Bankruptcy in Arizona: What it is, What to Do, and How to Decide (What is Bankruptcy Book 3)

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And the law prevents you from transferring your assets out of your name and then filing for bankruptcy at least it prevents you from getting away with it. If you sell something prior to the filing of your bankruptcy case you must sell it for approximately what it is worth. If you are thinking of filing for bankruptcy and are needing to sell something, ask your lawyer first, and then make sure you sell it for what it is worth and that money actually changes hands.

However, if you have a cabin, condo, or some other sort of real estate in your name, and if that property has any equity in it, then there is no homestead exemption and the bankruptcy trustee will step in and sell the property, paying off any liens on the property and then taking the money and paying it out to your other creditors. If you have real estate that is not your personal residence, and you have equity in it, then you may want to look at a chapter 13 bankruptcy and for sure discuss this situation with your lawyer. In order for your home to be protected under the homestead exemption you must utilize the property as your home and the property must be located in the state of Arizona.

If you own a cabin in southern Utah or a condo on the beach in California you will not have any homestead protection in those properties and would lose them in a bankruptcy. HOA fees that you have prior to your bankruptcy will be eliminated unless the HOA has a lien on your property.

If the HOA has secured a lien against your home then the debt is considered secured and will not be eliminated in your bankruptcy case.

In a chapter 7 bankruptcy the income you receive after your case is filed is largely irrelevant to the bankruptcy court. However, if you become entitled to an inheritance within days approximately 6 months after your bankruptcy case is filed, you must notified your lawyer and the bankruptcy trustee and your inheritance can then be seized to pay your creditors. It is important to understand that the law states that if you become entitled to an inheritance within days, not that you have received an inheritance within days.

If prior to the filing of your bankruptcy you are injured and become entitled to a settlement or payout due to your injuries, those funds can be seized by your bankruptcy trustee if they are received after your bankruptcy case is filed. It is important to let your bankruptcy lawyer know if you have been in an accident or expect some type of settlement or payout so that your lawyer can properly advise you as to when your bankruptcy case should be filed.

Often it is better to wait until the personal injury claim has been settled and paid before jumping into a bankruptcy case. If you file a chapter 7 bankruptcy you will likely lose part or all of your tax refund. If you file a chapter 13 bankruptcy there is a good chance you will lose your tax refunds for the years your case is pending usually 5 years.

Here are a few guidelines on what you can expect if you file your bankruptcy during the following months:. The typical chapter 13 case last 3 to 5 years in length. During that time period the bankruptcy trustee is going to give you two options when it comes to tax refunds. First, you can adjust your with holdings on your paycheck so that you keep more of your pay and thus reduce your chances of getting a large tax refund click HERE to find out how to find out what your tax with holdings should be.

An alternative is to keep your withholdings where they are and then if you get a tax refund each year you can turn it over to the chapter 13 trustee for distribution to your creditors. This last one is a sneaky way some bankruptcy trustees try and come after additional money for your creditors. The most common scenario I run into with this one is with real estate agents. The best way to work around this is if you have a large commission check coming or paycheck, then it may be best to wait until the commission is paid and spent prior to filing for bankruptcy.

The point of this article is to help you avoid some of the grief that can come along with a consumer bankruptcy case. Many if not all of these pitfalls can be avoided with a little planning and the help of a good bankruptcy lawyer. The problems often hit the unweary the hardest resulting in a really painful bankruptcy experience. If you are in need of help filing for bankruptcy give us a call. I offer a free consultation and am happy to walk you through the bankruptcy process and go over your options — John Skiba, Arizona Consumer Law Group, We offer a free consultation to discuss your debt problem and help you put together a game plan to eliminate your debt once and for all.

Give us a call at I was reading your article and I am currently in the process of bankruptcy, Chapter 13 and I have had many pitfalls during my process. The automatic stay stops the foreclosure proceeding as soon as the individual files the chapter 13 petition. The individual may then bring the past-due payments current over a reasonable period of time.

Nevertheless, the debtor may still lose the home if the mortgage company completes the foreclosure sale under state law before the debtor files the petition. The debtor may also lose the home if he or she fails to make the regular mortgage payments that come due after the chapter 13 filing. Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors.

How to File Bankruptcy in Phoenix, Arizona

During this meeting, the trustee places the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of the plan. If a husband and wife file a joint petition, they both must attend the creditors' meeting and answer questions.

In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the creditors' meeting. The parties typically resolve problems with the plan either during or shortly after the creditors' meeting. Generally, the debtor can avoid problems by making sure that the petition and plan are complete and accurate, and by consulting with the trustee prior to the meeting.

In a chapter 13 case, to participate in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, has days from the date the case is filed file a proof of claim. After the meeting of creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on the debtor's chapter 13 repayment plan.

Unless the court grants an extension, the debtor must file a repayment plan with the petition or within 14 days after the petition is filed. A plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis, typically biweekly or monthly. The trustee then distributes the funds to creditors according to the terms of the plan, which may offer creditors less than full payment on their claims. There are three types of claims: Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of bankruptcy proceeding.

