Understanding Arizona Bankruptcy Better

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HOW LONG DOES THE BANKRUPTCY PROCESS TAKE?

Obviously no two bankruptcies are exactly the same.  Typically, a Chapter 7 bankruptcy can take about four months (from the time of filing to the final discharge.) A Chapter 13 bankruptcy can take 36 to 60 months to entirely complete.

WHAT IS AN AUTOMATIC STAY?

When a bankruptcy is filed, an automatic stay is put into effect.  This means that ALL CREDITOR COLLECTION ACTIVITY MUST STOP.  Wage garnishments, bank levy, collection phone calls, foreclosures, repossessions…  under bankruptcy protection, the automatic stay requires creditors to immediately cease and desist all collection activities.

WHAT PROPERTY WILL BE PROTECTED IF I DECLARE BANKRUPTCY?

Arizona has exemption laws.  If you have lived in AZ for two years or more prior to filing your bankruptcy, you can typically protect your property under these laws.

WHAT IF I NEED TO FILE BANKRUPTCY, BUT I’M A BUSINESS OWNER

The answer here is to contact My AZ Lawyers.  This is a perfect example of a case that needs the attention of a knowledgable and experienced AZ bankruptcy law attorney.  My AZ Lawyers will determine which type of bankruptcy is best for your situation. The lawyers will hear your issues and concerns and help you decide which options are best to meet your financial goals both personally and for your business.

WHAT ABOUT MY STUDENT LOAN DEBT? 

It should be noted that it is virtually impossible to discharge student loans in any type of bankruptcy.

How Can a Gilbert Bankruptcy Attorney help me with my debt relief needs?

There are many ways a Gilbert bankruptcy attorney can help you if you are struggling with debt. A bankruptcy attorney can help you determine which chapter you qualify for, and which is better for you if you qualify for both. A bankruptcy attorney can help you apply all the appropriate exemptions to your possessions, and make sure all of your creditors are included in your petition and properly notified. A bankruptcy attorney will also take care of drafting and filing your petition, which will likely be well over 50 pages long. If you proceed pro se, or without an attorney, that responsibility will be yours alone.

What Different Chapters of Bankruptcy Can You File in Gilbert, Arizona?

Most residents of Gilbert, Arizona choose between Chapter 7 and Chapter 13 when filing bankruptcy. To qualify for Chapter 7, you must qualify through one of two ways. The first is by making less than the median income for your family size in Arizona. The monthly median income for a one person household is $4,597. That number increases to $5,760, $6,220, $7,056, and so on as you add family members. Otherwise, you can use the Means Test to prove that you don’t have enough disposable monthly income to pay your debts. If you make too much to qualify for Chapter 7, you will likely be eligible for Chapter 13.

What Does it mean to Declare Bankruptcy in Gilbert, Arizona?

When you declare bankruptcy in Gilbert, Arizona, it means you are seeking court protections while either liquidating or formulating a plan to reorganize your debts. When you file both Chapter 7 and Chapter 13 bankruptcy, the Automatic Stay of Protection goes into effect. When the stay is active, your creditors may not repossess your property, foreclose your home, or garnish your wages. The stay remains effective until your case is either discharged or dismissed.

Do I Have to have a certain amount of debt to file bankruptcy?

There is no minimum amount required to file bankruptcy, but we typically urge clients to pursue other methods of debt management if they only have a few thousand more in debt than bankruptcy would cost. Chapter 13 actually has debt limits. Those that file Chapter 13 must have no more than $419,275 in unsecured debt and $1,257,850 in secured debts.

Does my spouse have to file bankruptcy if I file?

Your spouse has the option to be included in your bankruptcy with a joint bankruptcy petition. Both of your debts, community and separate, will be discharged in a joint bankruptcy. However, if you file an individual petition, community debts will only be discharged as to your name. Your spouse will be protected from creditor collection on community debts as long as you remain married. Your spouse will not be protected from creditor collection on their separate property debts if you file an individual bankruptcy petition. You should discuss whether your debts are community or separate property with an attorney before making this decision.

If I File Bankruptcy in Gilbert, Arizona; Who will find out?

You will list all of your creditors in a creditor mailing matrix so they can automatically be notified when your bankruptcy petition is filed. This ensures that your creditors are aware of the Automatic Stay, which prevents them from pursuing collection efforts like repossession, foreclosure, and wage garnishments. Any co-signers on your loans will also be notified of your filing. If you rent, you will need to list your landlord on your bankruptcy petition, but can select an option to omit your landlord from the creditor mailing matrix. Bankruptcies are a matter of public record, so anyone who searches the bankruptcy dockets for your name should be able to find it.

Can I keep my home if I file for bankruptcy in Gilbert, Arizona?

If you file Chapter 7 bankruptcy in Gilbert, Arizona, your homestead exemption will be $150,000. This means you can have up to $150,000 equity in your home. You must remain current on your mortgage payments if you wish to keep your home through Chapter 7 bankruptcy.

