o Bankruptcy is a Federal Program that allows individuals in debt to start fresh. There are two types of personal bankruptcy, Chapter 7 and Chapter 13. In a Chapter 7, most unsecured debts are discharged and personal assets are protected. A Chapter 13 requires
reorganization of the debts and repayment to a trustee based on disposable monthly
income.
• How do I get the creditors to stop their harassing phone calls?
o One way to stop these creditors is to file a bankruptcy petition. When a debtor files an “automatic stay” is in place that prevents them from contacting you directly. Another option is to pursue a “Fair Debt Collections Practices Act” violation. Get the education you need to know your rights and make an informed decision.
• Have the laws made it harder to file?
o In 2005 Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act requiring pre and post filing educational courses and the Chapter 7 Means Test (among other things). Qualification is based on income and whether you are able to pay back your debts.
• Am I eligible to file a Chapter 7 Bankruptcy?
o Since the new law came into effect in 2005, debtors must be below the average income for their household. A Chapter 7 Means Test is used to compare your income to expenses and determine if you are unable to repay debts.
o Debts generally come in two forms: secured and unsecured. Secured debts are typically collateralized by a house or car. Unsecured include credit cards, lines of credit, pay day loans, signature loans and lawsuits. Most unsecured debts are discharged in a bankruptcy (given they were not incurred within 90 days). Secured debts can be discharged and the collateral lost. If debtors wish to keep secured assets they must stay current on payments. Chapter 13s are utilized to get current on payments and protect non-exempt equity in secured assets of personal property.
o We pull your credit report to ensure all your creditors are listed. Once listed these creditors may not sue you for the debt. If you report shows a zero balance you may omit these creditors from your bankruptcy. However, be aware that if the credit report is inaccurate and there is actual debt on the account, you will be liable post-discharge.
o Arizona Exemptions allow you to protect equity in your assets. For example, the Homestead exemption protects up to $150,000 of equity in your primary residence. Each debtor is allowed $5000 in vehicle equity. Ask us for a complete list of Arizona Exemptions.
• Can I file my own bankruptcy?
o Bankruptcy is like taxes, you can file your own. Keep in mind that you must follow the law AND the specific procedures that your bankruptcy trustee requires. There are approximately twenty Chapter 7 trustees in Arizona, and no uniform trustee procedural code. Mistakes on your bankruptcy petition and schedules could prolong your discharge and result in a dismissal of your case. It is always wise to have an experienced professional on your side to ensure proper filing. Furthermore, knowing you have a great attorney on your side will reduce your stress.
• Pre-Bankruptcy Preparation: What do I need to know?
o This is a very important aspect of your bankruptcy. What you do in the months and years before your bankruptcy may significantly affect your case. It is imperative that you seek professional advice to adequately protect your rights and assets. Every action you take could be detrimental.
o These many times go hand in hand. Financial stresses can be very taxing on a relationship and many times couples are faced with both a bankruptcy and divorce. It is imperative to get proper advice on the ramifications of a divorce in a bankruptcy. I.e. accepting responsibility for community debts in a divorce decree may result in an inability to discharge that debt in a bankruptcy.
• Can I discharge my student loans in a bankruptcy?
o As a general rule, student loans are not dischargeable in a bankruptcy. However, filing a bankruptcy relieves you of credit card and other unsecured debt, therefore, you can focus on student loan repayment.
• Can I discharge my tax liability in a bankruptcy?
o Older taxes are dischargeable in a bankruptcy. There are strict timing and assessment requirements that must be met. Our experienced attorneys will educate you on the process and determine if you qualify to have your debts discharged.
