Bankruptcy Preparation: What you NEED to know. So you’re contemplating a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Phoenix, Arizona. You go online, do a little research, are bombarded with information, and most of it leaves you more confused than when you started. The important thing is that you are doing research! Doing your homework and finding a good resource for Chapter 7 or Chapter 13 Bankruptcy is very important in a successful Bankruptcy filing. This Bankruptcy blog will give you some tips and strategies to help you prepare yourself for a smooth transition into a Chapter 7 or Chapter 13 Bankruptcy in Arizona. Anyone contemplating filing a Bankruptcy in Phoenix needs to understand that any and everything you do prior to filing a Chapter 7 or Chapter 13 bankruptcy will be under scrutiny by your Bankruptcy trustee and the Bankruptcy courts. No potential Chapter 7 or Chapter 13 Bankruptcy debtor should rush into a filing. Some firms and bankruptcy attorneys will try to get you to file as soon as possible, however, that could be detrimental to your case. It is imperative that you are careful with the handling of your cash, assets and spending. Otherwise, you will have issues in court, either by the bankruptcy trustee or your creditors. For example, if you have a large sum of cash on hand or in the bank, you must spend these funds in an appropriate way. Chapter 7 or Chapter 13 bankruptcy debtors should not give these funds to friends or family members, the trustee can ask for this money back. They should not go buy luxury items such as jewelry or big screen tvs. They should not hide the cash under their mattress, the trustee can ask for an accounting of the funds. The sum of money should be used for “reasonable and necessary living expenses“. This includes food, gas, health, vision, dental, etc. For a further explanation of this please contact our office and speak to an Arizona Bankruptcy Lawyer. We encounter potential bankruptcy clients who have assets that they “do not want to include” in their bankruptcy. They reason that if they transfer this property to friends or family members, that they won’t have to disclose the asset. WRONG! In a Chapter 7 or Chapter 13 Bankruptcy, we must disclose to the bankruptcy court all assets that were transferred prior to filing. If these assets have equity in them that is non-exempt, then the bankruptcy trustee will either reverse the transfer, or ask for the equity. Either way it’s a lose lose for the bankruptcy debtor. If a bankruptcy client has an asset that is non-exempt, i.e. quads, rv, jet ski, we advise them to sell the property for fair market value, and use the money to pay bills or for “reasonable and necessary living expenses”. Furthermore, concealment of an asset in a Chapter 7 or Chapter 13 Bankruptcy is a federal offense, and carries a significant fine (up to $250,000) and/or jail time. Another area of importance when preparing for a bankruptcy is spending, i.e. credit cards and other lines of credit. Some bankruptcy clients think that they can max their credit cards and take out new loans prior to filing then discharge these debts in their Chapter 7 or Chapter 13 Bankruptcy. WRONG! There is a 3 month “presumption of abuse” time period in a Bankruptcy. This means if the bankruptcy debtor racked up the credit cards, or signed new loans, in the 3 months prior to filing their bankruptcy, the creditor may object to the discharge of the debt, and the bankruptcy debtor would still be liable post bankruptcy. We advise all our clients to cut up their credit cards and live off cash prior to filing their bankruptcy. These are just a few tips to prepare you and ensure you do not spend years in a bankruptcy proceeding, dealing with these issues. Keep in mind that this is general information and each scenario can be much more complicated. It is important to seek further legal advice for all these matters. During our free, hour long, initial consultation we will discuss, in depth, all your issues and advise you accordingly.
Bankruptcy Preparation: What you NEED to know.
