately, the decision to file for bankruptcy should be made after consulting with a qualified bankruptcy lawyer. They can analyze your financial situation and help you make this decision.
When To File Chapter 7 or Chapter 13 Bankruptcy
If you have determined that bankruptcy is the right option for you, you will need to choose between Chapter 7 and Chapter 13 bankruptcy. Here are some factors to consider when deciding which chapter to file:
Chapter 7 Bankruptcy
- Chapter 7 bankruptcy is ideal for individuals with a significant amount of unsecured debt and little to no disposable income.
- It allows for the discharge of most unsecured debts, providing a fresh start with no repayment obligations.
- However, it may require the liquidation of non-exempt assets to repay creditors.
Chapter 13 Bankruptcy
- Chapter 13 bankruptcy is suitable for individuals who have a regular income but are unable to repay their debts in full.
- It allows for the creation of a repayment plan that lasts for three to five years, based on your income and debt levels.
- It may allow you to retain more assets and avoid liquidation.
Consult a Phoenix Bankruptcy Attorney
If you are currently struggling with overwhelming debt and need assistance, our team of Phoenix bankruptcy attorneys at Want a Fresh Start is here for you. Contact us today at (602) 737-3930 or online to schedule a consultation and start your journey toward a new financial start.
The post How Much Do You Have to Be in Debt to File Chapter 7? appeared first on Bankruptcy Law Network.
Bankruptcy and Foreclosure 16 Apr 2024 10:53 AM (11 months ago)
Many people fall behind on their mortgages. While some lenders are more than willing to work with homeowners who get behind on their payments, this is the exception rather than the rule. If you fall too far behind on your payments, your mortgage lender will likely begin the foreclosure process. One saving grace for homeowners facing foreclosure is that the process usually takes a while.This gives them time to consider alternatives to foreclosure, such as loan forbearance, a short sale, a deed in lieu of foreclosure, or bankruptcy.
An experienced bankruptcy attorney will evaluate your situation and advise you whether filing for bankruptcy could help if you are facing foreclosure. If you are in Arizona, Colorado, or Nevada and would like to discuss how bankruptcy may assist you, please do not hesitate to call our office for a fresh start today.
What is Foreclosure?
Foreclosure is the process by which a mortgage lender sells the homeowner’s house in order to cover the outstanding debts the homeowner owes to the mortgage lender. This process typically begins several months after the homeowner falls behind on his or her mortgage payments. In most cases, when a lender wants to begin the foreclosure process, they record a public notice with the county recorder’s office indicating that the borrower has defaulted on the mortgage, and also alert the borrower that they are in danger of foreclosure. After this notice phase, the borrower enters into grace period during (usually 30 to 120 days) in which they can work out an arrangement with the lender to pay off the debt they owe. If the default is not remedied by the end of the grace period, the lender will then arrange for the home to be sold at auction where the home will be sold to the highest bidder.
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(602) 737-3930The Automatic Stay in Your Bankruptcy Case
If you decide to file for bankruptcy before the completion of the foreclosure process, the court will automatically issue an order called an “automatic stay,” which directs your creditors to cease their collection activities immediately. If your lender had scheduled your home for a foreclosure sale, and you file for Chapter 7 bankruptcy, the sale will be legally postponed (usually by about three to four months) while the bankruptcy is pending. In some cases, the lender can request that the court lift the automatic stay so that the foreclosure process can proceed. If this is granted, you may not receive the extra three to four months of time.However, even if the lender’s request is granted, it will take the court a month or two to consider it, which can buy you more time in which to avoid the foreclosure.
You should also be aware that the automatic stay works differently if you file for bankruptcy after your lender has already filed the foreclosure notice. Most states have laws that require lenders to give homeowners a certain amount of notice before selling their property, and an automatic stay will not stop the clock on this advance notice. For example, assume that you live in a state where the law requires a lender to give the homeowner at least three months notice before selling the home. If you receive this three-month notice and then file for bankruptcy two months later, the three month period would have passed after being in bankruptcy for only one month. As a result, the lender could file a motion to lift the stay and ask the court’s permission to schedule the foreclosure.
How Chapter 13 Can Help
Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments on your mortgage. You can propose the length of time for repayment, but keep in mind that you’ll need sufficient income to pay both your past due payments and your current mortgage payments at the same time. So long as you make all of the required payments for the length of the repayment plan, you will avoid foreclosure and be able to stay in your home.
Chapter 13 bankruptcy can also help you eliminate additional mortgage payments if you have multiple mortgages on your home. If your first mortgage is secured by the entire value of your home (which is possible if the home has dropped in value), you might no longer have any equity with which to secure the later mortgages. That allows the Chapter 13 court to recategorize the second or third mortgage as unsecured debt, which, under Chapter 13 bankruptcy, takes the lowest priority and often does not have to be paid back at all.
