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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Bankruptcy and Medical Bills

Posted on May 31, 2013 by Staff Writer

With the implementation of Obamacare getting closer, there are several questions about what the Affordable Care Act will do for Americans facing high medical bills due to an ongoing illness or disease. According to the Washington Post, “the nonpartisan Congressional Budget Office estimates that 30 million more Americans will have health insurance by the end of decade.” That’s a big number, but it doesn’t take into consideration those Americans who will indeed have coverage, but who “will still face big financial burdens after they gain insurance coverage,” a sub-sect that will likely exist, according to two new academic studies cited in the Washington Post.

According to Reuters News Service, “medical bills are behind more then 60 percent of U.S. personal bankruptcies.” U.S. researchers told Reuters that, “for middle-class Americans, health insurance offers little protection,” and even healthcare reform isn’t on the right track. Dr. Sidney Wolfe of the Health Research Group at Public Citizen told Reuters that “expanding private insurance and calling it health reform will fail to prevent financial catastrophe for hundreds of thousands of Americans every year.”

Arizona has long had one of the highest rates of both personal and consumer bankruptcies in the country. Though that number significantly decreased from 2011 to 2012—according to Arizona Bankruptcy Courts, by 22.2 percent—Arizona residents are still at a high risk of bankruptcy. In 2012, there were 27,298 bankruptcy filings in Arizona, the large majority of which were in Phoenix.

As Obamacare is implemented, everyone will be looking to see if the expanded coverage will reduce bankruptcies due to medical bills. Stephanie Woolhandler, a professor at the City University of New York, conducted research to determine this on a smaller scale after the state of Massachusetts expanded healthcare coverage, and found that “in 2009, two years after the insurance expansion took effect, just about half the debtors (52 percent) attributed their bankruptcy at least in part to medical bills,” according to the Washington Post. “In 2007, before the expansion, the number stood at 59 percent.”

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

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Can You Stop Debt Collectors From Harassing You?

Posted on March 26, 2013 by Staff Writer

With most Americans carrying at least some debt, a recent story from THELAW.TV highlights the Consumer Financial Protection Bureau’s statement that an estimated 30 million Americans are currently experiencing some type of contact with debt collectors. Although a federal law called the Fair Debt Collection Practices Act does offer protection to consumers from the overreaching collection tactics by debt collectors, some debt collectors tend to ignore the restrictions set forth in the Act and needlessly harass consumers for repayment of debt. If you are aware of your rights under the Act and some state laws, then you can stop the harassing and in some cases, abusive behaviors, that some debt collection agencies may attempt to use.

For instance, debt collectors can only contact you during regular hours. This means that a debt collector who is calling you repeatedly at 3:00 a.m. is violating the law. Similarly, while debt collectors can call your family members when they are trying to locate you, they can only contact you once, and they are not allowed to tell your family members, your employer, or other third parties that you owe money to them. Plus, while debt collectors can call you at work, they have to stop doing so once you have notified them orally or in writing that your employer does not permit you to accept those types of calls at work.

Likewise, debt collectors can and will say anything possible in order to get you to make a payment toward your debt. Although they are not supposed to lie or tell you that they are attorneys, some debt collection agencies reportedly reward this sort of behavior. The bottom line, however, is that debt collectors cannot threaten you with violence, use obscene language during your conversations, or call you repeatedly just to harass you.

On the other hand, debt collectors can threaten to sue you, garnish your wages, or foreclose on your home, if the law permits them to do so and they fully intend to do so. The reality is that if you owe a debt and fail to make the required payments as agreed, you can and will be contacted by collections agencies, and you can be sued by that creditor in an attempt to collect the debt.

Bankruptcy may be a potential solution for consumers to rid themselves of harassing calls by creditors. Filing for bankruptcy results in the bankruptcy court issuing the automatic stay, which is a court order that prevents creditors from continuing to contact you about the debts that you owe. Plus, bankruptcy may allow you to repay all or a portion of your debts over time, or to discharge your responsibility to pay those debts altogether. Contact your Arizona bankruptcy law firm today for an evaluation of your financial situation, and see whether bankruptcy is a viable option for you and your family.

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.

