American Airlines Bankruptcy Could Affect Arizona Residents

Posted on April 30, 2012 by Staff Writer

Over 1,000 Tucson-area residents may be affected by a recent development in American Airlines Chapter 11 bankruptcy restructuring plan. The company filed for bankruptcy in November of 2011, and according to abc15, will likely be closing a Tucson reservations center as part of their plan to reduce their labor costs by over $1 billion.

As the airline was unable to renegotiate contracts with its numerous unions, they will now ask the bankruptcy court to let them void their current union contracts. Some of the reservations agents will be offered the chance to move or work from home, while others may lose their jobs – the total number of positions eliminated under the restructuring plan is estimated to be around 14,200.

According to an SFGate.com article, the airline may consider a merger as part of its bankruptcy restructuring plan. During testimony at the U.S. Bankruptcy Court in New York, where the bankruptcy case is filed, David Resnick stated that a merger is likely because “American is obliged to get the highest value for stakeholders.” Tempe Arizona-based US Airways is also hoping to gain support for a potential takeover of AMR Corp, American’s parent company.

When large corporations go bankrupt, this can have wide-spread bankruptcy implications. For instance, it’s certainly possible that some of the over 14,000 American Airlines employees who lose their jobs will end up considering bankruptcy. Arizona residents who are facing financial difficulties and wondering if bankruptcy is the right option for them should contact an experienced Phoenix, Arizona bankruptcy lawyer for advice.

How Does Filing Bankruptcy Affect a Prenuptial Agreement?

Posted on April 26, 2012 by Staff Writer

When one person owns a considerable amount of assets such as money, property or business investments, this individual may feel more secure about getting married if a prenuptial agreement is filed prior to the marriage. “Pre-nups” are documents detailing how everything would be divided legally if the marriage ended in divorce or if the spouse owning most of the assets would die first. Prenuptial agreements can also define perimeters of spousal and/or child support payments, child custody arrangements and aspects of the last will and testament that states inheritance rights.

According to NOLO Legal Encyclopedia, some states call a prenuptial agreement a prenuptial “contract” or “antenuptial agreement”. Generally, prenuptial agreements are desired by one or sometimes both spouses when either one has experienced previous marriages ending in messy and expensive divorces. By implementing a pre-nup, the individual who is “once-bitten, twice-shy” should not be subjected to outlandish spousal support or property acquisition demands made by his or her spouse if a divorce in the event a divorce is initiated.

However, even though prenuptial contracts are legally binding according to the federal Uniform Premarital Agreement Act, protection provided by such a contract from creditor actions during bankruptcy is questionable. In other words, the spouse who does not file bankruptcy is not guaranteed immunity from any Arizona bankruptcy court proceedings just because a prenuptial agreement exists.

Additionally, divorcing couples residing in “community property” states may both be subjected to creditor harassment even if only one spouse files bankruptcy, regardless of the legality of any prenuptial contract. If you implemented a prenuptial agreement prior to your marriage and are getting a divorce but your soon-to-be-ex-spouse plans to file for bankruptcy in Arizona, immediately contact a professional and experienced Glendale Arizona bankruptcy lawyer who will ensure that you are protected from creditor demands and any presumed liability for your spouse’s debts.

Bankruptcy Options for Student Loans in Arizona

Posted on April 23, 2012 by Staff Writer

Just as the economy is struggling to recover from the mortgage crisis of the past couple of years, a new threat is looming – student-loan debt. In February, the National Association of Consumer Bankruptcy Attorneys referred to a student loan “debt bomb”. Last month, the Federal Reserve Bank of New York announced that debt had reached $870 billion. And that number continues to climb. A student graduating in 2010 owed an average of $25,000 in student loans.

It is very difficult to have student loans discharged in Arizona bankruptcy filings. A person must prove ‘undue hardship’ in paying back the loans, typically only allowed if a demonstrated effort was made to pay the loans for an extended length of time and, due to uncontrollable economic hardship, the borrower is unable to meet the demands.

