The Benefits and Disadvantages of Filing for Bankruptcy

Posted on August 22, 2013 by Staff Writer

The choice to file for bankruptcy is not an easy one. The benefits need to outweigh the negative results of bankruptcy. It is necessary to have a full understanding of the consequences of bankruptcy in order to make the best decision possible.

The following are possible outcomes of bankruptcy:

1. Weakened Credit Score

Filing for bankruptcy has a negative effect on your credit score. A bankruptcy shows up on your personal report for 7 to 10 years depending on the type of bankruptcy for which you file. Yet, bankruptcy allows for a financial fresh start. You can rebuild your credit over time and there is an opportunity for it to be better than before your bankruptcy.

2. Difficulty Getting Loans

One of the results of having a bad credit score post-bankruptcy is that it will be more difficult to get a loan. You will also have a difficult time being approved for credit cards and financing the purchase of a home. Yet, if you are considering filing for bankruptcy, it might not be the best idea to have new bills to pay.

3. Issues with Finding Employment

Potential employers occasionally review your credit report before offering you a job. Certain states have outlawed or limited such a practice because of the negative cycle it perpetuates. People who can’t pay their bills on time are not able to get jobs that would allow them to pay their bills on time. Arizona is not one of the states that currently regulates such activity.

The benefits of bankruptcy can far outweigh the negative aspects because it will allow you to start fresh. It is important to discuss your situation with an Arizona bankruptcy lawyer. Bankruptcy will eliminate either some or all of your debts depending on what chapter is selected. Filing will also stop harassment from creditors, foreclosure, wage garnishment, or repossession because filing creates an injunction called an automatic stay. In the long run, a bankruptcy will allow you to build your credit back up to a respectable level and allow you to regain your life. Contact a dedicated bankruptcy attorney in Casa Grande who can assist you in deciding if filing is the right step for you.

The Bankruptcy Automatic Stay – Good Dog

Posted on August 8, 2013 by Staff Writer

So filing bankruptcy with a good bankruptcy lawyer is supposed to put a leash on your creditors, but when do they stop? What is there to make them stop calling, harassing, or garnishing? There is an injunction from a federal judge called the “automatic stay”. The judge essentially tells your creditors to stay, like a dog. When the judge speaks, they listen.

The automatic stay is a statutory injunction that is issued by the court immediately upon filing of a bankruptcy petition. Bankruptcy Code 362, and 101 (15). It is designed to protect the debtor and provide a break from collection efforts. Before the actual filing of the bankruptcy petition, you have to rely on your bankruptcy attorney to fend off your creditors by taking their calls and enforcing collection rules. This, in itself, is enough of a reason to retain a bankruptcy lawyer right away.

Once your bankruptcy attorney files your bankruptcy petition, the automatic stay goes into effect automatically, as the name would suggest. It is a very powerful tool and applies to nearly every entity involved in the bankruptcy. The automatic stay does not mean your debt is forgiven or discharged, it just calls off the creditors.

As long as your bankruptcy case is active, your bankruptcy attorney can enforce the automatic stay to protect your interests. Beware, once your bankruptcy is dismissed or goes away, so does the automatic stay. However, while it’s in place, most actions are prohibited. A creditor cannot start a new lawsuit or even continue any existing lawsuit to collect a pre-petition claim. Ellis V. Consolidated Diesel Electric Corp, 894 F.2^nd 371 (10^th Cir. 1990). Even if a creditor already has a judgment against you, the automatic stay will stop collection of that judgment through garnishment or execution on your property, immediately. The bankruptcy law even prohibits attempts to collect, especially harassing, bothering, or intimidating the debtor. B.C. 362 (a)(6)

The automatic stay is an amazing tool. There are reasons it might not be granted or might not apply to a specific debt. There are also a bunch of exceptions to the automatic stay where some courts and some creditors may still be able to pursue you. This is a very important part of a Chapter 7 or a Chapter 13 bankruptcy filing. It is one of the best and most immediate manifestations of bankruptcy relief. It is significant to execute and enforce the automatic stay. It is one of the main tools against a creditor. A qualified and affordable bankruptcy lawyer can help you through this. You can retain immediately to assuage the creditor calls and harassment. Payment plans are available, and the consultation is free. GET FREE HELP NOW.

