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.

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.

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.

Creditors will say just about anything to get you to pay up.

Posted on May 24, 2012 by Staff Writer

Creditors will say just about anything to get you to pay up. Most of these creditors are 3^rd party creditors who have invested money in your debt , pennies on the dollar. They’ll use scare tactics, such as threaten to send you to jail. This is not plausible, being in debt is not a crime. Some will go at lengths to try and reach family members , friends and even co-workers to try and shame you into a payment. Some will present themselves as lawyers or state they are calling from a law firm, but most of the time come back to being 3^rd party agencies. They can also threaten to reposes a vehicle put a lien on a home or property. I have even heard of creditors being nasty and foul on the phone even personally threaten to come look for you. Creditors cannot go into your bank account and withdraw money without your approval or for that matter wipe out your savings. Last but not least they’ll threaten you with legal action, such as summons you to court to try and get a writ of garnishment. They can always go down this route but will more than likely chose every other option before this. You always have to understand your rights, if you feel a creditor is crossing the line with their collection tactics keep track of those calls, record conversations anything that you may feel can beneficial sometime down the road if ever a FDCPA claim needs to be made.