Many wonder how their student loans figure into a potential bankruptcy

The Fairness for Struggling Students Act, if passed by Congress, would change that. It would allow students who borrowed education funds from private lenders to wipe out that debt in bankruptcy proceedings. These private loans often carry higher and variable interest rates and fewer consumer protections than government loans. Government loans, which are not included in this act, usually offer interest-rate caps, loan limits, income-based repayment plans and forbearance in times of economic hardship.

The legislation is being sponsored by Senator Dick Durbin D-Ill, who convened hearings about the issue. According to a report in the Seattle Times, Deanne Loonin, an attorney for the National Consumer Law Center, testified that current bankruptcy law “treats financially distressed students the same way as people trying to wiggle out of child-support debts, alimony, overdue taxes and criminal fines.”

Student loan lender Sally Mae supports legislation that allows federal and private student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay their loans over a five-to-seven-year period and still experience financial difficulty. But others at the hearing argued that it is unfair to the lending institutions who provided the funds to now allow debtors to be able to discharge them, resulting in a huge increase to cost of these loans.

If you are struggling with student loan debt, consult with a qualified Tucson, Arizona bankruptcy attorney, who can help you explore if bankruptcy is an option for you. Tucson bankruptcy lawyers are familiar with all of the available options for relieving your debt, and can discuss the best route for your particular situation.

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Do Spouses Have to File Bankruptcy Together?

Posted on April 22, 2012 by Staff Writer

While spouses are not legally obligated to file for bankruptcy together, there are situations where a spouse may choose to file for bankruptcy on their own. This could include when the wife or husband is the only one carrying significant amounts of debts (usually obtained before the marriage in the form of credit card debts or unpaid personal loans,) property aspects (such as whether properties are owned jointly or individually,) or community debt amount issues.

According to Federal Bankruptcy Law, when one spouse files alone, this means the spouse not filing bankruptcy may still be held liable for their share of jointly held debts. However, a single-spouse bankruptcy claim erases that spouse’s own debts as well as his or her share of debts jointly owed.

Legally-separated couples in the Arizona may find their best option is to allow the spouse holding the most debt to file bankruptcy alone, especially if the majority of these debts were incurred prior to the marriage.

In an “equitable distribution”, state such as Arizona, Bankruptcy Laws state that spouses who are not filing bankruptcy do not need to worry about their separate property being affected by the bankruptcy. However, if the spouse not filing for bankruptcy has received a substantial amount of property from the other spouse within less than a year of the filing, bankruptcy courts may perceive this as a fraudulent act and demand that all property be surrendered to a trustee appointed by the court.

Additionally, one spouse may also consider filing bankruptcy alone in order to prevent disclosure of the other spouse’s generous income. However, this idea will not work because spouses filing bankruptcy must provide proof of their spouse’s income, as well as household income.

To find out whether it is in you and your spouse’s best interest to file bankruptcy together or jointly, contact a Phoenix, Arizona bankruptcy law firm as soon as possible in order to receive the best possible advice and guidance needed to repair your financial situation.

Will Filing Bankruptcy Stop an Eviction in Arizona?

Posted on April 18, 2012 by Staff Writer

Failure to pay rent or violation of lease agreements may result in a tenant receiving an eviction notice from the landlord. Arizona renting and leasing laws state that a landlord needs to give the tenant he or she plans on evicting a document demanding the tenant has five days to comply or quit, or pay or quit. In other words, the tenant can either pay past-due rent, comply with lease regulations or move out of the unit. If a landlord does not hear from the tenant, they can then proceed with filing eviction papers at the end of the five-day period.

While all of us want to pay rent in a timely manner, unforeseen occurrences can result in the inability to make a payment. Being laid off, unexpected medical bills due to an accident or illness or other unfortunate circumstances can prevent someone from having enough money to make a rent payment. Sometimes landlords are understanding and allow extra time for rent to be paid. However, some are not so understanding and will proceed with the eviction process regardless of the circumstance.

