Fewer People are Filing for Bankruptcy because of New Habits

Posted on August 18, 2013 by Staff Writer

Since the beginning of 2013, consumers in the United States are not filing for bankruptcy protection as much as previous years. The way consumers are carrying debt has also improved. Credit card debt is one type of debt that can be removed or reduced through bankruptcy. Only 2.4% of credit cards were delinquent by thirty days or more, which is the lowest percentage in over 20 years.

“Sharply lower delinquency levels reflect improving consumer balance sheets, steady job creation and a continuing increase in household wealth,” said James Chessen, the American Bankers Association’s chief economist. “Many consumers have learned the hard lessons of recession and have redoubled their efforts to keep debt at manageable levels.”

This decrease in filings is a trend not only nationally, but in the Phoenix as well. Compared to the same period of last year, there was almost a 25% decrease in filings. Overall, bankruptcies have been decreasing since their peak in 2009.

Certain bankruptcy experts look to temper this good news by looking at possible causes for this decrease. They say it is not necessarily a sign that the economy is recovering, but that consumers are reluctant to sign up for new bills. The executive director of the American Bankruptcy Institute, Sam Gerdano, said that consumers have limited the chance of filing for bankruptcy by living on their base income alone.

If you have experienced a change in your life and need a fresh start financially, consider filing for bankruptcy. Large medical expenses, losing your job, and filing for divorce can all put a major strain on your bank account, even if you are frugal with your money. Don’t let an unexpected event get in the way of your future, contact an experienced bankruptcy attorney in Phoenix today. They can see if you qualify for bankruptcy and let you know what options are available to you.

A Study of How Sadness can affect Personal Debt

Posted on April 25, 2013 by Staff Writer

People seek different ways to deal with sadness. It seems unfortunate in the grand scheme of things, but a study shows that sadness can have a negative effect on a person’s financial bottom line and also further deteriorate their mental state.

In a study run by students Jennifer Lerner of Harvard’s School of Government and Elke Weber and Ye Li of Columbia reviewed the connection between sadness and debt. The results were published in the Psychological Science journal last year.

They came up with a term called “present bias”. The unhappiness of people makes them value the present more so than the future. This leads them to put more importance on instant gratification rather than the long term consequences. So it seems natural that “retail therapy” would be an avenue that people would use to make them feel better.

The bad news is that when debt becomes a problem then the sadness can turn into depression. Especially if the debt can’t be turned around and necessitates a bankruptcy. “Many of us confuse our self-worth with our net-worth,” clinical psychologist Bradley Klontz said. “As such, financial problems can deal devastating blows to our self-esteem. Bankruptcy can lead to feelings of guilt and shame, and cause us to isolate from our family and friends out of embarrassment.”

For some people, it has to get worse before it can get better. Filing for bankruptcy can alleviate your money issues and allow you to have a fresh start If you feel like bankruptcy is your best option, then contact a legal professional who can help you through the process. An experienced bankruptcy attorney in Phoenix can show you the options for turning around your situation so contact them today.

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Rental Properties During Bankruptcy

Posted on January 11, 2013 by Staff Writer

While bankruptcy is a good last option for many Americans battling financial insolvency, there are several reasons to seek professional assistance when considering filing for either Chapter 7 or Chapter 13. Knowing how to hold on to what you can after bankruptcy is one such reason. Many people believe that filing for bankruptcy automatically means that any rental or secondary property must be sold. While this is sometimes the case, whether or not the property has to be sold depends on what type of bankruptcy you’re filing, the outstanding loan on the property, and how much income is generated if the property is being rented out.

When filing a Chapter 13—a debt reorganization—bankruptcy, it generally allows for property to be kept and debts to be paid over time, usually three to five years, according to the Federal Bankruptcy Court. Foreclosure proceedings can be stopped during a Chapter 13, but individuals are still expected to pay all mortgage payments on both the primary and secondary residencies. After the 2008 housing crash, which hit Arizona especially hard, many rental property mortgages were underwater, meaning that people owed more on the mortgage than the property was worth. This can be adjusted by a bankruptcy judge during a Chapter 13.

