Chapter 13 Bankruptcy

Posted on July 29, 2013 by Staff Writer

If someone has gone into personal debt, he or she will most likely file under Chapter 7 bankruptcy, however, Chapter 13 is an option as well. Under Chapter 13, the debtor is allowed a three to five year payment plan in which time he or she can pay back all debts.

Chapter 13 bankruptcy is also called a wage earner’s plan because it is specifically for those who have a high enough monthly income to pay back the debts. If the debtor’s monthly income is less than that of the state’s median, the plan will be three years, if it is higher than the state median, the plan will be five years.

Along with creating a payment plan for the individual, the courts also forbid any debt collectors from further pursuing the debts owed to them by the debtor during the length of time that the payment plan continues.

One of the most important advantages of filing under Chapter 13 is that it will save your home from foreclosure, adding mortgage payments to the payment plan.

Chapter 13 also “acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes them to creditors,” according to the U.S. Federal Courts web page. This form of bankruptcy protects the debtors from having to deal directly with the creditors.

Debtors also have the opportunity under Chapter 13 to reschedule secured debts and extend those payment plans over the length of time for the bankruptcy payment plan set by the courts. Lengthening the payment plan may lower the individual payments as well as simply give the debtor more time to pay.

If you are considering filing for bankruptcy, but do not know which Chapter to file under or where to begin at all, contact Arizona bankruptcy attorneys for assistance. These experienced bankruptcy attorneys will assist you in making the best decisions about your money and payments to keep your home and other in important assets Arizona today.

Alternatives to Chapter 7 Bankruptcy

Posted on July 27, 2013 by Staff Writer

When someone must file for personal bankruptcy, they often choose to file Chapter 7 Bankruptcy, under which a person’s debts are forgiven. It is a long process, during which certain assets are allowed to be kept and others must be liquidated to pay off the debts. A Chapter 7 Bankruptcy stays on a person’s record for 10 years, potentially ruining credit and making it more difficult to get loans.

When someone compiles a large debt, it is important to know that there are many options. If you are considering filing for bankruptcy and you are engaged in a business, you may petition under Chapter 11 bankruptcy. If you want to file for personal bankruptcy and you are confident that you can pay off your debts within the five year time limit, you may file for Chapter 13 bankruptcy, under which a payment plan will be created for you to pay everything off.

Chapter 13 allows debtors to keep their homes from foreclosure as well. This is also a good option because many courts will dismiss a Chapter 7 petition if the debts that have been gathered are mostly consumer debts and not business debts. Chapter 13 helps you to pay off your debts, while putting any additional payments on hold, preventing your debt from increasing while you are in bankruptcy.

When filing for Chapter 7 bankruptcy, one of the first numbers that is looked at is the current monthly income of the debtor. If that number is higher than the state’s median monthly income, another test must be used. The “means test,” which is required by the Bankruptcy Code, will determine whether or not filing for bankruptcy is truly necessary. The only way to continue on with the bankruptcy filing at this point is if the debtor can prove to the courts that he or she has special circumstances that cause additional expenses.

If a debtor does not pass the means test, the bankruptcy will be dismissed or converted to Chapter 13, under which the debtor must pay off all of the debts with a payment plan.

If you are in debt and are considering filing for bankruptcy, be sure to consider all of your options and contact a bankruptcy attorney for assistance. Arizona bankruptcy attorneys can help you decide what to do today.

Filing for Chapter 7 Bankruptcy

Posted on May 14, 2013 by Staff Writer

Personal bankruptcy is covered in the United States Constitution to protect innocent citizens from economic destruction. Personal bankruptcy is broken down into two parts in the Bankruptcy Code of the Constitution, differing by way of payment plans.

Chapter 7 bankruptcy is often referred to as straight bankruptcy because it is typically what people think of when they hear the term “bankruptcy.”

When someone qualifies for Chapter 7 bankruptcy, the majority of his or her debts will be discharged, however, some of his or her property may have to be surrendered. There is no payment plan for Chapter 7 because the debts are simply forgiven.

To qualify for Chapter 7, the filer will have to pass a Means Test. The test is very complicated, however, most people can pass. The hardest part is gathering the necessary information.

Most property that you receive after you file for Chapter 7 bankruptcy does not become part of the bankruptcy, although there are a few exceptions to this rule. These exceptions include income tax refunds for years prior to bankruptcy, divorce property awards, inheritances and life insurance that the bankrupt person becomes entitled to within 180 days of filing, which must all go to pay the debts.

Ideally, the assets of the debtor can be collected and sold for the benefit of the various creditors. All assets that are not excluded and are owned on the petition date are able to be taken for this purpose. Very often, however, the debtor has no assets, in which case there will be no property taken from him or her.

If you are considering filing for bankruptcy, contact a bankruptcy attorney for assistance. We have Arizona bankruptcy attorneys across the state who can assist you with your bankruptcy case today.

Do I Need to be Flat Broke in Order to File Bankruptcy?

