Bankruptcy and Employment

Posted on February 13, 2013 by Staff Writer

Many people who have to file bankruptcy have obvious and well-founded fears of losing employment after filing. Section 525 of the Bankruptcy Code, approved in 1943, ensures that no governmental unit can terminate employment or discriminate, with regards to employment, for a person having filed bankruptcy. And yet a U.S. Court of Appeals decision issued in 2011 set a precedent that could hinder this decades-old protective law. In Myers v. Toojay’s Management Corp., an appellate court in Florida decided that while government employers may not deny employment to an individual who has filed for bankruptcy, this does not apply to private employers. The Bankruptcy Code is murky, and other courts may not uphold this controversial decision. Yet anyone who files for bankruptcy should be aware of its implications.

Regardless of this new ruling, most bankruptcy attorneys agree that they’ve never heard of a private employer denying employment based solely on a prior bankruptcy filing. Losing employment after filing for bankruptcy but independent of the filing is another story, and most definitely one many would consider absolute worst-case scenario. If this happens to you, the most important first step is to contact the bankruptcy attorney who handled your bankruptcy filing. He or she will be able to help you explore options, especially if you filed a Chapter 13. You may be eligible to temporarily waive monthly payments while you seek other employment.

According to U.S. Bankruptcy Court statistics, there was a 22 percent drop in the number of bankruptcy filing in Arizona between 2011 and 2012. This figure includes both personal and corporate, but is good news regardless for Arizona residents. Despite the drop, many individuals are still dealing with bankruptcy, and could have subsequent employment concerns because of it. For this and any other reason, 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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Bankruptcy Charges in Arizona

Posted on January 14, 2013 by Staff Writer

It may seem backwards, but if you’re cash-strapped enough to file for bankruptcy, there’s one more major bill you’ll have to pay, and that’s for the filing itself. Some families considering bankruptcy might think it’s a cheaper option to forgo a qualified attorney to handle the proceedings, but even the Federal Bankruptcy Court advises always hiring a competent attorney to walk a person through the process. Not only are filing fees the same to file with or without an attorney, bankruptcy is a complicated process that has plenty of room for error. Bankruptcy crime is a fraud punishable by a fine of up to $250,000 and/or five years in prison. It’s always best to know what you’re getting into, and this means hiring an experienced bankruptcy attorney to take you through the process.

Filing fees vary from state to state, and tend to change every year. In November 2012, Arizona announced its newest bankruptcy charges. The typical Chapter 7 (liquidation), Chapter 13 (reorganization) and Chapter 12 (family farmer) bankruptcies are the least expensive, at $306, $281, and $246 respectively. These aren’t the only fees associated with filing in Arizona—any reopening of a case, copies, the splitting of a jointly filed case, or exemplification of any document are examples of additional fees are applied whether or not the case was filed by an attorney. An amendment to a case will cost $30, and even abandoning the bankruptcy all together will cost $176. This fee alone is a reason to seek counsel to determine if bankruptcy is right for you.

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

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Hostess to Shut Down Operations

Posted on November 30, 2012 by Staff Writer

According to the Wall Street Journal, Hostess, “the company behind treats snacked on for generations, is poised to present to a federal bankruptcy judge a plan to shut down 36 plants and sell off the company’s business.” The announcement was made, according to the Journal, after the company’s second-largest union orchestrated a strike that resulted in a shutdown. The shutdown, Hostess announced, “would result in the loss of more than 18,000 jobs and place the fate of more than 30 American brands in jeopardy.” Union president Frank Hurt told the Journal that he “believed there was more than a good chance that a buyer quickly would swoop in to buy the profitable parts of the company and give his union’s members their jobs back.”

Yet Hostess CEO Greg Rayburn told the Associated Press, as reported in AZ Central, that there was no buyer waiting in the wings to rescue the company. Hostess is based in Irving, Texas and originally filed for Chapter 11 protection in January 2012. Yet, unlike many of its competitors, according to AZ Central, “Hostess had been saddled with high pension, wage and medical costs related to its unionized workforce.”

The shutdown isn’t only affecting the company and its workers: according to the East Valley Tribune, “the Twinkies shelves are quickly emptying across Arizona after Hostess announced it was going out of business.” Yet it’s more than cake and icing for the company’s 18,500 workers across the nation, according to KPHO Radio. There are roughly 500 bakery outlet stores across the country as well, which means that about 20,000 people are facing layoffs.