How Chapter 7 Can Help
Chapter 7 bankruptcy also cancels all the debt secured by the home, including mortgages and home equity loans.However, Chapter 7 will not keep you from losing your home. Chapter 7 forgives your debt, but that is it. When you enter into a mortgage, you are agreeing to use your home as collateral if you default on your payments. Chapter 13 enables you to pause action on that lien while you catch up on your payments and gives you a chance to save your home. Chapter 7 forgives your debt, but it will not lift the lien, and hence will not lift the foreclosure on your home.
If you choose to file for Chapter 7 bankruptcy when facing a foreclosure, you could also lose other valuables. Because the courts generally want to reimburse creditors for their losses, the bankruptcy trustee may award money from the sale of certain other valuables of yours to the creditors. For example, if you have a valuable wedding ring that has value exceeding the dollar amount you are allowed to keep during bankruptcy, under the “jewelry exemption”, you could lose your wedding ring. Therefore, Chapter 13 bankruptcy will be the better option for most homeowners facing foreclosure.
Contact a Skilled Bankruptcy Attorney Today for More Information
You don’t have to go through a foreclosure alone. If you are facing foreclosure and are considering filing for bankruptcy as a strategy to keep your house, contacting a bankruptcy attorney would be a good way to make healthy, informed decisions about doing so. Contact the office of Bankruptcy Law Network today online or call 866-780-4855 to schedule a free consultation.
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New Bankruptcy Laws 16 Apr 2024 10:45 AM (11 months ago)
In 2005, former president George W. Bush signed into law a major reform of bankruptcy law. This reform, called the Bankruptcy Abuse Prevention and Consumer Protection Act, changed bankruptcy law in a variety of ways. In general, filing for bankruptcy became slightly more complicated due to the reform. The following are a few of the major changes you may want to consider during the filing process in Arizona, and our Phoenix bankruptcy lawyers can help you better understand how the following changes impact your individual situation.
Chapter 7 Eligibility Is More Stringent
After the president signed the BAPCPA into law in 2005, the financial requirements to qualify for Chapter 7 bankruptcy became stricter. The primary change has to do with level of income. If your income is at or above the median level for your region, you will be automatically rendered ineligible to file for Chapter 7.
Moreover, if upon examination of your finances, you are determined fiscally able to contribute $100 per month toward the removal of your existing debt, you will need to proceed as a Chapter 13 petitioner instead of Chapter 7. This is determined through the analysis of your income each month, your general expenses, and the sum of your debts.
You Will Be Required to Take Classes
Before you can file for bankruptcy in Phoenix, AZ, you will likely be required to take credit counseling classes in a government sanctioned program. During these sessions, you will need to supply information about your income and your debts for the examination of a counselor. The counselor will go over the information and assets, like whether there are viable alternatives to filing for bankruptcy in your case. If alternatives are found, it is up to you whether you will pursue them or continue with your bankruptcy.
After your bankruptcy has concluded, you will also be required to attend a financial management training course that will give you information on management of finances and tips to remain debt-free.
Up-to-date Taxes Are Mandatory
Before 2005, those who had not paid taxes recently were still considered eligible to file for bankruptcy. Today, you need to provide additional documentation that requires taxes be current to begin your petition for bankruptcy. Your federal and state income tax returns from the preceding year will need to be presented. If they are unavailable, don’t fret; by paying your past due taxes and bringing them up to date, you will still be able to file.
The “Automatic Stay” Covers Less
An automatic stay is an injunction that occurs as soon as you petition for bankruptcy. This stay will preclude your creditors from taking many actions against you. These stays held a bit more weight before the BAPCPA was enacted, but are still an extremely helpful feature of bankruptcy proceedings.
One of the major changes to automatic stays has to do with eviction. While automatic stays will still keep your home or other owned property from being foreclosed upon, it will no longer protect tenants against eviction. Therefore, if you are considering filing for bankruptcy and are currently behind on your rent, it may be wise to prioritize paying your landlord during your proceedings. Make sure your Phoenix bankruptcy lawyer is informed of any potential residential complications from the outset, and you should be able to avoid a major incident.
The best way to guard yourself against inaccuracy and ensure you are getting the representation you deserve is to work with a professional. As experienced bankruptcy attorneys in Phoenix, AZ, we spend our days keeping up with changing laws and advocating for those who would benefit from filing for bankruptcy. If you have questions, contact us. We want the process to be as convenient as possible for you, so our professionals are available to assist you seven days per week.
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Bankruptcy and Divorce 16 Apr 2024 10:25 AM (11 months ago)
Often, divorce proceedings and assets lost in a divorce can make it necessary to file for bankruptcy in Arizona. In fact, the Phoenix bankruptcy lawyers at Bankruptcy Law Network by Bankruptcy Law Network know divorce is one of the more common reasons people choose to file. If you are still married, there are a number of factors to consider when determining whether to file for bankruptcy or divorce first – in addition to ways to make the process as easy on yourself as possible. You may wish to consider the following factors when facing bankruptcy alongside divorce.