If you file Chapter 13 bankruptcy, the homestead exemption won’t apply in your case. Instead, your mortgage payments- including any arrearages- will be worked into your payment plan. This can be crucial if you are facing foreclosure. Bankruptcy’s Automatic Stay will protect you from foreclosure during the course of your payment plan, and your past-due balance will be easier to repay when it is spread out over the course of 3-5 years.

Will I Lose all of my possessions with a Gilbert Bankruptcy Filing?

Just like your house will be subject to a homestead exemption in a Chapter 7 bankruptcy filing, there will be exemptions that apply to the rest of your possessions. For example, the exemption for your vehicle will be $6,000. You may either own one vehicle worth up to $6,000, or finance a vehicle with less than $6,000 equity. If you are married, you may have two $6,000 vehicles or one $12,000 vehicle. The exemption increases to $25,000 if you have a disability that requires a specialty vehicle. You may also have $6,000 in household goods and furnishings, $500 in clothing, and wedding rings worth no more than $2,000. There are plenty of other exemptions in Arizona, but one to note is that there is a $300 exemption for one bank account. That exemption increases to $600 if you are married. This means that on the day your bankruptcy petition is filed, you must have less than that amount in your bank account, or it can be seized by your bankruptcy trustee.

Can I ever get a credit card after filing bankruptcy?

Your credit cards will be frozen by the Automatic Stay, so you won’t be able to use them during bankruptcy. However, you will likely receive offers for new credit cards once your bankruptcy has been discharged. While you should be cautious about incurring new debt, opening a new line of credit can be a great way to improve your credit score post-bankruptcy. You may also want to consider getting a secured credit card. Offered through most banks, these are prepaid credit cards that can help rebuild your credit without the risk.

Does Filing Bankruptcy Wipe Out Medical Debt?

Medical debts are unsecured, non-priority debts. These are exactly the types of debts for which Chapter 7 bankruptcy was designed. However, your doctor may choose to stop treating you if you discharge their unpaid bills, so keep that in mind when declaring Chapter 7 bankruptcy. In Chapter 13, medical debt will be in the last category of creditors paid in your plan. If you only have enough income to pay off higher priority debts in your payment plan, medical bills will be discharged without repayment.

What is a Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a process that usually takes 4-6 months, and wipes out unsecured, nonpriority debts. There are income limits, frequency limits, and property value limits known as exemptions when filing Chapter 7 bankruptcy. Some debts, like child support, won’t be liquidated in a Chapter 7 bankruptcy.

What is a Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a debt reorganization payment plan. Your plan will last 3 years if you make less than the median income for your family size, and 5 years if you make more than that amount. Your payment plan will be calculated by determining how much you can afford to pay towards your debts each month (disposable monthly income) and the order in which your debts should be paid.

How Do I Know which Chapter of Bankruptcy that I Should File?

The first thing you should do is check that you qualify for both chapters. If you do qualify for both Chapter 7 and Chapter 13, you will need to review your debts to determine which is best for your situation. If you have mostly unsecured debts like credit cards and medical bills, Chapter 7 may be best for you. If you are behind on non-dischargeable payments like child support and alimony, Chapter 13 will give you a more realistic path to catch up. Chapter 13 also makes it easier for people who are behind on house and vehicle payments to catch up without losing the property to repossession.

Is there such a thing as a $0 Down Bankruptcy Filing for people in Gilbert?

Many of our Chapter 7 clients qualify for our Gilbert $0 Down Bankruptcy program. In this program, clients will pay no money up front to have their bankruptcy petition drafted and filed. Payments will begin within 30 days of the petition being filed. Our payment plans are 0% interest and include credit reporting, so your timely payments will help increase your credit score post-bankruptcy. Call today if you have more questions about our $0 Down program and would like to see if you qualify.

If I File Bankruptcy in Gilbert, will I have to go to court? 

Whether you file Chapter 7 or Chapter 13, it is mandatory that you attend a hearing known as a 341 Meeting of Creditors. This hearing will likely be short and sweet compared to your mental image of a typical court hearing. Your trustee will have basic questions about your identity and your petition. Your creditors may attend, but this doesn’t happen for most bankruptcy filers. If you file Chapter 13, you will also need to attend a plan confirmation hearing. In this hearing, the trustee will make sure that your proposed bankruptcy payment plan is feasible with your income and expenses.

How much does it cost to file bankruptcy in Gilbert, AZ?

The filing fee for a Chapter 7 bankruptcy is $335, and the filing fee for a Chapter 13 bankruptcy is $310. Attorneys fees are generally considerably higher than filing fees. You can expect to pay more for Chapter 13 representation than Chapter 7, but you may be able to negotiate a small up-front payment and work your legal fees into your payment plan.

What is a bankruptcy discharge?

When a bankruptcy is discharged, it means that it has been successfully completed. You have no legal obligation to repay debts that have been discharged. Once your bankruptcy is discharged, the Automatic Stay is lifted and you can open new lines of credit.