Can a tenant delay eviction by filing bankruptcy in Arizona? According to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, the answer depends on when the tenant filed bankruptcy. If a tenant files for bankruptcy prior to the eviction notice being served, then an automatic stay prevents a landlord from issuing an eviction notice. Despite this, the landlord can legally ask the bankruptcy court to void the automatic stay in order to proceed. Frequently, a judge approached by a landlord wanting to evict someone who has already filed for bankruptcy will lift the stay because breaking lease agreements does not affect the tenant’s financial condition.

Alternatively, filing for bankruptcy after being served an eviction notice may do nothing to delay the eviction process, especially if illegal drug use or excessive property damage is involved. However, landlords need some kind of proof of this kind of lease violation before continuing with an eviction that is based on these allegations.

If you are facing eviction due to sudden financial hardship and are considering filing for bankruptcy, contact a professional Phoenix Arizona bankruptcy attorney immediately to assist you in solving your housing problems and overcoming your financial distress.

Companies Use Chapter 11 Bankruptcy to Reorganize

Posted on April 14, 2012 by Staff Writer

Large corporations often use bankruptcy protection when restructuring or when faced with significant drops in the economy. On Thursday, well-known Dallas based corporation Reddy Ice filed for Chapter 11 bankruptcy protection with the support of its lenders and creditors. The filing will not affect the day to day business of Reddy Ice, the largest packaged ice producers in the country.

Reddy Ice will use the Chapter 11 filing as an opportunity to recover from a $33.3 million loss this quarter and to shoulder an increase in production costs. The Chapter 11 claim will also secure the company’s footing in negotiations in a buy-out of one of its top competitors. A press release cites three significant factors in the decision to file the Chapter 11 in the United States Bankruptcy Court for the Northern District of Texas. The company faces heavy debts, higher commodity costs, and a weak economy.

The Chapter 11 filing is a “Voluntary Plan of Reorganization.” These types of claims allow businesses to receive the automatic stay, which gives businesses the time and protection they may need to restructure when faced with uncertain economic factors, including those outside of the company’s control. Basically, the Chapter 11 claim includes a list of all debts, incomes, expenses, assets, and liabilities, in addition to a statement of reorganization. However, the details of the claim and how it can be filed will be determined based on the type of business filing the Chapter 11 claim with the bankruptcy court. In cases where corporations file for Chapter 11 bankruptcy, the personal property and assets of shareholders is protected, but businesses with sole proprietors may include these items.

Individuals can also make a Chapter 11 bankruptcy claim and receive the automatic stay. If you are considering a restructuring of your personal finances or your business debts, you may be eligible for bankruptcy protection under this claim in Arizona. Consult with one of our Tucson bankruptcy lawyers to help you navigate bankruptcy claims court.

How Often Can You File For Bankruptcy in Arizona?

Posted on April 11, 2012 by Staff Writer

Due to unforeseen economic difficulties arising from sudden unemployment, excessive medical bills, an expensive divorce or other hardships, Arizona residents often find it necessary to file for bankruptcy. Most people only need to file bankruptcy once in their life. But when additional, financially devastating events occur following the completion of one bankruptcy, the necessity to file another one may be inevitable.

As a resident of Arizona, you are legally permitted to file for Chapter 7 bankruptcy every six years following the filing date of the last bankruptcy. Chapter 7 allows discharge of most debts owed by someone filing for this bankruptcy, with the exception of child support, student loans, tax debts and alimony. Usually, a person files Chapter 7 when they have amassed large credit card debts burdened by high interest rates or incurred astronomical medical bills.

Chapter 13 bankruptcy can be filed at any time under bankruptcy law. This law allows Arizona residents an opportunity to prevent home foreclosures by rescheduling debts in order to make lower payments. By avoiding debt discharge with a Chapter 13, credit scores are not as negatively affected as they are in a Chapter 7 bankruptcy. Because it is similar to debt consolidation and permits debtors to work with the creditors they owe, a Chapter 13 bankruptcy can be filed when income availability changes due to health reasons or unemployment.