In contrast to secured claims, unsecured claims are generally those for which the creditor has no special rights to collect against particular property owned by the debtor. The plan must pay priority claims in full unless a particular priority creditor agrees to different treatment of the claim or, in the case of a domestic support obligation, unless the debtor contributes all "disposable income" - discussed below - to a five-year plan.

If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral e. Payments to certain secured creditors i. The debtor should consult an attorney to determine the proper treatment of secured claims in the plan. The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" over an "applicable commitment period," and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under chapter 7.

If the debtor operates a business, the definition of disposable income excludes those amounts which are necessary for ordinary operating expenses. The "applicable commitment period" depends on the debtor's current monthly income. The applicable commitment period must be three years if current monthly income is less than the state median for a family of the same size - and five years if the current monthly income is greater than a family of the same size.

The plan may be less than the applicable commitment period three or five years only if unsecured debt is paid in full over a shorter period. Within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court, the debtor must start making plan payments to the trustee. If any secured loan payments or lease payments come due before the debtor's plan is confirmed typically home and automobile payments , the debtor must make adequate protection payments directly to the secured lender or lessor - deducting the amount paid from the amount that would otherwise be paid to the trustee.

No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. Creditors will receive 28 days' notice of the hearing and may object to confirmation. While a variety of objections may be made, the most frequent ones are that payments offered under the plan are less than creditors would receive if the debtor's assets were liquidated or that the debtor's plan does not commit all of the debtor's projected disposable income for the three or five year applicable commitment period.

If the court confirms the plan, the chapter 13 trustee will distribute funds received under the plan "as soon as is practicable. If the court declines to confirm the plan, the debtor may file a modified plan. The debtor may also convert the case to a liquidation case under chapter 7. If the court declines to confirm the plan or the modified plan and instead dismisses the case, the court may authorize the trustee to keep some funds for costs, but the trustee must return all remaining funds to the debtor other than funds already disbursed or due to creditors.

Occasionally, a change in circumstances may compromise the debtor's ability to make plan payments. For example, a creditor may object or threaten to object to a plan, or the debtor may inadvertently have failed to list all creditors. In such instances, the plan may be modified either before or after confirmation. Modification after confirmation is not limited to an initiative by the debtor, but may be at the request of the trustee or an unsecured creditor.

What Are the Differences Between Chapter 7 and Chapter 13 Bankruptcy? | bahana-line.com

The provisions of a confirmed plan bind the debtor and each creditor. Chapter 7 bankruptcy is the neutron bomb of debt management and asset protection. A Chapter 7 is quick a few months , and quite complete when it comes to wiping out unsecured debt like credit card and medical debts.

You may want to save it for when you really need it--you can use Chapter 7 bankruptcy only once every seven years.

On the other hand, your particular combination of debt, income, and property may be a perfect fit for bankruptcy protection. The vast majority of people who end up filing for bankruptcy really do need it. A lot has been written lately about whether bankruptcy makes sense for people, in light of the economic downturn, including these articles:. This site will point you to numerous books, articles and services that can help you figure out whether it makes sense for you to file for bankruptcy.

However, this website cannot answer whether you, specifically, should or should not file for bankruptcy. If you have questions about whether bankruptcy is right for you, you may want to seek credit counseling from a reputable agency or consult a lawyer. A free or low cost consultation with an experienced credit counsellor or attorney can help you identify the relevant factors of your specific financial situation that ultimately determine whether bankruptcy is an appropriate, financially prudent option at this point in your life.

AZ Bankruptcy Law

The typical bankruptcy filer is a person already in fragile economic circumstances, often with large amounts of credit card debt, who then suddenly faces a spate of hard luck loss of job, injury, divorce, uninsured medical expenses , resulting in mounting penalties and an unpayable amount of debt. Bankruptcy law is designed to help people just like this, who need assistance in making a clean break -- a "fresh start" on life, rather than spend the rest of their lives being crushed by the burden of unpayable debt.

Even if you're facing unpayable debt, you still may not need bankruptcy to protect your assets. Under the Exemption Laws of Arizona , you may already be "judgment-proof. Unsecured creditors like credit card companies can't take your stuff if it's exempt. If there are harassing phone calls, you can stop them with a simple phone call or letter.

However, interest and penalties on your debt will continue to accumulate and bankruptcy will put a stop to that.

But exemption laws do not protect property from all types of debts or all types of creditors. For example, exemption laws typically do not protect you against collection of child support or tax debts. And if you bought property and pledged it as collateral for the purchase-money loan for example, a car loan or mortgage , the lender can take the property regardless of any exemption law. Finally, there are some kinds of debts that bankruptcy simply cant get rid of. These are called "nondischargeable" debts.

This generally includes child support, most student loans, and most tax debts. There's much more to be said about this topic than can be said on a Web page. Any decision to file for bankruptcy versus other alternatives requires a thorough, systematic review by you or someone you hire of your income, debts, and property. Chapter 1 will walk you through a self-analysis of your situation and explain your options in plain English. The rest of the book offers step-by-step discussions of exempt property, keeping your home, and how to prepare and file your bankruptcy forms.

