| Areas of Practice Auto Accidents :: Bankruptcy :: Criminal/ DUI :: Personal Injury |
Bankruptcy If you're here, you've already spent time considering bankruptcy. Bankruptcy is an important and sometimes difficult decision to make. Our goal on this site and in our free initial consultation is to provide information so you can make the best decision for your family and your financial future. The best place to start: information. Browse the questions and answers below. If you need to talk to an attorney, call us at 602-650-1200 for a free consultation. What is a bankruptcy? Bankruptcy is a means by which a debtor, either by themselves or with their spouses, may obtain fresh start in life, from an economic standpoint. This fresh start is accomplished by relieving the debtor from the burden of their debt and, in most instances, allowing them to retain most of their property. The relief portion of the bankruptcy comes from the bankruptcy discharge. The ability to retain most of their property comes from either federal or state exemptions. The process is governed by federal law, specifically the Bankruptcy Code, and handled in the federal court system.
Absolutely. It is important to keep in mind that bankruptcy is not your only option when dealing with credit issues, and in some cases it may not be the right option. That is why it is so important to discuss your particular situation with a qualified attorney before you make any decisions. Petersen Johnson gives you the opportunity to have your situation reviewed by an attorney, FREE OF CHARGE. Other options besides bankruptcy protection are to attempt to work out payment plans with each of your creditors. In most cases, the creditors will want to receive payment in full, with interest along the way. In other instances you may be able to work out a plan with your creditors to reduce and extend payments, extend a loan or agree to some other type of compromise. There are also “credit counseling” companies or “debt consolidation” organizations that you have probably seen advertised on television. Most of these organizations are financed and work directly for those attempting to collect the debts, your creditors, not you. IMPORTANT: Know and understand your options. Attempting to negotiate a compromise with your creditors may cause them to take negative action against you that limits your options or costs you more money in the long run. Remember, most credit counseling companies are subsidized by credit card companies, and their actions often have the same effect on your credit as a bankruptcy. Seek the advice of a bankruptcy attorney before you make your decision. At Petersen Johnson that initial consultation is FREE OF CHARGE.
You first speak on the phone with an attorney to discuss your current financial situation and your options. This is a FREE, no-obligation meeting. You will be asked some basic questions to determine if bankruptcy is an option. Obviously, the final decision will be yours. If it is determined that filing bankruptcy may be appropriate in your situation, you will then gather the necessary information we will need to prepare the petitions and schedules required by the bankruptcy court. The second meeting will be held in our office. This meeting, with an attorney, will also be FREE OF CHARGE. You will be asked to bring along the completed worksheet and copies of related documents. The attorney will review the worksheet and speak with you at length regarding bankruptcy, the procedures and the results you can expect along the way. You will leave this meeting with a written fee and costs estimate so you know what to expect. At this point we begin to prepare the many documents
the bankruptcy court requires and have you return to the firm
one last time to review, approve and sign the final documents. After we file and the court has notified your creditors, there is a period of time for them to respond or object to their debt being discharged. If they do object, we will represent you in addressing those issues as well. Finally, a meeting of creditors is scheduled and held at a hearing room. We represent you at this meeting to protect your interests. Your creditors are also invited but it is very rare that any show up. The Bankruptcy Trustee hears all parties. That meeting is usually very brief. At that point, after a specified waiting period, your debts are typically discharged (that is, your debts are no longer enforceable against you, giving you the financial clean start you have been waiting for). How long your bankruptcy proceeding takes varies with the complexity of your situation, how quickly you can collect and bring us the necessary information and the backlog in the court system. Bankruptcy can stop creditors from calling almost immediately. The process generally takes three to five months to complete.
If you file Chapter 13 bankruptcy you will NOT lose any personal property. Chapter 13 bankruptcy is also referred to as a reorganization of debt. Most Chapter 7 Bankruptcies are “no asset” cases. What this means is the debtor does not possess more assets than they are allowed to keep under the exemptions set out under federal or state law. Although subject to change, some of the exemptions under the current law are: • Equity in your home, called a homestead exemption. In Arizona you can protect up to $150,000 of the equity in your home. • Vehicles are exempt up to $5,000 in equity, and married couples may exempt two vehicles. • Insurance. You usually get to keep the cash value of your policies. • Retirement plans. Pensions, IRAs and 401(k) plans that qualify under the Employee Retirement Income Security Act (ERISA) are usually fully protected in bankruptcy, as are many other retirement benefits. Note however, that not all retirement savings may be protected. • Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books and musical instruments up to a specific dollar value. Other items, such as jewelry and vehicles are also protected up to a certain value. • Public benefits. All public benefits, such as welfare, Social Security and unemployment insurance, are fully protected. • Tools used on your job. You'll probably be able to keep many of the tools used in your trade or profession. Remember that the idea behind bankruptcy is to give you a financial fresh start. It is not the intent of the Bankruptcy Code to take away your ability to make a living. • Wages. In Arizona, most of your unpaid wages, earned prior to filing bankruptcy, are protected. All wages after filing are protected except in unusual circumstances.