What is a Reaffirmation? | Phoenix Bankruptcy Lawyer

Posted on March 8, 2013 by Staff Writer

A reaffirmation agreement is a contract a debtor in a Ch. 7 bankruptcy signs with a creditor to maintain an existing debt obligation. Now, this may seem counter-intuitive to a receiving a bankruptcy discharge, however, there may be certain debts that a debtor wishes to retain rather than discharge. The main type of debt that debtors wish to reaffirm is secured debt because the creditor has a lien against the property (ex: mortgages and vehicles). If a debtor does not reaffirm a secured debt, he or she runs the risk of surrendering the property back to the secured creditor upon the entrance of the bankruptcy discharge.

Because the bankruptcy discharge wipes out your personal liability for most of your debts, that previous contract you signed for a car loan is effectively wiped out. If you choose to sign a reaffirmation agreement, you are agreeing to take on that same old debt that would have otherwise been wiped out by the bankruptcy. The agreement is usually a form from the bankruptcy court, which the lender will partially fill out with information such as the new interest rate, balance, and payment information.

You or your bankruptcy attorney will also have to fill out several sections in the agreement to demonstrate to the bankruptcy court that you can afford to make the payments. So, if your bankruptcy schedules show that you have a negative monthly income, it is going to be hard to show how you can afford to make the payments (unless you get help from a friend or family member). You must understand, however, that a reaffirmation agreement is a contract to which you are binding yourself.

Ultimately, a reaffirmation agreement needs to receive court approval to become effective. There may be situations where a judge denies the reaffirmation, but still affords a debtor the right to maintain the secured collateral as long as the debtor maintains his or her payments with the secured creditor. Entering into a reaffirmation is not a transaction that a debtor should take lightly, it is always advisable to contact an experienced bankruptcy attorney to discuss your options in greater detail.

House Judiciary leader wants to update Arizona bankruptcy laws

Posted on February 23, 2013 by Staff Writer

According to a recent article published by Verde Independent News, the head of the House Judiciary Committee would like to update Arizona’s dated bankruptcy laws.

Representative Eddie Farnsworth’s proposal does not include anything that would alter the process that allows individuals to seek protection from creditors, as those are set in federal law.

However, the same federal law that ensures protection does allow each state to decide what those declaring bankruptcy can keep. And according to Farnsworth, that list for the state of Arizona is long overdue for a revision. He believes it is far too specific.

Arizona’s current law allows debtors to keep one kitchen table and one dining room table with four chairs each. They can keep additional chairs if there are more than four in the house.

The list of items also includes three living room lamps, one radio alarm clock, one vacuum cleaner, and a choice of one television set, radio, or stereo….just to exemplify the specificity of the Arizona law. The total value of those items cannot exceed $4,000.

Farnsworth’s new bill would keep that $4,000 limit for household items. However, it does destroy the specifics of what can be included to give those in bankruptcy some individual choices; they can decide what’s important to them.

According to Farnsworth, “one person may have a hutch from their great grandmother that they want. Somebody else may have a clock that’s important, or two clocks that are family heirlooms. This just gives them flexibility within the already established cap on exempted property.”

Another part of the existing law gets specific when considering other kinds of items that are considered off-limits to creditors.

Individuals may keep all of their musical instruments- but only up to a market value of $200. Farnsworth’s revision would double that number. The same thing is true for engagement and wedding rings, with the new cap being raised to $2,000.

Farnsworth’s bill wants to modernize Arizona’s current law.

If you or somebody you know is considering declaring bankruptcy, it would be in your best interest to contact an experienced Arizona bankruptcy attorney to talk about your options.

When will my Creditors Stop Calling Me?

Posted on February 22, 2013 by Staff Writer

There are two different events which will stop creditor calls. First, when you hire our law firm you will be able to refer your creditors to us. Once you are represented by a law firm, creditors are no longer to contact you directly but are to communicate to you through your attorney.

We recommend our clients tell their creditors: “I am filing for bankruptcy. I have an attorney and he told me not to talk to you. If you have any questions please call his law office” and then just hang up the phone.

In most instances your creditors really will call our law firm and verify that you are a client. This will stop 99% of the creditor calls. However, pay-day and title loan companies are notorious for continuing the calls until the bankruptcy is actually filed.

Second, once your bankruptcy is filed it becomes illegal for creditors to continue contacting you in an attempt to collect on the debt. Because as soon as a bankruptcy is filed the Automatic Stay of Protection goes into effect. This Automatic Stay of Protection prevents creditors from making any collector efforts. Creditors will be prevented from contacting you in any way, they will not be able to mail, email, or call.

So if you would like to learn how to stop the harassing phone calls, make an appointment to meet with one of our attorneys.