You’re more likely to have to sell a rental property under a Chapter 7—liquidation—bankruptcy. Anyone filing a Chapter 7 bankruptcy gets an exemption for the equity in the primary residence. In Arizona, according to the Arizona bankruptcy code, the homestead exemption is $150,000. This will most likely only be able to be applied to the primary residence, and would not apply to a secondary or rental property. Whether you’re able to keep secondary property also depends on whether it’s in you or your spouse’s name.

Determining what you’re able to hold to after bankruptcy is only one step of the complicated bankruptcy process. If you or someone you know is considering bankruptcy, don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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Declaring Bankruptcy before or after Marriage?

Posted on January 2, 2013 by Staff Writer

When two people forge a bond and want to get married, there are a lot of things to consider. On one hand, there is the planning that goes into a wedding. Finding a florist, booking a venue, and all the other vendors that must be contacted make a long list. On the other hand, there are issues with where you will live, what your goals are, and other important marriage related concerns. So if you have debts, this is the time to consider filing for bankruptcy.

There are many reasons to file for bankruptcy before marriage. The means test is a very important part of being able to declare for bankruptcy because it measures if you are able to recover from being in a bad financial position by yourself. Having a separate income, being single, you may be more likely to be qualified for a bankruptcy. Once you are married, your income is considered with your spouse, even if your debts are not.

This is because Arizona is a community property state. That means that your new spouse is not accountable for the debts accrued before marriage. Those debts will be in your name regardless of your marital status. It behooves you to consider your future spouse’s credit score and income. If they also have a bad credit score, you might be better off trying to work through your debts so that you can get loans for cars or a house.

Help alleviate the stress associated with these major steps in your life. Don’t put too many things on your plate because going through a bankruptcy is as time-consuming as preparing for a wedding. The best advice is to contact a skilled bankruptcy attorney in Arizona who can help you decide the best step for you before your nuptials.

New Bankruptcy Exemption in Arizona

Posted on December 2, 2012 by Staff Writer

Many people in Arizona have found that bankruptcy is the only option left to save their financial future. The silver lining about bankruptcy in Arizona is that there are exemptions in place to protect the debtors and their possessions. Typical exemptions include a person’s car (to a value of $5,000) and homestead property (to a value of $150,000). Recently, the Ninth Circuit Court of Appeals had to examine an exemption concerning the cash value of life insurance policies.

Arizona has a current exemption concerning the cash surrender value of life insurance policies. The statute states that these policies are only exempt if “named as beneficiary the debtor’s surviving spouse, child, parent, brother or sister, or any other dependent family member”. The case which helped change this decision was concerning an adult non-dependent daughter who was named as a beneficiary.

The dependency issue was a huge tipping point for this case. The trustee of the bankruptcy was trying to reverse the exemption due to the non-dependent status of the daughter. Since the daughter is grown, this particular case fell outside of the statute. Ultimately, the appellate court found that the exemption should include independent children who are listed as beneficiaries.

As you can see the bankruptcy laws of Arizona are complex and also being updated constantly. That is why it is absolutely imperative to have the best legal counsel available. If you are serious about the possibility of a bankruptcy, then you should definitely contact an experienced bankruptcy attorney in Phoenix to start discussing if bankruptcy is your best option.

The Financial Picture in Arizona Starting in 2013

Posted on November 27, 2012 by Staff Writer

There have been lots of reports lately about a “fiscal cliff” that we are coming closer to as a country. The term was coined by Federal Reserve Chairman Ben Bernanke during an appearance in front of Congress. It refers to the problem which the national government will face at the end of 2012. The tax cuts put in place by the Bush and Obama administrations will be over as of midnight on December 31^st.

Payroll taxes will increase by 2% for workers. Taxes will also increase in order to fund Obama’s new healthcare initiative. There are other tax breaks which are set to expire as well as tax rates which are set to increase. The worry is that the onslaught of these new taxes will stifle the resurgence of America’s economy and send it back into a recession. Lawmakers are set to make some difficult choices soon which will affect everyone.