One of the biggest worries you may face in considering filing for bankruptcy is the possible loss of your home. Bankruptcy is not designed to put you out on the street. Home Ownership and Bankruptcy. Whether you are able, or even if you should, keep your home after you file bankruptcy is a very important issue that you should discuss with a bankruptcy attorney. If you are behind on your mortgage payments and your mortgage lender is pursuing foreclosure, chances are that they will ask the bankruptcy court to lift the automatic stay to begin or resume foreclosure proceedings. If you decide that you do not want to continue to live in the house or that you do not want to make any more payments on the house, then the house will go back to the lender. The good news is that because you filed for bankruptcy and were granted a discharge, the lender cannot come after you for any deficiency that results from the foreclosure of the home. After discharge, you are no longer responsible for the mortgage. In many cases, however, if you do want to remain in the home, you may be able to reaffirm the debt or renegotiate your back payments with the lender. Remember, after the discharge you are assumed to be in a stronger financial position than before you filed: same income, little or no debt. Those mortgage payments that seemed impossible before may in fact be affordable now. In a Chapter 13 bankruptcy, in most cases you will not lose your house provided you immediately resume making the regular payments called for under your agreement and repay your missed mortgage payments through your plan.
What is the difference between Chapter 7 and Chapter 13 bankruptcy? Although
other types exist, there are two basic types of bankruptcies
available to individuals, Chapter 7 and Chapter 13. These
are the two most commonly considered by people. Chapter 7
bankruptcy is, by definition, a liquidation process in which
the individual's non-exempt assets are sold by the bankruptcy
trustee and the proceeds distributed to creditors. Chapter 13 is, by definition, reorganization. Individuals usually file a Chapter 13 to “reorganize” how they make payments on their homes, cars, etc. The Chapter 13 discharge comes down the road after you have completed the 3 to 5 year payment plan. In some instances the debts discharged in a chapter 13 can be more encompassing than a chapter 7, and you get to keep most if not all of your assets.
Yes, you
can get credit again; in some cases soon after your bankruptcy
is discharged. Creditors may ask for a higher interest rate
or require a security deposit, but credit is normally available.
As an example, if you want a credit card with a $500 credit
limit, the credit card company may require a $500 deposit. How often can I file bankruptcy? If you file a Chapter 7 you cannot file another Chapter again for six years, you may, however, file a Chapter 13 at any time.
How do I get a copy of my credit report? There are many resources through which you can obtain your credit report, but most get their information from three major credit bureaus:
Whether you go through a local credit agency or direct to one of the top three, expect to pay $8-10 for your credit report. If you have been denied credit during the last 60 days you can get a free copy of your credit report.
Will my utilities be turned off if I file bankruptcy? Your utilities will not be turned off because you have filed bankruptcy, however, your utility company may require that you pay a deposit to continue service.
Do a husband and wife have to file together or can only one file bankruptcy? Spouses may file bankruptcy jointly or only one party may choose to file. If debts they want discharged are owed jointly by a husband and wife, most couples choose to file together. If they do not, creditors may put pressure on the non-filing spouse, even though they may not be working, to pay the debt. The Bankruptcy Court Filing fee is the same for an individual or a couple.
In accordance with the Bankruptcy Code, creditors must stop collection efforts when they become aware of your bankruptcy filing. They become aware of your filing two ways: The court mails a notice to all the creditors listed in your bankruptcy schedules after you file the bankruptcy petition; or, if they call before they receive the written notice, you may give them your case number and the call will be over. Before your bankruptcy is filed creditors are not prohibited from collecting. However, the Fair Debt Collection Practices Act prohibits debt collectors from communicating with debtors that are represented by attorneys. Therefore, once you retain our firm, you can begin directing your creditors to call us instead of you.
No, student loans are generally not dischargeable under either chapter unless there is severe hardship resulting from the payments.
Credit reporting agencies must remove your bankruptcy from your credit history 10 years after your filing date (NOT the date of your discharge). Items discharged through bankruptcy are noted as such and should be removed from your credit file in seven years. As time passes, the listing on your credit report becomes less and less significant.
When the bankruptcy petition is filed, there is an automatic stay in all judicial proceedings in which you are a named party. In order for the foreclosure to continue, the lender would have to petition the Bankruptcy Court to lift the stay. If that is granted the foreclosure may proceed. This may give you an opportunity, however, to negotiate with your mortgage company and avoid the foreclosure. Under Chapter 13 the arrearage on a mortgage can be paid back over time while you make the future monthly payments. Similarly, in a Chapter 13, the present value of the car can be paid through the plan and repossession may be avoided.
There are two costs involved in the filing of a Bankruptcy. The first is a filing fee that is paid directly to the Bankruptcy Court. This fee is the same for all cases, depending on the chapter filed. The second fee is fee for our services, which include but are not limited to:
Our fee will depend on what is required to accomplish the above. It will, however, be a flat fee. Any additional costs will be clearly set out in agreement that you will have an opportunity to read and sign, before we begin working on your case. We will let you know what the flat fee is before we begin working on your case. The fee must be paid in full before we file.
What is dischargeable depends on the type of bankruptcy you file. In a chapter 7 Bankruptcy, most personal loans, credit card debt, repossession deficiencies, auto accident claims, judgments, business debts, leases, guaranties and negligence claims are dischargeable. It is possible to discharge other debts such as divorce property settlements or division of debts, injuries to others that are deemed willful, embezzlement, debts due to fraud of dishonesty, or debts arising from breach of a fiduciary duty. The burden is on the creditor to promptly take action to contest the discharge of these debts. Certain debts are not dischargeable in a chapter 7 bankruptcy: Recent taxes, Child or Family support, Criminal fines or restitution, DUI claims, debts not listed on your schedules, Trust fund taxes, government penalties other than tax penalties, student loans, or debts that were not dischargeable in a previous bankruptcy. Debts dischargeable in a Chapter 13 bankruptcy are, in many cases, more extensive, however, the discharge does not take place until the end of the 3 to 5 year repayment plan. |