How Filing Bankruptcy Will Affect Child Support

Posted on July 16, 2013 by Staff Writer

There are various reasons why a person may file bankruptcy such as illness, loss of a job, or a divorce, but getting out of paying child support should not be a reason. When a person files bankruptcy, if qualified, certain debts are forgiven. However, with child support this obligation cannot be forgiven. That means that although a person can file bankruptcy if he or she has a court order to pay child support, that obligation will not be dismissed because of the bankruptcy.

Likewise, if you receive child support and the non-custodial parent files bankruptcy, he or she will still be required to pay child support. However, having other debts forgiven may make meeting the child support obligation easier for non-custodial parents.

Although child support is never forgiven, Filing chapter 13 may provide a temporary stay, which means that collection efforts must cease during the process. In addition, filing bankruptcy could provide necessary relief if you are overcome by other debt. If you qualify, Chapter 7 would forgive the debt, whereas a chapter 13 will offer a reschedule of lower payments to your creditors. Once you have filed, your creditors will be notified and must not contact you during the process. Reestablishing credit after filing bankruptcy is also possible.

The process for filing bankruptcy can be complicated. Some people may find the process intimidating and therefore may never consider it. For some Arizona residents and others, filing is their way out from under a mountain of debt. If you or a loved one is considering bankruptcy as a means to a fresh start or if you have questions as to how doing so could affect child support and outstanding debts it may be time to contact an experienced bankruptcy lawyer today. The consultation is free.

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Can You Be Evicted During Bankruptcy?

Posted on May 18, 2013 by Staff Writer

Filing bankruptcy is meant to help filers to eliminate debt and get a fresh financial start. If a bankruptcy filer does not have money to pay their bills, they may wonder: what happens if I cannot pay my rent? Am I protected from eviction?

In order to evict a tenant, a landlord must have definite cause. Before the eviction process begins, a written notice must be sent to the tenant. This notice should list specific reasons why the tenant must leave and a time period in which they must be out.

The notice can be sent if the tenant has broken the lease, failed to pay rent, or failed to move out after the end of the lease term. If, after receiving the notice, the tenant fails to take action or leave the property, the landlord can begin the process of eviction.

The renter is then served with a summons. At that time the renter can file a response and go to the court hearing. If the renter does nothing, the landlord is given default judgment. A Writ of Possession is passed on to a law enforcement official, who assists the landlord in taking possession of the rental property. The renter and their belongings will be removed by the officer. The landlord will change the locks and ensure that the property is secure.

However, all of this can halt if a bankruptcy has been filed prior to a judgment on eviction.
During bankruptcy the renter is given an automatic stay, halting the eviction unless the landlord petitions the bankruptcy courts. A reschedule for an eviction hearing will be made which can take up to four weeks. This allows the bankrupt renter a little time before they have to move.

If you are trying to determine whether bankruptcy is right for you and how to proceed as a renter during the bankruptcy process, contact an Arizona bankruptcy lawyer who will guide you through the process and make it easy to understand.

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What Happens if A Creditor Files a Relief From the Automatic Stay?

Posted on March 24, 2013 by Staff Writer

One of the most important protections a debtor automatically receives upon filing for bankruptcy is the “automatic stay.” The automatic stay is imposed upon all of a debtor’s creditors preventing those creditors from actively collecting on a debt. The stay binds all creditors, not just unsecured creditors. Upon filing for bankruptcy protection, a creditor can no longer harass, garnish wages, levy bank accounts, foreclose on a property, repossess a vehicle, or even pursue an eviction. The stay remains in effect while the bankruptcy is pending but is lifted once the bankruptcy case is discharged. At that point, the discharge acts as an injunction from your creditors from actively collecting on those debts that were discharged in the bankruptcy.

However, the stay can be lifted during the bankruptcy upon motion by a creditor. Motions to lift the stay are not as common as one would think. When a creditor files a motion to lift the automatic stay, the debtor is entitled to notice and a hearing. The burden is on the creditor to convince the bankruptcy court that there is a very good reason to lift the stay, and the court is predisposed to continue the bankruptcy protection. For instance, the court will not lift the stay when an unsecured debt will be included in the debtor’s discharge.