Property Division
The division of jointly-held property can be made significantly easier by utilizing a bankruptcy to first eliminate the debts. Instead of determining who will inherit a home or property with a complicated financial situation, preemptive bankruptcy can act as an equalizing force, allowing the property to be later divided in a more straightforward way.
That said, there are circumstances under which filing for divorce first may be the better option. If you are unable to double your home exemptions and the property owned together will exceed the range of exempted funds, it may be better to file after the property has been divided in the divorce. This way, the property’s overall value will be decreased, and it will more likely fall into the bracket of exemption.
Costs of Divorce and Bankruptcy
The cost of filing for bankruptcy in Arizona remains the same whether you file as an individual or as a couple. Therefore, a joint bankruptcy filed with your spouse preceding a divorce may be a good way to save on filing fees. It may also assist with attorney costs, as the Phoenix bankruptcy lawyer will only need to handle a single case for both you and your spouse’s bankruptcy claims.
Chapter 7 or Chapter 13?
Before hiring a Phoenix bankruptcy attorney, perhaps the first question you should ask yourself when choosing whether to file for bankruptcy or divorce first is whether you intend to file under Chapter 7 or Chapter 13. Chapter 7 is a relatively short procedure, in which assets are liquidated and allocated to settle debts. Generally, this entire process takes no more than six months, so postponing a divorce for this amount of time will likely not yield any negative consequences.
Chapter 13, on the other hand, takes quite a bit longer. The time bracket for successful completion of a Chapter 13 claim is between three and five years, as all debts will be paid off slowly without asset liquidation. Therefore, if you plan to file for Chapter 13, it may be a good idea to settle your divorce first so you are not left in limbo for years following the initial petition for bankruptcy.
Qualifying for Chapter 7
If you do intend to apply for Chapter 7, a joint filing may act as a hindrance, depending on your income level. A means test is conducted to determine whether or not your income is low enough to be eligible for a Chapter 7 proceeding. Incomes that fall below the median for their region are the only ones that qualify, and the income considered is that of the household.
Therefore, if you and your spouse file a joint bankruptcy claim in Arizona and your combined incomes put you at or above the regional median, you will be ineligible to proceed under Chapter 7. Even in cases where each individual’s income is below the median, the combined higher income will disqualify you.
When divorce and bankruptcy occur near to or because of each other, many considerations are added on. There are multiple factors unique to each case that will determine the best way to proceed and our Phoenix bankruptcy lawyers will be able to help you better understand those that affect your particular case. The most efficient and effective way to make these processes work for your benefit is by consulting with a professional. Contact us for a free initial case evaluation.
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Bankruptcy Exemptions 16 Apr 2024 9:47 AM (11 months ago)
Arizona Bankruptcy Exemptions
If you are filing for Chapter 7 bankruptcy, all the assets you need will likely be exempt. This means these assets will not be considered in the bankruptcy process. Your assets will be yours to keep. There are notable exceptions. For example,if you have jet skis and vacation homes, maybe not exempt. However, if you owe a reasonable amount on your home and car, probably exempt. Most people keep their home and car, everything in their home, and most other things in a chapter 7 bankruptcy. Even business assets can be exempt in a personal bankruptcy. With the recent changes in Arizona bankruptcy exemptions, and the new Arizona homestead exemption law, it is worth a closer look.
Can I Keep My Home if I File Bankruptcy?
Yes, people nearly always keep their home through the bankruptcy process. Here’s how.
Arizona has a very generous exemption for equity in your home. The Arizona Homestead Bankruptcy Exemption is up to $400,000 if you owned your home for at least three years and four months before filing for bankruptcy. That means that you could have up to $400,000 in equity in your home and still keep it in bankruptcy. If you owned your home for less time, there is a possibility your equity might be capped at a lower amount, and our lawyers can assess your situations.
Equity is the difference between what you owe and what the home is worth. If you owe $300,000 on the home, the home could be worth up to $700,000 and still be exempt based on the $400,000 equity exemption. Valuation is somewhat subjective, so don’t get caught up in the actual valuation. If the Bankruptcy court attempts to get value from the home, the court would still have to pay costs of sale. This is usually 6% to the sales agent. Additionally, sale by a bankruptcy court will rarely bring full value. Therefore, any valuation from Zillow, or even an appraisal, is fluid in the bankruptcy process.
Do I have to Include My Home in Bankruptcy?
The bankruptcy process is not one where you “put the home in,” or “take the home out.” That sounds more like the Hokey Pokey. In bankruptcy, you simply list all of your assets and liabilities. With secured assets, you declare what you owe, and what the asset is worth. Based on this valuation, you will then use the appropriate exemption from Arizona Revised Statutes. Once the asset is properly exempted, you can simply check a box electing to keep the asset, or forfeit the asset. If you keep the asset, you will have to pay the secured lien. If you forfeit the asset, you simply give it back and owe nothing.
What is the Arizona Homestead Exemption?
A.R.S. § 33-1101 – Any person eighteen years of age or over, married or single, who resides within this state may hold as a homestead exempt from execution and forced sale, not exceeding $400,000 in value, any one of the following:
- The person’s interest in real property in one compact body on which exists a dwelling house in which the person resides.
