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.

Bankruptcy a Viable Option to Rid Yourself of Unwanted Debt:

Posted on January 19, 2013 by Staff Writer

If you are struggling to make minimum payments on your unsecured debts, do not use your savings, retirement funds, or obtain a home equity loan to pay off your creditor cards. Those assets are exempt (protected) and if you use those exempt assets to pay your creditors, you are possibly giving those assets to your creditors even though you could protect those assets in a bankruptcy case. Our exemption laws are made to make those assets exempt from the reach of your creditors. Sadly, I’ve seen people withdraw large amounts of money from their retirement accounts to pay down credit cards. Often these people still find themselves having to file bankruptcy, yet now they no longer have all of their retirement accounts. Also, avoid borrowing money from family members or friends to make credit card or car payments. Defaulting on loans from family or friends can unnecessarily strain relationships. It can also place undue strain on the borrower because you may feel morally obligated to repay those loans.

If you are: only making the minimum payments on your credit cards, using credit cards to purchase food or gas, repeatedly missing mortgage or car payments, or using “pay day” loans to pay basic living expenses you should sit down with a bankruptcy attorney for a free consultation. These are signs that bankruptcy may be your best option for freeing yourself from debt.

Bankruptcy is a legal, responsible and ethical way in which to address overwhelming debt and creditor harassment. Don’t continue to “rob Peter to pay Paul”.

Hiring the Right Bankruptcy Attorney is Critical!

Work with a compatible attorney. You will be working with your bankruptcy attorney over a several month period and so it is important for you to find an attorney you feel comfortable with and who has your best interests at heart. So don’t hire an attorney just because they claim to be the cheapest. Are they the cheapest for a reason? Will they take the time to listen to your situation? Will they return your phone calls? Will they return your emails? If you were shopping for a parachute would you shop for the cheapest one? Or, would you look for a parachute that was built by a reputable company? Would you be interested in the quality of the parachute? I think so; it’s the same with hiring the right bankruptcy attorney.

Unfortunately, some people are not concerned about the type of representation they get. I always tell people that they may save a few hundred dollars by going to the cheapest lawyer, but they always get what they pay for.

The importance of hiring a competent, experienced attorney to represent you in a bankruptcy case cannot be overemphasized. People file for bankruptcy because they are in dire circumstances and need help, and hiring the wrong attorney can make the bankruptcy process unnecessarily stressful and difficult. How can you make sure you hire the right attorney? Go with the law firm that specializes in bankruptcy. We have a commitment of doing things the right way.

9th Circuit Rules Arizona Bankruptcies May Shield More Assets than Other States

Posted on October 26, 2012 by Staff Writer

Arizona residents may be able to shield more assets from creditors during bankruptcy than filers in other states, according to a report from Arizona Central News.

In a recent court decision, the Ninth U.S. Circuit Court of Appeals ruled against bankruptcy trustees who tried to argue that filers can only keep life insurance policies and annuities if the beneficiaries of those policies are minor children.

The judge, however, said that Arizona bankruptcy laws may allow filers to keep the value of their life insurance policies, even if the beneficiaries are not minor children. During bankruptcy, filers are often allowed to keep a number of exempt items.

In Arizona, for example, Chapter 7 bankruptcy filers are allowed to keep a vehicle worth a certain amount, their wedding rings, and other important pieces of property.

But whether filers can keep the proceeds of life insurance policies is a relatively unsettled area of bankruptcy law, so the Ninth Circuit Court of Appeals had to step in.

The appellate court dealt with two cases. One involved a woman who named her adult daughter as beneficiary of three life insurance policies worth $40,000. The other case involved a woman who also listed her adult daughter as the beneficiary of a $33,000 life insurance policy.

In both cases, the adult daughters were not dependent on their parents. As a result, in both cases, the trustees claimed that the policies should not be exempt from liquidation.

And a court at the trial level sided with the trustees, claiming that federal laws allow the trustees to gather assets like life insurance policies that are not intended for minor beneficiaries.

The appellate court, however, overturned the lower court, citing an Arizona law that allowed bankruptcy filers to exempt life insurance policies, regardless of who those policies will eventually benefit.

And the court ruled that, in this case, state bankruptcy laws trumped federal laws, which reveals just how confusing some of the interplay between state and federal rules can be in bankruptcy court.

Schedule a free consultation with an experienced bankruptcy attorney to see when you should file. Keep the assets you need to start over, don’t use them to pay creditors when you don’t have to. Contact a Phoenix Bankruptcy Attorney Today!

Retaining Assets During Bankruptcy in Arizona

Posted on October 17, 2012 by Staff Writer

For many Arizona residents, bankruptcy is the only option to escape the crippling burden of debt or foreclosure. Chapter 13 is commonly called the “wage earner’s bankruptcy,” as workers can continue to keep a portion of income that they earn during bankruptcy to help get their feet back on the ground. Filing a Chapter 13 bankruptcy is a bit more complicated than the straightforward Chapter 7. According to the U.S. Federal Bankruptcy Courts, a Chapter 7 provides for “liquidation,” which means “the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.”

In Arizona, according to the Arizona state bankruptcy courts, a Chapter 7 bankruptcy provides for a Homestead Exemption, of up to $150,000 for either a home (including mobile homes), plus the land upon which the home is situated. Personal property exemptions can be up to $4,000 and money, benefits, and proceeds up to $20,000. There are a few other property exemptions—making Arizona one of the best states in which to file a Chapter 7 bankruptcy—but if you’re interested in retaining the majority of your assets, including money earned while in the throes of bankruptcy, filing a Chapter 13 might be better for you.

The biggest advantage of a Chapter 13 over a Chapter 7 filing, according to the U.S. Bankruptcy Code, is that “Chapter 13 offers individuals an opportunity to save their homes from foreclosure.” If a person files for Chapter 13, he can “stop foreclosure proceedings and may cure delinquent mortgage payments over time.” In a state such as Arizona, which was hit particularly hard by foreclosures and the imploding of the housing market, a Chapter 13 filing might be a better option for cash-strapped residents.

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

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