Posted on May 2, 2013 by Staff Writer

No, you do not need to be completely broke in order to file bankruptcy. In fact, most of our Arizona bankruptcy clients have jobs and many own homes. You don’t need to be living under a bridge or in a park to qualify for bankruptcy. Regardless of how much or how little money you make, you can file bankruptcy. Additionally, regardless of how much or how little debt you have there will be a chapter of bankruptcy right for you.

When we meet with a potential client, we look at salaries and income to analyze them for determining eligibility under the means test. Most of our clients qualify for eliminating their debts with Chapter 7 bankruptcy. Those who do not qualify for Chapter 7 bankruptcy because they make too much money can still seek relief under Chapter 13.

Bankruptcy relief is available to anyone who is over-burdened by their debts and has difficulty paying them. So even if you have a regular, steady job and are earning healthy a healthy salary you can still seek bankruptcy relief. For many Arizonians bankruptcy is the only realistic way out of their stressful financial situation.

Additionally, most assets are protected by exemptions. So even if you own a home, car, and 401k we can most likely protect them. Take the first step in tackling your serious debt problems by meeting with one of our skilled Phoenix bankruptcy attorneys.

The Two Kinds Of Personal Bankruptcy

Posted on April 12, 2013 by Staff Writer

If you’re filing for individual bankruptcy in Arizona, you have two options available to you: you can either file for a Chapter 7 or a Chapter 13. Like anything in life, there are both advantages and disadvantages to both. Before you file, it’s best to get a clear understanding of each and how they’ll affect you immediately and in the future.

Chapter 7:
If you file for Chapter 7, what happens when your case is successfully discharged is that most of your debts will be cleared, and no obligation to pay them back. Additionally, the process of a Chapter 7 usually takes a few months—which is much quicker than many other debt solutions offered.

Unfortunately, although your debts are cleared, there is the possibility you can lose some of your property during the proceedings. Any property you own that is considered non-exempt may be taken by the courts in order to help pay back your debt to the creditors.

You are also only allowed to file for a Chapter 7 once every eight years, and you must qualify to do so.

Chapter 13:
If you happen to be extremely fond of your property and do not wish to lose any of it, it’s better for you to file for a Chapter 13. When filing for this type of bankruptcy, the bankruptcy trustee is not allowed to liquidate any of your property for creditors. You can also keep any cosigners you might have out of the proceedings.

The disadvantage to filing for Chapter 13 is that you still need to pay back your debts. You will set up a payment plan, which usually takes three to five years to complete. There is a chance you can get the amount reduced, but it will not be wiped clean. You may also have higher court fees than you would in a Chapter 7.

Speaking to a qualified Arizona attorney will also help you decide what to file if you have to file for bankruptcy. Our attorneys work throughout Arizona and Nevada, and offer free initial consultations. Contact us today to learn more.

What is a Bankruptcy Discharge? | Arizona Bankruptcy Lawyer

Posted on March 9, 2013 by Staff Writer

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.

Although a debtor is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

A Ch. 7 bankruptcy discharge normally occurs approximately 90 days after the bankruptcy case was filed, assuming the debtor satisfied all of his or her requirements for receiving a discharge. A Ch. 13 bankruptcy discharge will not occur until debtor satisfies all of his or her requirements set forth in the filed reorganization plan. Normally, this should take between 3 or 5 years.

Please take notice that not all debts are allowed to be discharged in a bankruptcy. While there are many specified debts that are deemed non-dischargeable, the most common types of these include the following:

Recent back taxes
Alimony or child support arrearages
Student loans
Governmental fines/debts
Recent usage/fraud
Non-listed debts

You should always consult with an experienced bankruptcy attorney to determine what your options entail. Knowing which chapter in bankruptcy to file due to the types of debts you have is very crucial to maximizing your eventual bankruptcy discharge. Call my office today to discuss.

Can Anyone File Bankruptcy?

Posted on February 27, 2013 by Staff Writer

In a manner of speaking, yes, anyone can file for bankruptcy. What chapter of bankruptcy you qualify for depends on your specific situation. In October 2005, a massive change took place in the U.S. bankruptcy code. Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) as a response to the belief that too many people were taking advantage of Chapter 7 bankruptcy. The result of this new law is to force people who can afford to repay some of their debt to file for bankruptcy under Chapter 13 instead of Chapter 7.

Chapter 7:

In a sense, anyone—even businesses—can file for Chapter 7 bankruptcy protection. There are no minimum or maximum debt limits to be concerned with. However, before you can file a Chapter 7 bankruptcy you must be able to pass the infamous Means Test. The Means Test is used to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the bankruptcy code. If there is a presumed abuse, the case must either be converted to a Chapter 13 or it will be dismissed. Most people who cannot file a Chapter 7 bankruptcy because their income is too high end up filing for Chapter 13.

Chapter 13:

There are a few key limitations about who can file for Chapter 13 bankruptcy. For one, businesses are not able to file a Chapter 13 bankruptcy. Additionally, neither can people with too much debt. Currently the debt limits are $1,081,400 in secured debt plus $360,475 in unsecured debt (taxes whether dischargeable or non-dischargeable are included in the unsecured debt limit calculation). If you make too much money to pass the means test and have too much debt to file a Chapter 13 there are still some options for you.