Know your rights when it comes to debt collection

Posted on January 8, 2013 by Staff Writer

Part of making financial arrangements such as taking a loan or filing for bankruptcy is knowing your rights. If you are in debt and collectors are constantly contacting you, it is good to know what you are up against, and to what you should pay attention. This is where the FDCPA comes into play.

The Fair Debt Collection Practices Act (FDCPA) is a 1978 act, which aims to eliminate abusive practices in the collection of consumer debts, promote fair debt collection, and help consumers by providing an avenue for disputing and obtaining debt information to ensure the information’s accuracy. You might not want to start looking for the Act itself, but rather look at a summary of what the act means from the consumer’s perspective.

The Act regulates everything from means of contact to where and how often a debt collector can contact you. It also provides guidelines for who a debt collector can contact and what kind of information they can disclose when contacting someone other than you.

Debt collectors can be relentless, but they must always follow the FDCPA rules when contacting consumers. Even things like the use of offensive language or calling you names could mean their actions count as harassment. If debt collectors break the guidelines of the FDCPA, it is possible to receive damages if you win your claim. Our Phoenix, Arizona bankruptcy attorneys also take collection harassment cases. If you need an attorney to help you with personal bankruptcy, foreclosure or debt collection harassment, contact our Phoenix offices as soon as possible.

Choosing a Credit Card After Bankruptcy

Posted on November 20, 2012 by Staff Writer

Many credit card companies see an opportunity for a quick sale in people who are recovering from bankruptcy. Without access to cash, and oftentimes with many assets gone, people recovering from bankruptcy often turn to credit cards as a means to get their lives back on track. While this is an obvious answer, and, if done correctly a smart one, a consumer—especially if he or she has a history of bad credit or money mismanagement—needs to be careful when choosing which card to go with. Many credit card companies have come under fire in recent years for having unrealistic payment plans and bottom lines, especially after the 2008 recession.

One such practice that consumers should be wary of is a company that offers cards with a crazy-high Annual Percentage Rate (APR). According to Daily Finance, while the “infamous First Premier credit card with its 79.9% interest rate has vanished, as have its predecessors, a 59.9% and a 49.9% APR card… other issuers seem happy to fill the vacuum left by First Premier’s absence in this market segment.” While securing a credit card after bankruptcy is important—not only as access to cash, but because using a credit card is essential to building back up credit after bankruptcy—choosing one with a low APR is essential.

The CARD Act, passed in 2009, prohibits fees from amounting to more than 25 percent of a card’s credit limit, but many credit cards still have very high fees. The CARD Act, according to Daily Finance, also “prevents issuers from hiking interest rates on existing balances and makes the bank give you both a grace period and a warning before raising your APR,” but loopholes, such as those for business credit cards, give consumers, especially those recovering from bankruptcy, something to be wary of.

Choosing a credit card after bankruptcy is only one of the many difficult processes a person recovering from bankruptcy will go through. Don’t do it alone. Contact a dedicated Arizona bankruptcy lawyer today.

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Bankruptcy Discharges: What You Need to Know

Posted on November 17, 2012 by Staff Writer

When a person files for bankruptcy, usually the end result in mind is the discharge of debts. The types of discharges available for a person in bankruptcy depends on which type of bankruptcy the person files. According to the U.S. Federal Bankruptcy Courts, a “discharge releases the debtor from personal liability for certain specified types of debts.” This means that the debtor is no longer liable for the debts incurred before bankruptcy. The discharge is the legal, permanent order that prohibits “creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communication with the debtor.” This includes telephone calls, letters, and personal contact.

The only way that a person filing for bankruptcy will not get a discharge is if there’s the need for litigation, involving objections to the discharge. The clerk of the bankruptcy will first mail a copy of the discharge to all “creditors, the U.S. trustee, the trustee in the case, and the trustee’s attorney.” Not all debts will be discharged—this depends on your state and under each chapter of the Bankruptcy Code. According to the Federal Bankruptcy Courts, “19 categories of debt excepted from discharge under chapters 7, 11, and 12.” The only way that any discharge can be revoked is if the person filing for bankruptcy did so fraudulently, which can involve a handful of shady practices.

Before obtaining a discharge, however, the first important step toward declaring bankruptcy is to do your own research into Arizona state bankruptcy code to get an idea of what the different types of bankruptcy are and what they mean for you. The next step is to hire a bankruptcy attorney. It’s not an easy process, and shouldn’t be gone through alone. If you or someone you know is considering bankruptcy, contact a dedicated Arizona lawyer today.

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