- The person’s interest in one condominium or cooperative in which the person resides.
- A mobile home in which the person resides.
- A mobile home in which the person resides plus the land on which that mobile home is located.
Can we use two homestead exemptions?
Only one homestead exemption may be used, regardless of who is filing. Even if you get divorced, and you lived together on the property when you were married, you could still only claim one $400,000 exemption.
What if I sell my home? Can I still use the homestead exemption?
Yes! If you sell your home, the homestead exemption will attach to the money you get from the sale for 18 months, or until you establish a new homestead, whichever is shorter. This applies whether you sold the property or the property was forced to be sold like in a foreclosure. Be careful though, the homestead exemption does not attach to money you get from refinance. The homestead exemption only attaches to money you get from the sale of the home.
Do I need to register my home to get the homestead exemption?
Unlike other states, like Nevada for one, the homestead exemption automatically attaches in Arizona. You do not need to register or declare the homestead exemption, except on the bankruptcy petition.
1215-DAY RULE IN BANKRUPTCY
The U.S. Bankruptcy Code limits the homestead exemption. If you file for bankruptcy within 1215 days of buying your home, you do not get the full amount of Arizona’s homestead exemption. Why 1215 days? We don’t know. The U.S. Congress makes this stuff up. Regardless, 1215 days is about 3 years and 4 months. Pursuant to 11 U.S.C. § 522(p), “a debtor may not exempt any amount of interest that was acquired by the debtor during the 1215-day period preceding the date of the filing of the petition that exceeds in the aggregate [$170,350] in value”.
Stripping Liens in Bankruptcy
If a creditor takes a judgment against you, that judgment will automatically attach to real estate in any county the lien is recorded. In Arizona, this is true for real estate you now own, or real estate you buy in the future. The judgment even attaches to homestead real estate. These types of creditors are known as judgment creditors. They may have started out as a credit card or personal loan. However, once they sued and got a judgment, they get special status as judgment creditors.
Judgments will automatically attach to real estate and homestead properties. Therefore, even if you discharge the debt, the judgment lien will still survive the bankruptcy. However, you may have heard of an old technique called stripping liens in bankruptcy. U.S. Bankruptcy Code Section 522(f) (11 U.S.C. § 522(f)) says that a debtor can get rid of a judgment lien that impairs their ability to claim the homestead exemption. In bankruptcy, a debtor can ask the court to declare the lien invalid if it cuts into their homestead exemption amount.
This may sound like a good deal, but in reality it is not used much. The homestead exemption is not applicable to a refinance. The homestead exemption is paid after consentual creditors in the sale of real estate. Consentual creditor are the liens to which you agreed, like a mortgage. Therefore, the judgment creditor only gets paid after the homestead amount of $250,000 is paid to the owner. Because the judgment creditor is not paid until after the homestead amount, it is not normally the case that it interferes with the homestead exemption.
Home Equity in Chapter 13 Bankruptcy
Can I keep my Car if I File Bankruptcy?
Yes, almost everyone is able to keep their car in bankruptcy. Here is how:
- Exempt Equity – The easiest way to keep your car in bankruptcy is to have less than the exempt amount of equity. Equity is the difference between what you owe and what the car is worth. If you owe $24,000 on the car and the car is worth $30,000, you have $6000 in equity. If you owe more than the car is worth, you have no equity, or negative equity.
Vehicles are conditionally protected by exemption laws. $15,000 of your car’s equity is exempt and untouchable. If you are disabled, that exemption rises to $25,000. If you have little equity in your car or its value falls at or below the $15,000 limit, there is little chance it will be of any interest to the court.
- Bankruptcy Planning – Even if your car has too much equity, the equity is only measured on the filing day. If you have more than the exempt amount of equity in your car, go get a title loan. The title loan will increase the amount you owe on the car. Make sure that if the car were sold, there would be less than the exempt amount of equity left. That way, the court will not be interested. For example, if you have a car that is paid off, and it is worth $19,000. Go get a $5000 title loan. Use the money to pay for necessities like paying your car payments, rent or utilities ahead. Then when you file, you have less equity in your car. It’s not illegal, as long as you are paying the loan back and you do not have the cash at the time of filing.
- Lazy Creditors – Check if your lender properly secured against the vehicle. You can do this at azmvdnow.gov. If the creditor failed to secure against the vehicle, you might have more equity than you think. Additionally, Registration loans are not secured against the car. A registration loan is just a personal loan and will not reduce the equity.
- Redemption – If you owe a substantial amount more than the car is worth, you might consider redemption. This is a motion with the court to buy the car for what it is worth, regardless of what you owe. It is the same to the court because if you forfeited the vehicle, they would have to sell it anyway. They just as well sell it to you. This is a good option, but you would have to come up with the money to pay for the car. There are some companies who will do this for you. 722redemption.com is one of them. A lot of law firms will not file these motions anymore since the Arizona bankruptcy judges stopped allowing payment for them. But it is still an option.