Big 5 banks save $20 billion while our bankruptcy clients suffer. I recently read an article from the Huffington Post that upset me. The article stated that the Big 5 Banks (Bank of America, JP Morgan Chase, Wells Fargo, Citi Group, and Ally Financial) have saved an estimated $20 billion since the housing crisis hit in 2007. This profit was gained from shortcuts the banks took in processing distressed homeowner’s loans. This is particularly bothersome to me because we deal with these banks daily, whether helping clients with short sales, discussing foreclosure options, Arizona’s anti-deficiency statute, and most of all in a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. A vast majority of our clients have distressed properties and are looking for a way out. These bankruptcy clients have spent their hard earned dollars on these houses, and made them their homes, only to lose them due to the banks unwillingness to help. A majority of our Chapter 7 bankruptcy and Chapter 13 bankruptcy clients have been in, or are actively pursuing loan modifications. Unfortunately, most of these mods are simply smoke and mirrors. The banks place these distressed homeowners in “trial periods” in order to recoup some funds prior to foreclosing, and that’s the honest truth. Furthermore, many of our clients would benefit from a short sale v. a foreclosure or bankruptcy. The banks have been very difficult to deal with. Even with full offers of fair market value, the bank will reject the offer, only to foreclose at a later time, for far less than the short sale offer. WHERE IS THE LOGIC IN THAT??? As Arizona Debt Relief Agents our goal is to help individuals who come to us get out of debt. First and foremost we explore all non-bankruptcy relief options (short sale, debt negotiation, etc). Many times, due to the banks unwillingess to work with these people, they are forced into Chapter 7 or Chapter 13 Bankruptcy. Hopefully, after reading this blog you can better understand my frustration. I have seen far too many of our bankruptcy clients forced into bankruptcy, though a successful loan modification, short sale, or even debt negotiation would have prevented the bankruptcy. To read the entire article go to the following site: http://www.huffingtonpost.com/2011/03/28/big-banks-save-billions-homeowners-suffer_n_841712.html
A grieving father’s perspective-Dan Marco’s Blog
Read the lastest blog posts from partner Daniel Marco about the tragic loss of his son Zachary Marco. Visit www.mysonzack.wordpress.com
The benefits of an Arizona Chapter 13 Bankruptcy
The benefits of an Arizona Chapter 13 Bankruptcy. Most of you are aware that the vast majority of consumer bankruptcy in Arizona is either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. The key factors in a debtor’s life that effect eligibility in either Bankruptcy Chapter are income, assets, debts and intentions within their Arizona Bankruptcy. In this blog, we will discuss the advantages of filing a Phoenix Arizona Chapter 13 Bankruptcy. Chapter 13 Bankruptcy is often referred to the “reorganization” bankruptcy where debtors will pay back all or a portion of their debts. This Bankruptcy chapter is utilized for high wage earners or debtor’s who have non-exempt assets that they would like to keep. Chapter 13 Bankruptcy is a 3 to 5 year commitment, rather than a 4-6 month commitment in Chapter 7. Bankruptcy Debtor’s are required to pay to make a monthly payment to the trustee, which is determined by their disposable monthly income. A Chapter 13 debtor’s disposable monthly income is calculated using a pre-filing 6 month average gross income (add up the gross incomes for the 6 months prior to filing and divide by 6) minus living expenses. Whatever is left after this calculation is turned over to the Chapter 13 Trustee. Now keep in mind that debtors are not made to fend for themselves, all verifiable reasonable living expenses are used in the calculation. So what does the Chapter 13 trustee do with these funds in an Arizona Chapter 13 Bankruptcy? Here is where we get into the benefits of this Bankruptcy. The funds that bankruptcy debtor’s give to the trustee are used to pay down the debtor’s debts. For example, if a client pays to the Chapter 13 trustee $2000 per month, a portion of the total would possibly go towards secured debts (i.e. car payments), back income taxes, mortgage arrearages (in order to get caught up on payments and keep the house), back child support, and the other portion would go towards the bankruptcy debtor’s unsecured debts (i.e. credit cards, lines of credit). At the endof the 3 t0 5 year term the Chapter 13 debtor will likely have paid off their vehicle(s), mortgage arrearages, and paid back a portion of their unsecured debts. At the end of the Arizona Chapter 13 Bankruptcy term, the remaining unsecured debts are discharged (i.e. if you owe $100,000 of credit card debt and pay back $40,000 in a Chapter 13 plan in the 3 to 5 years, the remaining $60,000 will be discharged). As stated above, a major benefit of a Phoenix, Arizona Chapter 13 Bankruptcy is to get caught up mortgage arrearages. Debtor’s utilize this bankruptcy chapter in order to keep their home. BUT WAIT IT GETS BETTER!!! In an Arizona Chapter 13 Bankruptcy, the debtor may also be allowed to strip their wholly unsecured 2nd mortgage (called the