Although filing more than one Chapter 13 is not unusual, repeated filings of Chapter 7 may be unsuccessful due to judges frowning upon people who engage in abusing bankruptcy laws by repeatedly filing for bankruptcy. However, when someone suddenly becomes buried under unexpected medical expenses, filing another Chapter 7 bankruptcy may be the only way out of such a catastrophic financial situation.

If you are experiencing a situation where bankruptcy seems like the only hope, don’t hesitate to contact a caring and professional Tucson, Arizona bankruptcy attorney who can offer expert advice and assist you in overcoming your financial burdens.

When You Hire An Arizona Bankruptcy Lawyer, How Long Will The Case Take?

Posted on April 10, 2012 by Staff Writer

The length of the bankruptcy process is dependent upon several factors. An important distinction can be made between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy. The discharge of certain types of debt is the objective in both chapters of bankruptcy; however, Chapter 13 can last up to three to five years before a debtor attains a discharge. In contrast, a Chapter 7 case may be completed in a few months from start to finish. The most commonly filed chapter of bankruptcy is Chapter 7.

Bankruptcy attorneys usually will not work on a client’s bankruptcy case until the attorney’s fees have been paid. Once the debtor’s petition is filed with the Bankruptcy Court, her debtors are prevented from collecting (or attempting to collect) money for debt obligations. Many of the debts will subsequently be discharged in the bankruptcy—including bankruptcy attorney’s fees. Hence, most attorneys want their fees paid in advance of work done on the bankruptcy case.

The time preceding the filing of the petition may be the longest part of the Chapter 7 process. A filer enlisting the aid of an attorney may take several months or years to pay the attorney’s fees and provide the attorney with the documents necessary to prepare the bankruptcy petition. Once the fees and documents are received by the attorney, the case could take days or months to prepare depending on the filer’s needs and the attorney’s capabilities and timeliness.

The timeline of a case is much more predictable once the petition has been filed with the Bankruptcy Court. A case is filed electronically by the attorney. The 341 Meeting of Creditors (trustee meeting) is usually held within four to six weeks of the filing date. The debtor usually receives a discharge from the Bankruptcy Court in about eight to ten weeks after the 341 Meeting. The Court sends a Notice of Discharge to all the creditors who were listed in the petition.

Most Chapter 7 Bankruptcy cases are officially closed by the trustee in three to four months from the date of filing.

How A Bankruptcy Client Should List All Household Goods And Property On The Schedules

Posted on April 8, 2012 by Staff Writer

In bankruptcy, a debtor is required to file a petition and schedules with the Bankruptcy Court. The debtor must list her assets and property in the appropriate schedules. Every state has bankruptcy exemptions that dictate what assets/property of the debtor will be protected from the Bankruptcy Court’s reach. Property within the reach of the Court can be taken, sold, and used to pay down the debtor’s unsecured debts. A debtor should be aware of her state’s exemptions and the potential risks she may face by filing bankruptcy.

An attorney can assist her client in understanding and applying the exemption rules in order to deal with any property issues prior to filing the petition and schedules. An attorney can also ensure that accurate information is filed with the court. The attorney will be able to guide her client on which items in a household and which property should be listed. The bankruptcy code and the bankruptcy trustees may require specific entries in the schedules that would be difficult for someone to know on her own.

For example, household goods and their values must be listed in Schedule B. This does not mean that every household item owned by a filer must be listed in the schedule. Some trustees require a more detailed listing of specific items than other trustees. Just because an exemption may not exist for a certain item owned by the filer, that item is not necessarily at risk of being taken by the bankruptcy trustee.

Arizona does not have an exemption for CDs and DVDs, items that most people own. Some trustees want these goods listed in Schedule B whereas other trustees do not care whether they are listed. The value of CDs and DVDs are usually so minimal that trustees don’t worry about their omission from Schedule B. However, a filer does not want to cause issues with a trustee by omitting items the trustee expects on the schedules.