- Keep and Pay – A sneaky way around being upside down on a car is called a Mustafa Order. This is an order made up by the court where you keep the car and just keep making payments. Once you are finished with the car, you can just tell the creditor to come and get it. You are not responsible for any of the negative equity or arrears on the car. This is a great way to keep your car, but still be able to get rid of it whenever you like. Some attorneys will not do a Mustafa order. It required an extra court appearance. You should not have to pay for this extra appearance. Ask the lawyer if he does Mustafa orders for free. If not, call us. We do.
- Get a New Ride – Usually your best option is just to get a new or different car. You will normally qualify for a different car immediately when you file bankruptcy if you have not had a foreclosure in the last two years. You will have no debt and are able to make a monthly payment. You are a car salesman’s dream. If you need help with this, we have a dedicated car broker that can get you a loan the day you file and he will find a car for you, too. New cars are fun. Variety is the spice of life.
Can I keep my Furniture?
Can I keep my Retirement Fund?
Can I keep my Pensions?
Stop Wage Garnishment
Living Expenses
Up to six months of food and fuel expenses are immune from being seized as assets to pay off debt during your Chapter 7 case. This means certain funds you have saved may be protected, and you can continue to live decently while you are under bankruptcy to get your financial life back on track.
You can also have $5,000 in one bank account exempt. If you are married, you can have up to $10,000 in one account or each spouse can have their own account with $5,000.
The above are but a few of the examples of exemptions in. There are many more, and some can be relatively far-reaching. To obtain an exhaustive list or to get an assessment of what pieces of your property could likely stand exempt from Chapter 7’s liquidation procedures, contact one of our knowledgeable bankruptcy attorneys today. We are open seven days a week with extended hours to serve you and answer any questions you may have concerning the bankruptcy process.
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Bankruptcy Means Test 16 Apr 2024 9:26 AM (11 months ago)
The simplest way to define a means test is as an official assessment of and investigation into the financial circumstances of an individual. Means tests are used in the realm of bankruptcy to determine eligibility for a Chapter 7 filing in Arizona. But what exactly does a means test entail, and how does it affect your filing for bankruptcy? Our Phoenix bankruptcy lawyers can help answer these questions, among others.
What Is a Means Test?
The means test is a system of assessment to help prevent the abuse of Chapter 7 bankruptcy and regulate its use. Individuals seeking to file for Chapter 7 are required by federal law to submit their financial information for investigation before their filing process can begin. Once the information is received, your average monthly income over the past six months is weighed against the median income for those in your region.
If you fall below the median income, you will likely qualify for a Chapter 7 filing. If you are at or above our area’s median income, you will generally be directed to pursue a Chapter 13 bankruptcy filing, which will require you to pay any debts not absolved within a given timeframe.
Why Is This Test Necessary?
Chapter 7 was created to assist those who truly could not pay their debts, but later was overused by those who had the means to settle without aid. In 2005, legislation was passed and new bankruptcy laws tightened the eligibility requirements around Chapter 7 qualification, and the means test was one of the measures taken. This ensures those unable to pay their debts are given the assistance they need, while those who need a different level of assistance are cared for, as well.
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Benefits of Chapter 7 Bankruptcy
Many hope to receive Chapter 7 over Chapter 13 because of its increased capacity for change. When filing for Chapter 7 in Arizona, the debtor can receive an entirely fresh start with the majority of his or her debts discharged. He or she may have some assets liquidated in the process, but by the end of the 3 to 6-month bankruptcy process, he or she will be entirely debt-free.
Chapter 7 also imposes no limitations on the amount of debt that can be handled, and the discharging of existing debt is handled quickly and efficiently. Moreover, with all payments made, the debtor emerges free of future payments or obligations and can retain all of his or her earnings. A Phoenix bankruptcy lawyer can help you determine whether or not filing for Chapter 7 is best for your financial situation.
Passing the Means Test
Upon successfully passing the means test, you are qualified to file under Chapter 7 for bankruptcy. Once this is determined, it is time to begin assessing your assets and costs. Chapter 7, also known as liquidation or straight bankruptcy, often requires some of your assets be sold to repay your debts; however, there are ways to protect the assets you hold most dear. Every state offers some level of asset exemption, and working with a bankruptcy lawyer in Phoenix, AZ could get your vehicle and your home removed from harm’s way. When embarking on this path, check that the things you value most are safe. Relying on a knowledgeable advocate is the best way to do so.
What Happens if I Don’t Pass?
If you do not pass, it doesn’t mean you are unable to file for bankruptcy. A skilled Phoenix bankruptcy attorney can work with you to help set up a Chapter 13 claim in Arizona and still get your assets under control. Alternatively, there are options outside of filing for bankruptcy you might consider if you are financially capable of paying back your debts, such as debt consolidation. If you don’t qualify for Chapter 7 and are reluctant to pursue Chapter 13, talk with your banker or a financial adviser to learn what alternatives may benefit you.