lien strip)! Yes, you heard it right. If the Chapter 13 debtor can prove that their house is worth less than the amount owed on their first mortgage, they can strip the 2nd mortgage, and at the end of the Chapter 13 term, wipe the debt away! So you can pay back taxes, get caught up on mortgage arrearages AND strip your 2nd lien. Furthermore, individuals who have valuable assets (cars, antiques, jewelry), and do not want to jeopardize losing them in a Bankruptcy, can file a Phoenix Arizona Chapter 13 Bankruptcy and likely keep those assets. Here is how it works; if the Chapter 13 debtor pays back to their unsecured creditors the amount of the non-exempt assets value, they can keep that asset. For example, Chapter 13 debtor has a 1966 mustang worth $50,000. Debtor gets a $5,000 vehicle exemption per the Bankruptcy Code, meaning $45,000 is non-exempt. If the Chapter 13 debtor pays to his unsecured creditors at least $45,000 in his Chapter 13 plan, he can keep that asset, and get out of debt. Call us anytime to discuss these benefits in depth, we love talking about them! (480) 540-3815
Dan discusses his recent Mexico trip and how a pair of his son’s sandles connected him to Zack for a short moment. www.mysonzack.wordpress.com
Arizona and Federal Taxes and Bankruptcy
Arizona and Federal Taxes and Bankruptcy It’s the most wonderful time of the year, TAX SEASON!! See lawyers can have a sense of humor too! Tis true it is time to deal with taxes. As we all know there are 2 things that we all absolutely, without fail, no if ands or maybes, no way around it, must do….die and pay those dreaded taxes. It is our monetary thank you to the wonderful State of Arizona and this great country, in allowing us to all share in the dream. What happens to your Arizona and Federal tax returns in an Arizona Chapter 7 or Chapter 13 Bankruptcy? The tips I will give you will allow you to properly prepare your tax filing, spending of the Arizona refunds and federal refunds, and file your Arizona Bankruptcy. In a Phoenix, Arizona Chapter 7 or Chapter 13 Bankruptcy, if you receive your prior years tax refund, State AND Federal, after you file your Bankruptcy, 100% of the refund will go to the Bankruptcy estate. For example, if you file your Chapter 7 Bankruptcy on March 1, 2011 and receive your 2010 Arizona tax refund on March 5, 2011 and your 2010 Federal refund on March 10, your Bankruptcy Trustee will take 100% of the refund, both state and federal. It is imperative that you properly time your Arizona Bankruptcy filing around your tax refunds. Ideally, you will file your Arizona taxes and Federal taxes, get the refunds, use the money on “reasonable and necessary” living expenses (food, gas, clothing, rent, bills, etc.), then file your Arizona Chapter 7 or Chapter 13 Bankruptcy. You definitely do not want to use the money to pay back friends or family members, do not buy luxury/non-exempt items such as big screen tvs and jewelry, and you can not “hide” the money (the trustee’s will find it). Wait it gets a bit more complicated, I know you’re excited. You must forfeit a portion of the Arizona and Federal tax refunds for the year you file your Bankruptcy. For example, if you file your Arizona Chapter 7 or Chapter 13 Bankruptcy in March of 2011, you must send to the Bankruptcy Trustee a file stamped copy of your 2011 tax return (yup that’s right, when you file the taxes in 2012). The pre-bankruptcy filing portion of your Arizona and Federal taxes are property of your Bankruptcy estate. So in our example, since you filed your Arizona Bankruptcy in March of 2011, 25% of the 2011 tax refund is property of the Bankruptcy estate (aka the Bankruptcy Trustee will take 25% of the total refund). In a Phoenix Arizona Chapter 13 Bankruptcy, you must turn over your refund for every year you are in Bankruptcy (Chapter 13 Bankruptcies are typically 3 to 5 years). So what happens if you get a refund from one and owe on another? You are still responsible for turning over any tax refund to the Bankruptcy Trustee. However, we tell our Chapter 7 and Chapter 13 clients to inform the Trustees that the refund will offset the liability. Usually, the trustees are ok with this and will allow you to use the refund to pay what you owe, but there are no guarantees so make sure to discuss this with your Phoenix Arizona Bankruptcy Lawyer. During one of my days volunteering at the Phoenix Arizona Bankruptcy Court Self-help Center, a single mother of 3 came in and told me her Bankruptcy Attorney filed her Chapter 7 Bankruptcy before she received her $7,000 state and federal tax refunds. You guessed it, the Bankruptcy Trustee took all $7,000. This was money she could have used to pay child care expenses, pay rent, pay bills, take care of her family. My heart broke as I had to tell her that there was no way of getting this money back, and that she needed to speak to her Phoenix Arizona Chapter 7 Bankruptcy Lawyer. As she sat there in tears, I thought to myself how negligent her Bankruptcy Attorney was, and how easy it would have been to avoid her losing her tax refund. This is a very confusing yet VERY important subject in a Chapter 7 or Chapter 13 Bankruptcy. If you have any further questions or concerns regarding Arizona and Federal taxes and Bankruptcy please call us at (480) 540-3815.
A BIG win for Attorney Andrea Wimmer!