The book includes line-by-line instructions for the official bankruptcy forms, complete with filled-in examples. Throughout the book, you are alerted to situations that are particularly troublesome and should not be handled without an attorney. This website supplements the information in the book by providing quick access to local county-by-county information and services.

If you just need help with preparing the forms, you can hire a bankruptcy petition preparer. If you want legal advice and analysis of the details of your specific situation, you can hire a Arizona bankruptcy lawyer to advise you. You'll find listings in the Lawyers section of this site. These listings are not endorsements. They are simply designed to help you quickly connect with service providers in your area.

Whether you decide to do it yourself or hire professional help, this site will help you become a smarter, better-informed consumer and help you steer clear of shoddy services. Arizona Median Income If your average monthly income for the past six months is below the state median for your size household, you meet the requirements of the "means test" section b 2 of the bankruptcy code to qualify for Chapter 7 Bankruptcy.

Median Income standards effective Nov 1, through March 31, Median Income standards effective Aprl, May 1, Department of Justice for bankruptcy cases filed on or after May 1, The means test is but one of several hoops you must jump through.

Even if your income is low, a judge can prevent you from filing Chapter 7 if it appears that you have enough income to repay a substantial portion of your debts in a 3-year Chapter 13 plan. Chapter 7 allows you to eliminate most unsecured debts in a matter of months in return for giving up all "non-exempt" property -- if you have any. Most people who file for Chapter 7, have no available non-exempt property or equity.

How to File Bankruptcy in Phoenix, Arizona 85001

Whatever they still own by the time they file is either protected by exemption laws , or pledged to a secured creditor as collateral for a debt, and therefore not available to pay off unsecured creditors. Chapter 13 takes 3 to 5 years. Instead of giving up property, you repay a portion of your debts and live within a strict budget that is monitored closely by the bankruptcy court trustee. If you can't make the required monthly payments, your Chapter 13 bankruptcy fails and your debts will remain unless you convert to a Chapter 7 bankruptcy.

Chapter 13 is commonly used by people who are behind on secured debt payments e. Under the new bankruptcy law, which took effect in October , a mathematical formula called the "means test" establishes an initial determination of the kind of bankruptcy you qualify for: Chapter 7, Chapter 13, or either. This formula takes into account:. If your annual income is less than the Arizona median income for your household size, then you can file for Chapter 7 or Chapter 13, assuming you meet other qualifications.

If your income is higher than the state median, you must first complete a long list of expense deductions to estimate what your 'disposable income' will be over the next five years. The result of this calculation determines whether you can file for Chapter 7, or are left with Chapter 13 as your only option. Although this form is rather long and complicated, the free, online Bankruptcy Means Test Calculator on this website can do the math for you and tell you how you would fare under the means test.

This calculator is free and anonymous; you do not need to disclose your name, your email address, or any other identifiable personal information. If you have lived in Arizona for at least 91 of the past days six months , you may file at the court described below. If you've moved recently, you may have to file at the court that served your old zip code.

Most of your interactions including the filing of your forms can be done by mail. However, you will need to go the courthouse, in person, at least once for a meeting with the bankruptcy trustee. See the list below for more information about your court, including addresses and maps to the courthouse s.

Check the court website for updates to this information before relying on it. Most bankruptcy court websites make little or no effort to help non-lawyers or provide important information in plain English. However, a few stellar courts do an outstanding job of providing practical, relevant information in plain English.

13 Pitfalls of Bankruptcy in Arizona

There is no reason all courts can't do this; taxpayers should demand it. See the LegalConsumer Court Ratings to see how well your court serves the public. The cost of filing for bankruptcy is more than just the filing fee. There are fees for:. Surfing the Web is fine, but not all that efficient. To get up to speed faster, you can buy a step-by-step book that lays out the bankruptcy process and includes worksheets and forms. Depending on where you live, you might be able to get some free bankruptcy help and information from the court, specifically for people filing bankruptcy without an attorney.

An increasing number of courts offer such materials and you'll find links to those resources on the bankruptcy court page. Most bankruptcy courts used to offer little or no real help to non-attorneys. There were a few happy exceptions to this general rule, but only a few. Even so, this information goes only so far. Court clerks still can't answer most questions or offer advice, but most now do offer some sort of self-service packet or people filing without an attorney, or who are at least curious about what is involved, before they decide to hire an attorney.

You may want to consult a bankruptcy lawyer early on, if you can get a free consultation. This approach helps you make the most of your time with the attorney, and helps you evaluate whether the attorney really knows bankruptcy law. Bankruptcy is a specialized area of law. If you hire a lawyer, you want want one who really knows the subject and is familiar with local bankruptcy court rules and customs.

It's a good article, but the dire warnings about 'misinformation' in that article can be avoided by buying a good, up-to-date book on the subject. Chapters 1 through 5 of How to File for Chapter 7 Bankruptcy. Arizona District Bankruptcy Court. Before you file for bankruptcy, you must participate in a credit counseling session and get a certificate proving that you have done so.

If you are planning to file jointly with your spouse, you can both attend the same counseling session, but each of you must get a separate certificate. Many critics of the new bankruptcy law see the credit counseling requirement as just another bureaucratic obstacle for already-desperate debtors.

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