There are many important factors to consider before beginning the process of filing for bankruptcy in Arizona and a knowledgeable Phoenix bankruptcy lawyer can help simplify the process for you. Essential to making an informed decision is knowing what bankruptcy is, what it is capable of, and what to expect when going through the process.
What Is Bankruptcy?
Bankruptcy is a federally legislated program designed initially as a temporary response to bad economic times. Today we know it as an action that can be taken on the part of a debtor to assist them in resolving some of their debts. If the debts owed are too high to be realistically paid, creditors can sometimes pose a real threat to livelihood. They can take legal action against those who owe them, seizing their assets and even garnishing wages for the sake of their debt’s payment. Bankruptcy is one way in which people can minimize the impact of their outstanding debt and work with knowledgeable professionals, like our Phoenix bankruptcy attorneys, to get their debts resolved as quickly and efficiently as possible while still maintaining their quality of life.
What Bankruptcy Can Do
There are a few primary ways bankruptcy can help those in debt re-establish their financial footing. Take a look at the following examples to see if your situation could benefit:
- Credit card debt, medical bills, and other debts which are unsecured by any sort of collateral can be minimized or completely eliminated by bankruptcy. Re-payment plans, when legally appropriate, are an option, but generally bankruptcy can eliminate a large portion of what is owed.
- Creditor harassment can be a real problem, as can the collection efforts made in an attempt to obtain payment. Harassment can cover a wide scope of activities, including attempted repossession of property or foreclosure. In instances where the collection efforts have escalated to this level, bankruptcy can be a good way to stop foreclosure, shielding yourself and your assets.
- The act of petitioning for bankruptcy puts an automatic stay in place, giving court-ordered protection against collections during the bankruptcy proceedings. This measure is one of the first ways bankruptcy guards you from the harmful or harassing actions of creditors. If a creditor continues to try to contact you or recover any portion of the debt after an automatic stay is put in place, you have recourse that varies from alerting them of the bankruptcy or notifying the court, up to filing a suit for violation.
What to Expect When Filing
Will filing for bankruptcy fit well into your life? Do you have the required information to begin a claim? Here are some things you can expect to encounter while on the path to financial freedom through bankruptcy:
- Up-to-date taxes are a necessity when filing for bankruptcy. To get your claim off the ground, you are required to provide income tax statements from the most recent year. If you are delinquent on your taxes, it may be necessary to file before proceeding.
- A bankruptcy means test will be conducted to determine which type of bankruptcy is best for you. Results of this test and expert legal advice will get you on your way to financial relief and piece of mind.
- Depending on what type of bankruptcy you petition for, non-essential property and/or debt discharge may be part of the settlement. This is considered Chapter 7. Another option may simply be setting up a payment plan to pay off a portion of debts over a 3- to 5-year period. This is considered Chapter 13 bankruptcy.
Bankruptcy can be a great way to stop creditor harassment, lighten the weight of your debts, and stop foreclosure. Ultimately, though, each person’s financial situation is highly unique and needs an individual assessment. To truly determine if bankruptcy is the correct choice for you, contact one of our bankruptcy lawyers in Phoenix, AZ. We are here seven days a week to answer questions and help you make the best decision for your future.