A Big win for Andrea Wimmer! We at Mostafavi, Marco & Wimmer are pleased to announce that Phoenix Arizona Bankruptcy Lawyer Andrea Wimmer has won a very important decision in front of an 9th Circuit Bankruptcy Judge in Phoenix!! Her case has set precedent in Arizona, and is a huge win for Chapter 13 Bankruptcy debtors filing in the state. In an Arizona Chapter 13 Bankruptcy, there are debt limits that debtors must be under in order to qualify to file a Chapter 13. The secured debt limit (i.e. debt secured against property such as a car or a house) is just over $1,000,000. The Chapter 13 unsecured debt limit (i.e. credit cards, lines of credit, any other debt not secured by collateral) is just over $336,000. If the Phoenix Arizona Chapter 13 Bankruptcy debtor is over these limits they would not qualify, and would need to do a Chapter 7 Bankruptcy (risk losing valuable assets, can not get caught up on mortgage arrearages, can not strip 2nd liens) or Chapter 11 Bankruptcy (5 year commitment and very expensive). In Andrea’s case, the trustee filed a motion to dismiss the Chapter 13 client’s case for exceeding the unsecured debt limit of $336,000. The trustee held the position that the unsecured portion of the Chapter 13 debtor’s 1st mortgage should be included in the unsecured debts. The Chapter 13 Trustee reasoned that because the home is worth less than the total owed on the first mortgage, the portion of the loan that is unsecured should be included as an unsecured debt. If successful in his argument, Andrea’s client would have their Chapter 13 dismissed and be back to square one. Phoenix Arizona Bankruptcy Lawyer Andrea Wimmer held the position that the note on the 1st mortgage is secured by the home, and that it could not be bifurcated (divided into secured and unsecured). She argued her case in front of the judge and the judge ruled in her favor! This not only saved her client’s Chapter 13 bankruptcy, but also was the first case tried in Arizona on this issue. Congratulations to Andrea on this remarkable victory! Her determination to take this issue on and argue successfully for her client is truly inspirational.
A Chapter 13 Bankruptcy Client says thank you
A Chapter 13 Bankruptcy Clients says thank you Throughout our careers Phoenix Arizona Bankruptcy Lawyers Andrea Wimmer and myself have represented hundreds of Chapter 7 Bankruptcy clients. Typically, these individuals come to us distraught with stress, from a mountain of debt, creditor harassment, and fear of the unknown. How will they pay bills and feed their kids? Why wont the creditors work with them when they have made every good faith effort to pay them? When will they be forced from their home? We both keep a box of tissues in our offices because we understand a bankuptcy consultation is an emotional time for people. No one moves forward in life, working hard everyday, providing for themselves and their families, with the intention of getting into financial distress. That is NOT the American dream. In the last 10 years, the American dream has become skewed, and we are experiencing the aftershock. Andrea and I both volunteer at the Self-Help Center of the Bankruptcy Court in Phoenix. We advise clients who file without attorneys on their legal rights and remedies in a Chapter 7 bankruptcy or Chapter 13 bankruptcy in Arizona. One day an older lady came in and i spent about 30 minutes with her consulting about a Chapter 13 Bankruptcy. This life long school teacher spent her life helping others, whether it was her family, students or community. She had recently lost her husband and was unable to organize her debts on her own. She had a son battling a drug addiction, so no help there. All she wanted was to keep her home, pay her debts, and continue her retirement without stress. Ms. Teacher had filed a Chapter 13 Bankruptcy on her own in order to get caught up on missed payments since her husbands passing, because she was unable to pay for the funeral expenses and her mortgage. Her intentions were to pay the bank what she owed. Little did she know that individuals in Phoenix, Arizona who file pro se (without an attorney) Chapter 13 Bankruptcies have a 98% failure rate (it is hard enough for attorneys to get Chapter 13 Bankruptcy Plans confirmed). Ms. Teacher told me that she believed God sent her to the Bankruptcy Self-Help Center that day to meet me. She hired us to take over her case, we revised her Chapter 13 Bankruptcy for her, and submitted the Chapter 13 plan. Last Wednesday we attended the 341 meeting of creditors and after an issue free hearing I noticed her sense of relief. I told her everything would work out great for her, that we would get her caught up on her mortgage payments AND strip her wholly unsecured 2nd mortgage. Her house will become her home again. As she wept with excitement and appreciation she held my hand and said “Thank you Kaveh, thank you for giving me hope and allowing me to want to live everyday. I no longer want to die”. THAT is what this is all about. That is why I am an Arizona Bankruptcy Lawyer. We started Mostafavi, Marco & Wimmer in order to directly help people, face to face, and that day bore the fruit of our labor. And what a sweet fruit it was. I gave Ms. Teacher a hug and we parted ways. As I sat in my car, nearing tears, I thought about the other hundreds of Arizona Bankruptcy clients we have helped and felt an overwhelming sense of satisfaction.
What is a Chapter 7 Bankruptcy?