Corporate bankruptcies can lead to personal bankruptcies, and the closing of a corporation as large as Hostess will affect many across the country. If you or someone you know is facing bankruptcy, don’t go through it alone. Contact a dedicated Arizona state bankruptcy attorney today.

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Rebuilding Your Credit Following Bankruptcy

Posted on October 14, 2012 by Staff Writer

One common concern of many consumers is that if they file for bankruptcy proceedings, whether it be under Chapter 7 or Chapter 13, that there will be an irrevocable mark on their credit reports from which they will never recover. The reality is that filing for bankruptcy will undoubtedly lower your credit score significantly. A lower credit score will make it more difficult for you to qualify for credit, and may subject you to higher interest rates when you do qualify for credit. However, the damage to your credit score will not last forever, and you can easily make strides to rebuild your credit following your bankruptcy discharge.

After your bankruptcy is complete, you are likely to be able to get a credit card with at least a small credit limit. By using that card regularly and making timely payments each month, you can slowly begin to rebuild your creditworthiness. Likewise, you are likely to qualify for a vehicle loan fairly quickly following your bankruptcy. Although interest rates on these loans can be high, making regular, on-time payments also can help rebuild your credit score.

Fortunately, as reported in a recent Bloomberg article, federal law is increasingly attempting to protect consumers by ensuring that their credit scores are correct and that there is easy access to their credit reports on a routine basis. For instance, under the Fair Credit Reporting Act, you can access a free copy of your credit report from each of the three major credit reporting companies each year. Furthermore, starting October 1, 2012, the Consumer Financial Protection Bureau, as created by the Dodd-Frank law of 2010, will begin supervision of the records and practices of companies in the business of credit-reporting. This new supervision is designed to ensure that consumers and lenders receive the same credit scores and information from credit-reporting agencies.

In many cases, bankruptcy is the best option to stopping creditor harassment and dealing with overwhelming amounts of debts. Fortunately, while bankruptcy may temporarily lower your credit score, with time and hard work, you can successfully rebuild your credit score. Contact your experienced Las Vegas bankruptcy attorney today for more information about the effects of bankruptcy on your credit score, and to get answers about whether bankruptcy relief is right for you.

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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Bankruptcy Not Only for the Average Joe

Posted on July 30, 2012 by Staff Writer

After the annual National Football League’s draft season, it is reported that an estimated 200 college athletes will secure contracts worth millions of dollars. Yet, in as little as five or ten years, these same athletes may become bankrupt.

This phenomenon is not limited to any specific group of athletes, but basketball and football players seem to file bankruptcy in the highest numbers. Sports Illustrated set forth estimated numbers (in 2009) of 78% of NFL players and 60% of NBA players were experiencing financial strain between two (NFL players) and five (NBA players) years of retiring. Exactly how does this happen?

Although there are several reasons for this occurrence, one of the contributing factors seems to be a result of unsound financial advice. The new millionaires become magnets for so called “advisors” who may not actually be experts in handing financial matters. Also, marriages and extramarital affairs contribute to huge income losses for athletes.

Athletes receive their pay early in their careers and there is a marked lack of the same cash flow after retirement or as the athlete ages. Unwise money management from the beginning can create bankruptcy in later times.

The average person who files bankruptcy may not have the same status of financial high points as these professional athletes, but they face financial mishaps in a similar manner. The Supreme Court set forth the definition that bankruptcy “gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” As such, bankruptcy is an available tool to help alleviate financial burdens and learn from past missteps to plan for a successful future. Contact a compassionate Arizona bankruptcy lawyer today to begin your new life.

New Guidelines for Chapter 13 Bankruptcies in Arizona

Posted on June 18, 2012 by Staff Writer

One June 1 2012, new guidelines for “approving flat fee arrangements as part of the Chapter 13 plan confirmation process” went into effect in the state of Arizona, according to the District of Arizona United States Bankruptcy Court. A Chapter 13 bankruptcy, according to the Federal Bankruptcy Court, is one in which an adjustment of debts “of an individual with regular income” are allowed to be readjusted, which “allows a debtor to keep property and pay debts over time, usually three to five years.”

The new guidelines put a cap on the maximum fee that a bankruptcy attorney in Arizona can charge at $4,500, but, according to the new ruling, “if such fee is not sufficient to fairly compensate counsel for the legal services rendered in the case, the attorney may apply for additional fees.” It’s good news for consumers, as the court will not approve additional fees unless a detailed plan is issued. This can relieve already financially strapped clients from hidden costs, especially those that often cause the financially insolvent to be wary of hiring an attorney to begin with.