Contact us today if you think Chapter 7 or Chapter 13 might be right for you.
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Bankruptcy and the Elderly 16 Apr 2024 8:05 AM (11 months ago)
The Phoenix bankruptcy lawyers at Bankruptcy Law Network understand that the aging process can be a financially difficult time. As we grow older, medical bills accrue and pensions have begun to decrease along with social security allotments. These factors, combined with disabilities common to the elderly, can preclude them from working, meaning that old age is one of the easiest times to fall into large debt. There are some benefits for seniors above other citizens when it comes to filing for bankruptcy in Arizona, and filing can help in many cases. Some of the ways seniors are particularly well-suited for a bankruptcy claim and some examples of how the process can help them live more comfortably are listed below.
Medical Bills
Medical bills are, unfortunately, one of the leading causes of excessive debt in the U.S. This is particularly true among senior citizens, meaning that they, more than anyone, may benefit from having this debt discharged. One of the primary functions of bankruptcy is the removal of medical debts and costs. Chapter 7 bankruptcy in Arizona, for example, has the ability to entirely remove medical bills within the span of a few months.
That said, if you plan to file for the sake of removing your medical debt, it is important to wait until all costly medical procedures have concluded. Bankruptcy will only eliminate existing debts, so if ongoing treatment is occurring, it may be wise to wait until it has concluded to file.
Home Equity
Often, by the time we become senior citizens, we have allocated our resources to ensuring we own our homes outright. This means a substantial portion of equity has usually been allocated to the home, and it is important that this remains safe during bankruptcy proceedings. Many states, Arizona included, provide home exemptions that will help protect your property. In Arizona, up to $150,000 is exempt from liquidation during a bankruptcy proceeding. If your home has a higher value than this, it is a good idea to speak with a Phoenix, AZ bankruptcy attorney regarding ways to protect your house.
Retirement Accounts
One benefit especially helpful to the elderly is that most pension and retirement accounts stand exempt from liquidation during Chapter 7. The money you have spent years putting back will not be jeopardized by filing bankruptcy, and if it is your primary source of livelihood, you may rest assured knowing that the Chapter 7 proceedings cannot garnish any of your money from those sources. It should be noted that only legitimate retirement accounts, such as 401(k)s, 403(b)s, state or district pensions, and IRAs are protected. If your assets lie in other types of accounts, they may be subject to confiscation.
Social Security
When attempting to file for bankruptcy, each person needs to submit their financial records for analysis to determine eligibility. This analysis, called a means test, weighs individual income against the median income for the state and decides. Chapter 7 bankruptcy is determined a viable option based on its findings. If your income is below the median for your area, you are safe to file under this chapter. If not, you’ll be forced to file under Chapter 13 bankruptcy.
Seniors have an advantage in this area, as well. Social security payments received are not appraised in the means test, meaning that if your primary income is social security, you will almost certainly qualify. There are instances in which the analysis can find an excess of disposable income and a rejection could result, but if your salary falls below the median, you are generally free to pursue Chapter 7.
Filing for bankruptcy in Arizona is a huge decision, and one that is best undertaken using the guidance of a seasoned Phoenix bankruptcy lawyer. For information on the pros and cons of filing for your specific situation, contact one of our bankruptcy attorneys.
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Discharging Taxes 16 Apr 2024 7:53 AM (11 months ago)
When it comes to discharging or eliminating tax debt in Arizona, there are many factors to keep in mind and a knowledgeable Phoenix bankruptcy lawyer at Want A Fres Start can help you every step of the way. For instance, many tax debts are exempt from discharge by design, and even if bankruptcy is successfully filed, they will need to be paid during or after the bankruptcy proceedings. There are, however, exceptions to this generalization, and some taxes can be discharged through the filing of bankruptcy if the circumstances are right. It’s important to work with a legal advocate experienced in bankruptcy cases before making a decision. Some examples of instances where tax debts may be discharged by way of filing for Chapter 7 bankruptcy are included below.
Tax Debt Was Not Accrued Willfully
If your tax debt was accrued through willful tax evasion or fraud, it is likely that it will be ineligible for discharge; however, if you came by your debts innocently, there is a possibility the debts may be expunged. Clerical errors, timing issues, and unsuccessful attempts to pay your taxes in full are potential explanations for tax debt which may be acceptable to the court when choosing whether or not to allow the costs to be discharged.
A Tax Return Was Filed
To discharge your debt in Arizona, a tax return must have been filed for the time period for which you hope to be forgiven payment. This return must have been filed at least two years prior to your filing for bankruptcy, and it must be submitted on time. Many courts will not accept late returns as a determining factor in getting tax debt discharged.
The Debt Is From Income Tax
Certain taxes, such as fraud penalties or payroll taxes will never be eliminated in court. Income tax, however, is a different story. If you are hoping to have tax debt removed during your bankruptcy proceedings, be aware that unless the debt in question is from income tax, the likelihood of success is very low. An experienced Phoenix bankruptcy lawyer will be able to help you determine if your taxes are eligible for elimination.