Chapter 11:

In rare cases a person must file a Chapter 11 because they cannot file either a Chapter 7 or Chapter 13 bankruptcy. If a person does not pass the means test because they make too much money and they have too much debt to file a Chapter 13 then they must file a Chapter 11. Because a corporation cannot file a Chapter 13 bankruptcy if they are looking to reorganize their debt they must file a Chapter 11.

Contact our law firm to see what chapter of bankruptcy will best help you.

How do I know if I qualify for a Chapter 7 Bankruptcy?

Posted on February 24, 2013 by Staff Writer

Determining whether or not a person can qualify for a Chapter 7 bankruptcy is one of the most complex areas of consumer bankruptcy. The means test is used to determine who can file for Chapter 7 bankruptcy and who must file a Chapter 13. The means test was introduced to the Bankruptcy Code in 2005 and is designed to limit those individuals eligible to file for Chapter 7 bankruptcy.

The Chapter 7 bankruptcy means test compares your current monthly income against the median income for households similar in size to those in your same state. The means test looks at the average household income over the six months prior to filing. If your income is below that of the average household income for your state then you will automatically qualify for a Chapter 7 bankruptcy.

Now if your household income exceeds the median income for households of a similar size in your state you still may be able to qualify for a Chapter 7. This is because certain expenses are deducted from your current monthly income in order to determine your net monthly income. Now not all expenses are qualifying expenses, however, the following kinds of costs can be deducted: child support, alimony, tax withholding costs, health savings account, garnishments, certain utilities and several other types of expenses.

However, if you still do not qualify for a Chapter 7 even after deducting the qualified expenses you can still file bankruptcy. For most people who do not qualify for Chapter 7 bankruptcy because of their high income file Chapter 13 bankruptcy. Chapter 13 bankruptcy is a reorganization of your debts. The bankruptcy last for 3 to 5 years during which time you make payments to your creditors. At the end of the bankruptcy whatever balances are left over will be discharged.

The means test is one of the most complex areas of consumer bankruptcy so please speak with one of our bankruptcy attorneys to look at your individual situation. Don’t subject yourself to a Chapter 13 bankruptcy without first speaking to our experienced attorneys.

Can I Choose What to Include in My Bankruptcy?

Posted on February 9, 2013 by Staff Writer

Many people ask us if they can choose what they want to include in their bankruptcy. The answer is yes and no. Yes, a bankruptcy filer is free to choose what they would like to do with secured assets. A Statement of Intention is required to be filed in Chapter 7 cases. This Statement of Intention is a form completed by the debtor that discloses to the court, the Trustee, and your creditors what you intend to do with your secured collateral such as your home or car. The Statement of Intention requires you to state whether 1) the property will be retain; or 2) surrendered.

If you choose to retain an asset then you must continue to pay for it. Notice will be given to the creditor of your intentions to retain and pay for the collateral. Alternatively, if you choose to surrender property the notice is given to the creditor that you intend to surrender the property.

Secondly, when people ask: Can I choose what to include in my bankruptcy? No, you cannot choose to exclude certain assets or debts from being disclosed to the bankruptcy court. Failure to disclose all of your assets is a felony and is punishable by up to five years in prison. You cannot simply leave assets or debts off of your bankruptcy Schedules for personal benefit, but this doesn’t mean that you will necessarily have to give them up.

What does it mean if I don’t pass the means test?

Posted on February 3, 2013 by Staff Writer

The means test was introduced to the Bankruptcy Code in 2005. It is designed to limit those individuals eligible to file for Chapter 7 bankruptcy. The Chapter 7 bankruptcy means test compares your current monthly income against the median income for households similar in size to those in your same state. The means test looks at the average household income over the six months prior to filing. However, not all income is considered in the means test. Income from employment, gifts, financial assistance from others, income from a non-filing spouse are included in the calculation. However, social security income, social security disability, veteran’s disability benefits, and child support payments are not considered.

If you household income exceeds the median income for households of a similar size in your state you still may be able to qualify for a Chapter 7. This is because certain expenses are deducted from your current monthly income in order to determine your net monthly income. Now not all expenses are qualifying expenses, however, the following kinds of costs can be deducted: child support, alimony, tax withholding costs, health savings account, garnishments, certain utilities and several other types of expenses.

However, if you still do not qualify for a Chapter 7 even after deducting the qualified expenses you can still file bankruptcy. For most people who do not qualify for Chapter 7 bankruptcy because of their high income file Chapter 13 bankruptcy. Chapter 13 bankruptcy is a reorganization of your debts. The bankruptcy last for 3 to 5 years during which time you make payments to your creditors. At the end of the bankruptcy whatever balances are left over will be discharged.

The means test is one of the most complex areas of consumer bankruptcy so please speak with one of our bankruptcy attorneys to look at your individual situation.