By now you have all heard your family, friends, co-workers and the guy on the street give their opinion on what a Phoenix Arizona Chapter 7 Bankruptcy really is. Everyone speaks about the stigma and myths, “Oh your life will end as you know it.”, “You will lose everything you own.”, “You can not have a job and file a Chapter 7 Bankruptcy.” Well my friends we are here today, as Arizona Bankruptcy Lawyers, to give you the truth, the whole truth, and nothing but the truth, so help us God (whichever one you believe in). Arizona Chapter 7 Bankruptcy is a federal program that is known as the “freshstart“. We call it the freshstart because many times the debtors move on from their Chapter 7 Bankruptcy discharge debt free, while able to keep their home, cars, and personal belongings. Yes, you heard me right. That is the truth, whole truth and nothing but the truth. In Arizona, each Chapter 7 debtor is allowed exemptions in order to protect their belongings. For example, each debtor in Arizona filing for Chapter 7 Bankruptcy is allowed $5000 of equity protected in their vehicle and $4000 for their household goods. Go to our resources page for a full list of the Arizona Chapter 7 Exemptions. As your Phoenix Arizona Bankruptcy Attorney, our job is to utilize every exemption in order to protect all your property. So no ladies and gentleman, you will not lose everything. So how does one qualify for a Chapter 7 Bankruptcy in Phoenix Arizona? There are income qualifications that you must meet in order to file for Chapter 7 Bankruptcy. Your income level must be below the Arizona average income level for your household size. For example, a single person household average income in Arizona is $41, 915, a two person household is $54,510, etc. What this means is that if you are below these averages, you have a good chance of being eligible for an Arizona Chapter 7 bankruptcy. For those of you over these limits do not fret, simply because you are over median income levels does not mean you automatically are disqualifed from a Chapter 7 Bankruptcy. If this is your case, we sit down with you and calculate the “Mean’s Test” in order to determine if you can repay your debt. In a nutshell, the Chapter 7 Mean’s test compares your income to expenses to determine if you have disposable monthly income per month to repay to creditors. Some individuals come to us and the first thing they say is, “I know I have too much (or too little) debt to qualify for a Chapter 7 Bankruptcy.” Uhhhhh, what? There are no debt limits in a Phoenix Arizona Chapter 7 Bankruptcy. At your free initial consultation, we will determine if a Chapter 7 Bankruptcy is in your best interest by comparing your income, assets and property to your debt. As debt relief agents, we do not only push Chapter 7 or Chapter 13 Bankruptcy, we determine your most advantageous non-bankruptcy debt relief options first, i.e. settling your debt. Now comes the all important myth, that you will never have credit again after a Chapter 7 Bankruptcy. WRONG!!!! Many of our Arizona Chapter 7 Bankruptcy clients call us a year later so excited to tell us that they have 700, 720 or even 750 credit scores. As your Phoenix Arizona Chapter 7 Bankruptcy Lawyers, we will give you tips post-Chapter 7 discharge to help re-establish your credit. So what does this blog teach us? 1) If you have a job you are not automatically ineligible for an Arizona Chapter 7 Bankruptcy. 2) You will not lose your entire lives and be out on the street if you file Bankruptcy. 3) Your debt amounts do not qualify your for a Chapter 7 Bankruptcy in Arizona. 4) You will rebuild your credit and be able to buy things in the future. 5) Breathe and get a free consultation to get educated, you have nothing to lose. Our Chapter 7 Bankruptcy Lawyers (Kaveh Mostafavi and Andrea Wimmer) are always available to address any Chapter 7 Bankruptcy or other debt issues you may have. Do not hesitate to call us and get the information you need to plan your “freshstart” appropriately.
Dan Marco-A grieving father’s perspective
Dan Marco, brilliant lawyer, advocate for the public, grieving father. A successful lawyer for 24 years, a shattered man for 4 months. Since his son Zach’s tragic death in October of 2010 (ASU honor student gunned down in a robbery on the corner of University and Rural in Tempe, AZ for a laptop and cell phone), Dan has devoted himself to helping those who have suffered similar tragedies. He helped a Phoenix family deal with media relations after their young son was shot. He has been active in meeting with representatives of Arizona’s Victim Advocacy boards to extend his helping hand. He has been approached by officials from other states as well. Until now, Dan has been selflessly aiding others, maybe to his own detriment. Grief is a dynamic process and must be handled delicately, and Dan has found a way to reach out to others while finally helping himself. He has started a new blog devoted to his son, expressing his distress, voicing his opinions, so that others may get a glimpse of his world. To say the least, Dan is an amazingly engaging writer. Take a moment to read his work and experience for yourself his gripping work. http://mysonzack.wordpress.com/