This will also force consumers and businesses to make some difficult decisions. In Arizona, one of the choices available for financial problems is declaring for bankruptcy. If your financial situation is bad right now, within the next year, it could be even worse. There is still an opportunity for the government to step in and change the financial future of the country. While you cannot control the economy of the nation, you can control your financial future. Contact an experienced bankruptcy attorney in Arizona who can assist you in giving you a personal financial picture and whether or not bankruptcy is your best option.

Credit Card Debt Rises, Delinquencies Fall

Posted on October 20, 2012 by Staff Writer

Credit card debt is on the rise for the American consumer, which could be bad news for the number of bankruptcies as the holiday shopping season approaches. According to the American Banking Association Banking Journal, “average credit card debt per borrower increased from $4,699 in the second quarter of 2011 to $4,971 in the quarter that just ended—a rise approaching 6 percent.” According to TransUnion, this average is, however, still low compared to the $5,719 average that peaked in the second quarter of 2009.

The news isn’t all bad, however. At the same time that debt reached its relative new high, “the second quarter saw the national credit card delinquency rate fall to 0.63 percent, down ten percentage points from the first quarter.” This, according to TransUnion, is the lowest level since the second quarter of last year, and last year was the lowest level of delinquencies since 1994.

This could be indicative either of the fact that American consumers have begun to learn to spend within their means, or that they have adjusted to paying higher rates of credit card debt as a percentage of monthly expenditures. Either of these could be one reason that the number of bankruptcies in Arizona has continued to drop recently. According to CreditCards.com, Arizona rose six spots from number 21 to 15 for the listing of bankruptcies per capita. Better management of credit card debt—including a reduction in number of delinquencies that follows the nationwide trend—would have a direct impact on the number of bankruptcies in a state.

If you or someone you know is considering bankruptcy, as a result of credit card debt or unmanageable delinquencies, don’t go through it alone. Contact an experienced Arizona state bankruptcy attorney today.

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Retaining Assets During Bankruptcy in Arizona

Posted on October 17, 2012 by Staff Writer

For many Arizona residents, bankruptcy is the only option to escape the crippling burden of debt or foreclosure. Chapter 13 is commonly called the “wage earner’s bankruptcy,” as workers can continue to keep a portion of income that they earn during bankruptcy to help get their feet back on the ground. Filing a Chapter 13 bankruptcy is a bit more complicated than the straightforward Chapter 7. According to the U.S. Federal Bankruptcy Courts, a Chapter 7 provides for “liquidation,” which means “the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.”

In Arizona, according to the Arizona state bankruptcy courts, a Chapter 7 bankruptcy provides for a Homestead Exemption, of up to $150,000 for either a home (including mobile homes), plus the land upon which the home is situated. Personal property exemptions can be up to $4,000 and money, benefits, and proceeds up to $20,000. There are a few other property exemptions—making Arizona one of the best states in which to file a Chapter 7 bankruptcy—but if you’re interested in retaining the majority of your assets, including money earned while in the throes of bankruptcy, filing a Chapter 13 might be better for you.

The biggest advantage of a Chapter 13 over a Chapter 7 filing, according to the U.S. Bankruptcy Code, is that “Chapter 13 offers individuals an opportunity to save their homes from foreclosure.” If a person files for Chapter 13, he can “stop foreclosure proceedings and may cure delinquent mortgage payments over time.” In a state such as Arizona, which was hit particularly hard by foreclosures and the imploding of the housing market, a Chapter 13 filing might be a better option for cash-strapped residents.

If you or someone you know is considering bankruptcy, don’t go through it alone. Contact a dedicated Arizona state bankruptcy attorney today.

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Arizona’s Homestead Exemption

Posted on September 15, 2012 by Staff Writer

Bankruptcy can be a confusing process, especially with the long list of exemptions that work in some states and don’t in others. Seeking specific information about the bankruptcy code in your state is an imperative part of the bankruptcy process, before, during, and after you’ve hired a bankruptcy lawyer.