The values of the items must also be listed in the schedules. An attorney can help her client know how to value the items according to the bankruptcy code and the trustee’s expectations. The values of most goods only need to be approximated to a reasonable accuracy. The trustee is expecting to see estimated values in the schedules, but may refer to a specific standard for valuation. The value of a vehicle listed in Arizona can safely be estimated at its Blue Book value. Other items, such as clothes, may not have an acceptable standard to reference their value. The attorney’s experience will help the filer correctly value her goods.

Arizona’s vehicle exemption allows a filer to have up to $5,000 equity in a vehicle. If a filer decides that her paid off vehicle is worth only $4,000, it is not necessarily exempt in the bankruptcy and protected from the reach of the trustee. The trustee may Blue Book the vehicle and determine that its value is closer to $6,000. The trustee then has a right to the $1,000 excess in the vehicle’s equity. An attorney can prevent such problems from occurring by helping a filer identify and deal with such issues prior to filing bankruptcy.

The same can be said with most of the assets/property owned by a filer. The expertise of an experienced Arizona bankruptcy attorney is crucial in protecting one’s property while maximizing the benefits of filing bankruptcy.

How Much Does it Cost to File Bankruptcy?

Posted on April 8, 2012 by Staff Writer

The Bankruptcy Court is a Federal Court that must follow Federal law and Federal Bankruptcy procedural rules. The court filing fees are set by Federal law and are uniform in every Bankruptcy Court in the country.

The two most common chapters of bankruptcy filed by individuals are Chapter 7 and Chapter 13. A debtor must pay a $306 fee to file a Chapter 7 bankruptcy or a $281 fee to file a Chapter 13 bankruptcy.

Every person filing a Chapter 7 or a Chapter 13 bankruptcy will pay the same filing fee; however, attorneys’ fees may vary to extreme degrees. An attorney’s fees can differ from state to state or from city to city. Additionally, an attorney’s price quote will often reflect the expected difficulty of the case.

One individual may own a minimal amount of assets and have a limited number of creditors to deal with. Another individual may have an abundance of assets and numbers of secured and unsecured creditors. The “no-asset” case will require less time from the attorney and will likely be less expensive than the latter case. A Chapter 7 Bankruptcy in Arizona may range from $1,000 to $3,000 in attorney’s fees, depending on the type of case and/or other factors mentioned above.

A Chapter 13 Bankruptcy generally costs more than a Chapter 7 Bankruptcy because the cases are often more difficult and the bankruptcy may last three to five years. A Chapter 13 Bankruptcy in Arizona may range from $2,000 to $5,000 depending upon the type of case and previously mentioned factors.

The fees in a Chapter 13 Bankruptcy may be broken up in the bankruptcy. Attorneys will often charge an upfront fee for the initial preparation and filing of the case. The remaining attorney’s fees can then be paid by the client through the Chapter 13 Bankruptcy plan. A Chapter 13 Bankruptcy is basically a repayment plan supported by the debtor’s monthly payments to the Bankruptcy Court. Creditors receive a pro rata share of the funds available to repay debts. The attorney’s remaining fees are paid through the Chapter 13 like the debts of other creditors. If you have questions regarding the costs of bankruptcy, contact and Arizona Bankruptcy Attorney today.

The price of a bankruptcy is not necessarily indicative of the quality of the service or the accuracy of the bankruptcy petition. A larger law firm may charge more because of the staff involved in the process and the amount of care shown its clients. A single attorney may have lower fees due to less overhead costs and may neglect her clients. The quality and care of the provided services could also be reversed, where the large firm neglects its clients and the lone attorney offers the care her clients need.

Since price alone does not indicate the quality of service, a potential filer should shop around and meet with different attorneys. The attorney’s credentials, staff (could be a positive or a negative), office, location, and personality could all play a factor in whether a potential client would hire the attorney.