The Tax Debt Is Three Years Old or More
The only way a tax debt may be considered for elimination is if the debt was originally due at least three years prior to the proposed discharge. More recent tax debts will not be forgiven, so look into your record to ensure the debts you are hoping to discharge have a due date of three years or more from the day you began filing for bankruptcy.
The “240-Day Rule” Applies
The Internal Revenue Service (IRS) has to have assessed the debt no less than 240 days before you initially file for bankruptcy. This limit may be altered if the debt was suspended by the IRS because of a prior bankruptcy filing or if there was an offer standing in compromise. Additionally, if the IRS has yet to assess your debt, this rule does not apply, and the debt can be brought up for consideration of discharge.
If all of the previous conditions are met, the debt will likely qualify for discharge; moreover, there may be extenuating factors that could broaden the scope of eligible debts. The following tax debts, however, are not eligible for discharge and should not be brought into a bankruptcy proceeding in Arizona:
- Taxes withheld by an employer from an employee’s paycheck
- Taxes that have a federal lien placed on them
- Tax debts from returns that were never filed
As with all portions of bankruptcy, consult a knowledgeable professional for answers to your questions and advice on the best way to proceed. If you would like additional information about tax discharged, contact us to speak with a seasoned Phoenix bankruptcy attorney today. We are available 7 days per week and are happy to make this process as easy and stress-free as possible.
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Will I Lose Everything in Chapter 7 Bankruptcy? 16 Apr 2024 6:50 AM (11 months ago)
Many people who are considering bankruptcy are worried that filing for bankruptcy will leave them destitute and penniless. This impression tends to arise when people first start looking into bankruptcy and discover that the most common type of consumer bankruptcy, Chapter 7, involves the liquidation of a debtor’s nonexempt assets in order to pay his or her outstanding debts. When faced with the option of losing everything they own and hold dear or staying in debt indefinitely, many people often choose the latter, and their inaction results in them getting further and further into debt with no end in sight.
If this sounds familiar to you, we have some good news. You will not lose everything if you file for Chapter 7. In fact, there is a chance that you will not lose anything at all. Our experienced bankruptcy attorney is thoroughly familiar with the U.S. bankruptcy code and knows how to help his clients get the most out of bankruptcy. To schedule a free consultation with a bankruptcy lawyer, call our office today at 866-780-4855 or send us an email through our online contact form.
There are Significant Exemptions Available
To understand why you will not lose anything, it is important to understand how Chapter 7 bankruptcy works. As mentioned above, the fundamental premise of Chapter 7 is the liquidation of a debtor’s nonexempt assets in order to pay off outstanding debts. Upon the completion of the bankruptcy, the debtors remaining debts are discharged (except for a few very narrow categories of debt that are generally nondischargeable).
The operative word that many people unfamiliar with bankruptcy miss in this explanation is “nonexempt.” Assets that are exempt from bankruptcy are not reachable by the bankruptcy court, which means that they will not be part of the bankruptcy estate to be liquidated. There are exemptions available for various categories of assets, and in many states, you can choose between using the exemptions available under federal law and those available under state law. While there are some unlimited exemptions, people may typically only exempt up to a certain value of assets in a given category. Types of property that usually fall within an exemption include the following:
- A certain amount of equity in your home
- Vehicles, up to a certain value
- Clothing
- Pensions
- Appliances
- Work tools
- Public benefits
- Retirement accounts
- Cash
- Civil judgments
- Furniture
Hopefully, this explanation and list of exemptions are making you feel a little more comfortable with the idea of filing for Chapter 7. Here’s another fact that may make you feel even better: most Chapter 7 bankruptcies are zero-asset bankruptcies, which means that the debtor has no assets that can be reached by the bankruptcy trustee. This means that the debtor files for bankruptcy, loses nothing, and has his or her debt eliminated by the court.
Bankruptcy Has Immediate Benefits
While the discharge is clearly the most notable benefit of filing for bankruptcy, your life can significantly improve the moment you file. This is because of the automatic stay, which is an injunction that goes into effect when you file for Chapter 7 that prevents your creditors from making any attempts at collect on debts. This means that they cannot call, write letters, repossess property, foreclose on your home, or take any other collection action. In addition, any lawsuits that were pending at the time of your filing will be placed on hold until the conclusion of your bankruptcy case. If the lawsuit was in regard to the collection of a debt, it is possible that the debt will be discharged by your bankruptcy, in which case the lawsuit will not recommence after your bankruptcy has concluded.
Your Financial Situation May Improve Immediately after the Conclusion of Your Case
Another concern that many people who are considering bankruptcy have is that it will “destroy their credit” and make it impossible for them to buy a home, car, or obtain credit for years. If you are considering bankruptcy at all, there is a good chance that you are already behind on your bills and unable to keep up. As a result, your credit is probably already poor, and unless you expect a windfall or a significant increase in your income, will continue to remain so. By taking action and filing for bankruptcy, you will eliminate most, if not all, of your outstanding debts that are showing up on your credit report as collections and obtain a fresh financial start.