The housing market was hit especially hard in Arizona during the 2008 economic downturn, and the rate of foreclosures in Arizona was exceptionally high. At the end of 2011, according to RealtyTrac, there were 8,217 properties in Arizona that were being foreclosed—1 in every 346 housing units. In fact, Arizona was in the top three states for rate of foreclosure, alongside California and Nevada.

Because of this, Arizona residents who are currently facing financial insolvency are more concerned with keeping their home than ever before. Luckily, Arizona state bankruptcy code includes a Homestead Exemption. According to a report issued by the Arizona state government, a homestead is a “dwelling with its land and buildings occupies by the owner as a home.” Arizona bankruptcy law, according to the report, “does not recognize federal property exemptions, but establishes exemptions specific to Arizona residents.”

The Arizona Homestead Exemption protect up to “$150,000 of a person’s equity in the person’s dwelling from attachment, execution, or forced sale.” Married couples may only claim one homestead exemption in a bankruptcy case. It’s easy to claim this exemption: it’s automatic, which means that no written claim is required.

If, for whatever reason, such as if a debtor has more than one property that could qualify for the exemption, the person filing bankruptcy must waive the exemption and “record the waiver in the office of the county recorder.”

There are a couple of federal regulations to state homestead exemption laws, such as that “a person cannot exempt any amount of interest, which is acquired within 1,215 days prior to filing for bankruptcy and that exceeds $125,000 in value.” These and other such stipulations are part of what makes filing for bankruptcy such a confusing process. Don’t go through it alone. Contact an experienced Arizona bankruptcy attorney today.

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Trend of Falling Bankruptcies in Arizona Continues for 18 Straight Months

Posted on August 20, 2012 by Staff Writer

An ongoing trend toward fewer bankruptcies remained firmly entrenched in July, with filings dropping 14 percent around the Phoenix metro area.

The 1,847 bankruptcies started in July were down from 2,153 in July 2011, reported the U.S. Bankruptcy Court in Phoenix. The latest figures marked the 18th consecutive month in which filings fell on a year-over-year basis.

For all of Arizona, filings also have dropped for 18 straight months, including a decline of 14 percent in July.

The improvement in the bankruptcy situation doesn’t mean consumers are flourishing, but it’s the latest of several encouraging signs. For example, the W.P. Carey School of Business at Arizona State University reported Thursday that median home prices around Maricopa and Pinal counties were up 29 percent in June over a year earlier.

Also, credit-researcher TransUnion reported that mortgage delinquencies in Arizona fell 21.1 percent over the past year, the second-best showing of any state in the nation. The average amount of mortgage debt in Arizona, $193,169, was down 3.1 percent from one year earlier, also the second-best improvement nationally. It may not always sound like the most appealing option, but bankruptcy can help your financial situation if you’re struggling. An experienced bankruptcy attorney in Arizona can help you determine the best choice for you.

“The economy has not grown at a robust rate, but it does continue to slowly improve, and we believe the improvement in mortgage delinquencies will follow a similar pattern,” said Tim Martin, a group vice president in TransUnion’s financial-services business unit. “With steadying home prices and mortgage interest rates remaining at extremely low levels, it appears that market conditions are set up to allow for further declines in the mortgage delinquency rate.”

Nationally, consumer bankruptcy filings fell 12 percent in July compared with a year earlier, according to the American Bankruptcy Institute and Epiq Systems.

“The July filings continue to reflect the effects of sustained low interest rates and weak consumer spending,” said the institute’s executive director, Samuel Gerdano. “We are still on pace for perhaps the lowest total new bankruptcies since before the financial crisis in 2008.”

Across the U.S., there were roughly 4.1 bankruptcy filings per 1,000 Americans over the first half of the year.

If bankruptcy is the right option for you it is imperative to choose the right Professional Bankruptcy Firm that can guide you through the complex nuances of bankruptcy filing. Schedule a free consultation with an experienced bankruptcy attorney in Prescott, Arizona to see when you should file. Keep the assets you need to start over, don’t use them to pay creditors when you don’t have to. Contact a Prescott, AZ Bankruptcy Attorney Today!