Will I Lose my Car if I file for Bankruptcy?

Posted on January 24, 2013 by Staff Writer

Will you lose your car if you file for bankruptcy? Generally no, however, there are some exceptions that you should be aware of. Section 362 of the U.S. Bankruptcy Code provides an “Automatic Stay” to protect consumers from their creditor’s collection activities during bankruptcy. Unless a creditor files a Motion to Lift the Automatic Stay they cannot repossess a vehicle during the bankruptcy. A Motion to Lift the Automatic Stay is nothing more than a creditor asking the bankruptcy court for permission to pursue its collection activities. A creditor must have a legitimate legal reason for why the Automatic Stay should be lifted otherwise their request will be denied. But the most common reason for allowing a creditor to pursue its collection activities is if the debtor is behind on payments. So in order to keep your car safe from the bank during the bankruptcy you need to be on time and stay on time with your payments.

Additionally, vehicles are protected from creditors and the bankruptcy court by law. A.R.S. § 33-1125(8) provides that Arizonians who are single can have up to $5,000 of equity in their vehicle. Married couples have a $10,000 exemption. The $10,000 can be used entirely on one vehicle or can be split equally between two cars. Also, people who have a handicap license plate receive a $10,000 exemption. So for example, if you are single and own a vehicle that is worth $4,999, the bankruptcy court cannot touch it. However, if you are single and own a vehicle that is worth $7,000 then you are over the exemption amount by $2,000 and the court is going to ask for $2,000 in order for you to keep it.

Bankruptcy laws and how they pertain to vehicles can be confusing however, during a free consultation you can speak with one of our skilled attorneys and see how your vehicle can be protected in bankruptcy.

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.

Image courtesy of FreeDigitalPhotos.net

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.

Arizona Exemption Info

Posted on October 5, 2012 by Staff Writer

It is good to have some idea of the legal intricacies you might be dealing with when filing for bankruptcy, so we will go through some of the exemptions in Arizona bankruptcies. Bear in mind, however, that having the basic knowledge is not the same as having an experienced bankruptcy attorney on your side. As it is said in the United States Bankruptcy Court District of Arizona’s information release: “This pamphlet is not intended to give you legal advice, and it is not a substitute for the legal advice specific to your situation that you should obtain from a qualified attorney.”

Bankruptcy exemptions are a way to let you keep some of your property in case of a bankruptcy. We recently discussed the homestead exemption in our blog, so it makes sense to discuss the personal property exemption next.

The Arizona Personal Property Exemption allows husband and wife to double personal property exemptions, and here are a few assets that are listed under this exemption with the main guideline of “Household furniture, furnishings and appliances personally used by debtor in an amount not to exceed $4000 (fair market value)” :

– one kitchen and one dining room table with four chairs each, plus one chair per each dependent resident after the total exceeds four

– one living room couch

– two beds, plus one additional bed for each dependent of the debtor who resides in the household

– one bed-table, dresser and lamp for each bed allowed above

– bedding for each bed allowed above

– one television set or radio or stereo

– one stove

– one refrigerator

– one washing machine

– one clothes dryer

– one vacuum cleaner

The full list can be found in the exemption information release, but a knowledgeable bankruptcy lawyer will know exactly what you are entitled to when you are going through your bankruptcy proceedings. Basic information can help you understand what you are dealing with, but nothing can replace the help of a skilled bankruptcy attorney. Contact our bankruptcy attorneys today.

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.

Image courtesy of FreeDigitalPhotos.net

Bankrupt Arizonans may be able to keep specific assets

Posted on September 12, 2012 by Staff Writer

According to the AZ Business Gazette, Arizonans may have found a clever way to legally shield their assets from creditors during the bankruptcy process.

The 9^th U.S. Circuit Court of Appeals banned the argument of trustees regarding people that have recently declared bankruptcy. The argument stated these individuals did not have to surrender the values of their life insurance annuities and policies if the beneficiaries were minors. This was based on a unanimous decision.

According to the judge– “That’s just how the law reads in Arizona.” The question of policies and annuities may not apply to all individuals looking for protection from creditors. Arizona laws allow exemptions that differ from others but these can be critical.

A perfect example of these exemptions involves the cash surrender value of a 2 year old life insurance policy. The policy states that he beneficiary must be immediate family, for example:

Spouse
Parent
Child
Sibling
&/or any other dependent family member

There were arguments from the trustees that these exemptions shouldn’t apply because children weren’t dependents.

Smith, a man who wrote for the unanimous appellate panel, stated the arguments were simply a “misreading of the law”. He explained that the “other” in the documents is referring to diversity. The judge stated “A beneficiary will fit into two different categories, either as previously stated or another dependent member of the family”.

The judge commented that “If the legislature wanted the exempt members to only be dependents, the legislature should have exempted ‘these dependents’, opposed to listing specific family members.

Smith followed up by saying “if the courts adopted the trustees’ understanding, the wording of the law would not make sense because the exempted members that were on the list, would be inapplicable.

He continued to say that even if the term “other” meant obscure, something the courts aren’t acknowledging is that it still wouldn’t support the arguments of the trustees. The impression that certain items were sold off or exempt from liquidation is not exclusive to these insurance policies and annuities.

The list of allowable exemptions is pretty systematic. This list includes:

Musical instruments with values below $250, used solely for personal use. This limit would also apply to manuals, books, and other published documents.

Individuals declaring bankruptcy can keep specific items, which includes:

Bibles
Firearms

The law permits one bible and one gun, as long as the weapon isn’t valued higher than $500.

If you are considering a bankruptcy, consult with an Arizona bankruptcy lawyer first and they will be able to advise you on the best way to handle your situation. A knowledgeable bankruptcy attorney in Arizona will be able to help you determine which of your assets you will be able to hold on to when you file for bankruptcy.