Generally, secured creditors are the most common type of creditor that would seek to lift the stay. (A “secured debt” is a debt that is secured to a form of collateral, i.e. a mortgage or car loan.) Secured creditors often file motions to lift the stay when the debtor is not making payments. Since property used as collateral must be paid for or returned during bankruptcy, the court will normally lift the stay unless the debtor can bring the payments current or show another good reason to deny the motion (for example, the debtor will use one of the available methods for dealing with secured debts in Chapter 7 bankruptcy, or the debtor has provided for payment of the debt in a Chapter 13 repayment plan). For example, if you are behind on your mortgage when you file for Chapter 7 bankruptcy, your mortgage lender is likely to ask the court to lift the stay so it can continue with foreclosure.

A landlord may also seek relief in order to evict for non-payment of rent. A bankruptcy debtor’s rent obligation is divided on the bankruptcy filing date into pre-bankruptcy and post-bankruptcy debts. Pre-bankruptcy rents are dischargeable, and post-bankruptcy rents are not dischargeable and not subject to the automatic stay. This means that while the automatic stay would prohibit the landlord from collecting on unpaid pre-bankruptcy rent, the landlord may evict if post-bankruptcy rents are not paid.

Is Bankruptcy right for me?

Posted on February 1, 2013 by Staff Writer

The decision to file bankruptcy is a very personal one and should be made only after careful consideration. Your first step should be to know all your available options. So take advantage of the opportunity to meet with one of our bankruptcy attorneys for a free consultation to find out how bankruptcy would affect your situation. They will be able to explain the bankruptcy process to you and how it will affect you.

What can bankruptcy do that other forms of debt settlement cannot? One thing unique to Bankruptcy is the “Automatic Stay”. The Automatic Stay of Bankruptcy goes into effect as soon as the bankruptcy is filed. The Automatic Stay prevents creditors from taking further collection efforts against someone who has filed for bankruptcy. This means that if you are currently being garnished the garnishment will immediately stop. Additionally, bankruptcy will prevent foreclosure of your home, stop repossession of a vehicle, stop creditor lawsuits, and creditor harassment.

Are you struggling or missing minimum payments on your credit cards? Then contact each of your creditors and find out what the current balance is. Many debt collectors will only settle for lump-sum cash payments. Or if your creditors will accept new repayment plans will you be able to actually keep up with those payments? Do you have the cash to pay off your creditors? If you cannot make minimum payments on your credit cards you may want to consider filing for bankruptcy to get a fresh start.

Will I Lose my Car if I file for Bankruptcy?

Posted on January 24, 2013 by Staff Writer

Will you lose your car if you file for bankruptcy? Generally no, however, there are some exceptions that you should be aware of. Section 362 of the U.S. Bankruptcy Code provides an “Automatic Stay” to protect consumers from their creditor’s collection activities during bankruptcy. Unless a creditor files a Motion to Lift the Automatic Stay they cannot repossess a vehicle during the bankruptcy. A Motion to Lift the Automatic Stay is nothing more than a creditor asking the bankruptcy court for permission to pursue its collection activities. A creditor must have a legitimate legal reason for why the Automatic Stay should be lifted otherwise their request will be denied. But the most common reason for allowing a creditor to pursue its collection activities is if the debtor is behind on payments. So in order to keep your car safe from the bank during the bankruptcy you need to be on time and stay on time with your payments.

Additionally, vehicles are protected from creditors and the bankruptcy court by law. A.R.S. § 33-1125(8) provides that Arizonians who are single can have up to $5,000 of equity in their vehicle. Married couples have a $10,000 exemption. The $10,000 can be used entirely on one vehicle or can be split equally between two cars. Also, people who have a handicap license plate receive a $10,000 exemption. So for example, if you are single and own a vehicle that is worth $4,999, the bankruptcy court cannot touch it. However, if you are single and own a vehicle that is worth $7,000 then you are over the exemption amount by $2,000 and the court is going to ask for $2,000 in order for you to keep it.

Bankruptcy laws and how they pertain to vehicles can be confusing however, during a free consultation you can speak with one of our skilled attorneys and see how your vehicle can be protected in bankruptcy.

I owe more than my house is worth and waiting on the bank to threaten foreclosure, what can I do?

Posted on January 17, 2013 by Staff Writer

If you are delinquent on your mortgage and still want to keep your house then bankruptcy may be able to help you. A Chapter 13 bankruptcy can allow homeowners to file bankruptcy, catch up on their missed payments and possibly even reduce the amount owed the home. In chapter 13 bankruptcies secondary mortgages can be “stripped” or removed during the bankruptcy process. Stripping mortgages can reduce the principal owed and thus reducing the monthly mortgage payments.