While it is certainly true that your bankruptcy will remain on your credit report for years, that fact will not prevent you from buying a home, financing a vehicle, or getting a credit card the entire time it appears on your report. In fact, because creditors are aware of the fact that people who have filed for bankruptcy are typically debt free, they often are happy to extend them credit – albeit at a higher interest rate. To many people, the elimination of debts that were hanging over their heads along with a clean slate (with the exception of the bankruptcy itself) is a welcome change from the unmanageable hamster wheel of debt they were facing prior to filing for Chapter 7.
Call Us Today to Speak with a Chapter 7 Bankruptcy Attorney
If you are in debt and are having trouble keeping up with your financial obligations, Chapter 7 bankruptcy may be able to help you. Filing for bankruptcy is a big decision, however, so you should be sure to explore all of your options and speak with an experienced bankruptcy attorney before taking any action that could affect your legal rights. If you do choose to file for bankruptcy, the assistance of an attorney can ensure that you take full advantage of all available exemptions so that you obtain the best possible available under the law. To schedule a free consultation with an experienced bankruptcy attorney, call our office today at 866-780-4855 or send us an email through our online contact form. We are qualified to represent clients in the states of Arizona, Colorado, and Nevada.
The post Will I Lose Everything in Chapter 7 Bankruptcy? appeared first on Bankruptcy Law Network.
Stop Creditor Harassment 16 Apr 2024 5:52 AM (11 months ago)
There are laws and regulations in place to offer relief to those who find themselves overwhelmed by debt and to give them hope that a resolution can be found. These laws also to preclude creditors and debt collectors from acting in a harassing manner toward those indebted to them; however, there are particular parties – such as first party or in-house collectors – exempt from many of these regulations. Though use of obscene language, repetitive calls, or threats are all outside the acceptable realm of conduct, many who have outstanding debts feel harassed by collectors, and often with good reason. At Bankruptcy Law Network, our compassionate Phoenix bankruptcy lawyers understand the toll harassment from creditors can take on your life and will help you put an end to it.
One of the most efficient ways to resolve creditor harassment is by filing for bankruptcy in Arizona. As soon as the initial petition for bankruptcy is filed and the preliminary procedures have begun, an automatic stay comes into play. This is a court ordered remedy by which collectors are prohibited from harassing or even contacting the debtor. An automatic stay can do much toward reducing the amount of interference from creditors. The following are a few examples of ways an automatic stay gives debtors’ peace of mind while they manage their debts and finances.
Ensuring Your Wages Aren’t Garnished
The threat of wage garnishments is one of the most serious and alarming a collector can make. The idea of a portion of your paycheck being removed before it even transfers to your bank account can leave you feeling powerless, but our skilled Phoenix bankruptcy attorneys can help. When an automatic stay is in place, wage garnishments will be instantly ceased. Your full salary will continually be awarded to you, and you may later qualify to have previous wage garnishments discharged during your bankruptcy.
Preventing the Collection of Overpayments
Overpaid public benefits can go unnoticed. If you have mistakenly spent the excess money you’ve received from the government, generally, you will be asked to repay the difference. Automatic stays prevent those funds from being accessed, allowing you to keep the money you received and the over-payment can be discharged
Preventing Foreclosure
Foreclosure or repossession of your home is another alarming threat made by creditors. If your home is currently being foreclosed upon or may enter foreclosure soon, it may be a good idea to consider filing for bankruptcy. As soon as the automatic stay is in place, foreclosure proceedings are halted until the end of the process.
Guarding Against Eviction
If your Arizona landlord has not acquired a judgement for possession and you are behind on your rent, beginning bankruptcy proceedings may prevent them from evicting you from your rental. Automatic stays are put in place to protect those in the process of filing for bankruptcy, and one of the ways they do this is by preserving residency. An experienced Phoenix bankruptcy lawyer will be able to provide you with additional information regarding how you can guard yourself against eviction.
Keeping Utilities Connected
Falling behind on utility payments can bring major consequences, among them having your water or electricity shut off. These things can be inconvenient, at best, to very detrimental in your day to day living. Fortunately, the automatic stay is able to come to your aid in this instance, as well. The stay will prevent utility providers from disconnecting services from you due to lack of payment until the proceedings are finished. You will still need to pay future bills, but past delinquencies won’t work against you and are possible debts that can be discharged in your bankruptcy.
Automatic stays in Arizona are not a cure-all for every sort of debt, but they do work in your favor to prevent collectors from contacting you regarding your debts. While the stay is in place, barring a creditor’s Motion to Lift the stay, no creditor or collector will be permitted to contact you concerning what you owe until the proceedings are at an end. By that time, you’ll likely have settled your debts. Contact a Phoenix bankruptcy attorney to learn how an automatic stay can help you, and what the exceptions to an automatic stay are.
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