The new guidelines also dictate specific attorney responsibilities that must be fulfilled by any bankruptcy attorney hired in the state of Arizona, including but not limited to:

Review of financial documents and client consultation
Representation at a 341 Meeting
Review and analysis of creditor claims, including attendance at related hearings
Preparation / filing of affidavit of no income regarding tax claims
Preparing / filing of bankruptcy notice in State Court actions

Arizona residents should note that the new guidelines apply specifically to Chapter 13 filings, not the more common Chapter 7. If you or someone you know is considering a Chapter 13 bankruptcy, contact a dedicated Arizona bankruptcy lawyer today.

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Co-Signors Responsibility to Bankrupted Debt

Posted on June 4, 2012 by Staff Writer

In a Chapter 7 bankruptcy case, the bankruptcy trustee works with the court to liquidate the filer’s assets and use the resulting funds to pay off as many creditors as possible before discharging the filer’s remaining debt.

A co-signer can be held legally liable for any debts not paid through the bankruptcy. If, for example a debt for a personal loan is discharged during Chapter 7 proceedings, the original loan holder no longer has to pay the creditor. The co-signer, however, did not file for bankruptcy and must repay the full amount owed to the creditor.

When an individual agrees to co-sign a loan for a loved one, the creditor reports the loan to the credit bureaus and it appears on both the primary applicant’s credit report and the co-signer’s credit report. Should the primary applicant then file for bankruptcy, the creditor updates the loan’s status to “included in bankruptcy.” Unfortunately, this update also appears on the co-signer’s credit report-even though he isn’t the one who filed for bankruptcy.

According to the Federal Trade Commission, a creditor may opt to sue the co-signer for the unpaid amount of a loan included in the primary applicant’s bankruptcy. This can result in the co-signer suffering a wage garnishment or bank levy. In some cases, the creditor may opt to place a judgment lien against any property the co-signer owns-effectively preventing him from receiving any proceeds from the sale or transfer of his property without first paying off the debt he co-signed for.

Despite filing bankruptcy however, a debtor can retain primary responsibility over a co-signed loan if they opt to “reaffirm a debt.” When a debtor chooses to reaffirm a debt, he petitions the court for the right to retain responsibility for repaying the creditor in question. Reaffirmed debts do not then need to be paid by co-signers.

When filing for bankruptcy in Arizona, it is critical to seek guidance from an experienced and caring Arizona bankruptcy attorney who can guide you through the process and give personalized advice on your Arizona bankruptcy case.

Filing Bankruptcy as an Individual

Posted on May 19, 2012 by Staff Writer

In Arizona, depending on the type of debt that you have, it is possible to file for bankruptcy as an individual even if you are married. You are not required to file with your spouse, although it is recommended that you speak to a knowledgeable bankruptcy attorney who can inform you of possible consequences and benefits to determine whether it is in your best interest to file separately, jointly, or not at all.

In Arizona, most assets that you or your spouse earned, as well as most debt that was acquired by either party is considered community property or community debt. Any debt or assets that are acquired before or after the marriage are not considered part of the community debt or community property. An Arizona bankruptcy attorney can help you determine what is legally considered community property or community debt in Arizona.

If you and your spouse have joint debts and you file on your own, your spouse’s credit rating may be affected. However, without joint debts, your spouse’s credit rating can remain unaffected by bankruptcy. Your bankruptcy will prevent you from co-signing on future financial obligations with your spouse for several years.

The spouse who isn’t filing does not have the protections that bankruptcy can offer; not only is there the possibility of losing community property, the spouse who doesn’t file may still be responsible to pay joint debts. Because things like a house or a car can be considered joint property, it can be required to be used to pay for community debt. Even if you file for bankruptcy without your spouse, they have the risk of losing such community property to pay for debt. Joint debt is debt that has been agreed by two or more individuals, and each party can be held responsible to pay 100% of the debt if another party refuses. This may not be a problem if your spouse’s credit is in good standing, however if they have acquired large amounts of debt, could create a problem.

It is possible to file for bankruptcy without the help of an Arizona bankruptcy lawyer; however it is in your best interest to consult an attorney to discuss the best financial options for you and your family. Contact a Tuscon, Arizona bankruptcy lawyer today for advice on how to best handle your bankruptcy case.

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.