Additionally, as soon as a bankruptcy is filed an Automatic Stay of Protection goes into effect. This Automatic Stay of Protection prevents creditors from taking action against any of your property without first asking the court for permission. For example, a creditor cannot foreclose on a property without first “Lifting the Automatic Stay” or asking the bankruptcy court for permission. So by filing a chapter 13 bankruptcy you are able to stop the foreclosure and pay any arrearages during the bankruptcy.

If you are a home owner who does not want to keep your home then “surrendering” the property in bankruptcy may be the right option. Surrendering the property should accelerate the foreclosure. As long as a property is titled in your name then you are responsible for any HOA dues and property taxes, so if you are not living in a property surrendering it in bankruptcy may be the best option for you.

Another option is a short sale. With a short sale a homeowner obtains permission from the bank to sell the home to a third party for less than the balance owed. This is not a quick process, nor is it guaranteed but an experienced real estate agent can increase your odds. Having financial difficulties with an underwater house should not lead you to believe that foreclose is your only option. Our experienced attorneys can help explain what options may be available to you.

The Purpose of the Automatic Stay in Bankruptcy

Posted on July 25, 2012 by Staff Writer

Most people know that the filing of bankruptcy is an efficient way to remove one’s debts. But, most people do not know that debtors in bankruptcy are also afforded great protection from their creditors the instant the bankruptcy petition is filed. There are many reasons for filing a bankruptcy, some of which include: stopping the sale, foreclosure or repossession of one’s home, property or vehicle; stopping wage garnishments or bank levies; or, simply stopping creditor harassment. The automatic stay is what stops those events from occurring or continuing once the bankruptcy is filed.

Upon filing a bankruptcy, the automatic stay kicks in and it is designed to protect the debtor and the debtor’s assets from collection actions by his or her creditors. The debtor’s assets now become property of the bankruptcy estate and then can hopefully be exempted (protected) and retained by the debtor. Some property is unable to be exempted, and will need to be turned over to the bankruptcy trustee so that he may evenly distribute it amongst the debtor’s creditors. However, the debtor does not now need to worry about creditors actively attempting to collect those assets directly, and in the process, destroy the debtor’s attempt at a fresh start.

How Bankruptcy Can Help Foreclosure.

Posted on July 25, 2012 by Staff Writer

The filing of a bankruptcy petition with the Bankruptcy Court initiates the automatic stay, an injunction order given by the Court to halt creditor collection efforts against the filer. Secured creditors are temporarily prohibited from collection efforts unless they obtain permission from the Court to resume collection actions. Most unsecured creditors will be permanently prevented from resuming collection efforts by the stay and will subsequently be discharged in the bankruptcy. The protections provided by the automatic stay begin when the petition is filed with the Court. collection efforts unless they obtain permission from the Court to resume collection actions.

The automatic stay also stops foreclosure proceedings. F or the stay to be effective against foreclosure, the petition must be filed before the foreclosure sale takes place. Although filing bankruptcy can stop the foreclosure sale, this is usually only a temporary protection against losing the home.

Most people filing bankruptcy will file a Chapter 7 case, by far the most commonly filed chapter in bankruptcy. Chapter 7 Bankruptcy is a relatively quick procedural process. Once a petition is filed, a debtor (filer) may receive a Notice of Discharge within 4 or 5 months. The bankruptcy stay no longer provides protection against secured creditors once the case is closed. The debtor is once again subject to collection attempts by these creditors.

A home will be protected from foreclosure during the bankruptcy, but will once again be at risk when the case is closed. The debtor must pay the mortgage arrearages and remain current on post-petition house payments if she wants to keep her home. Filing bankruptcy can be very helpful in catching up on house payments because the debtor will no longer be liable for her unsecured debt. The money that would normally be spent paying credit cards, medical bills, and payday loans, or the money lost from a garnishment, can now be allocated to secured debts like the house and car payments.

Most homeowners in Arizona will be protected by the state’s anti-deficiency statutes from the liability on a first mortgage if their home is foreclosed. However, a homeowner will likely be liable to the lenders of any junior mortgages. A debtor may choose to surrender her house in bankruptcy and discharge the liabilities from all mortgage holders. By surrendering her home in the bankruptcy, the debtor is protected from all loan and arrearage responsibilities and obligations.