Bankruptcy Case File Chapter 7 Arizona Attorney

Frequently Asked Questions

General Bankruptcy Concerns:

What is Bankruptcy and how does it work?

Now you have decided that Bankruptcy may be the right choice:

Your bankruptcy has been filed - now what?

The Discharge:

Other Questions:

Is Bankruptcy dishonest?

Most people generally strive to be honest and pay their fair obligations. Unfortunately, in reality, sometimes things happen that are unforeseen or out of our control. Bankruptcy is a legal right that is provided in the United States Constitution. Bankruptcy is a right that protects honest people from harassment, lawsuits, wage garnishment and other creditor actions. Bankruptcy allows good people a fresh start.

Bankruptcy is a right used by many of our nation's largest companies. (You know who they are.) The same laws used by the rich and famous, are available to protect individuals and families.

What property will I lose in a bankruptcy case?

The bankruptcy laws are designed to allow a fresh start. A fresh start would be difficult if you lost all your property. The fact is that many people don’t lose anything in their bankruptcy. The bankruptcy law allows the State government to decide what property is protected for bankruptcy cases filed in its state. In Arizona you are allowed to keep most personal and household property, equity in your home up to $125,000, some equity in a car, most retirement plans, and many tools of the trade. (See exemptions).

What can I own after filing Bankruptcy?

Many people believe they cannot continue to own anything after a bankruptcy. You can keep the property that is protected and exempt in the bankruptcy, and generally anything you acquire after the bankruptcy. The day your bankruptcy is filed acts as a “fresh start” date. Anything you earn after the filing date is yours. Anything that you own or have owed to you before the case is filed is subject to the bankruptcy court’s rules. Most normal belongings are protected.

Will I be able to establish credit after a bankruptcy?

Years ago it was difficult to rebuild credit after a bankruptcy. Times have changed. Many stores and banks actively market to people who have filed bankruptcy. Many mortgage companies can assist applicants with a bankruptcy as soon as the discharge is granted. As a practical matter, a bankruptcy won’t make your credit any worse. After the bankruptcy you are likely to be in a better position to pay current bills and improve your chances of getting new credit.

Does Bankruptcy get rid of all debts?

Most consumer and business debts are eliminated in bankruptcy. Certain debts are not. Including: child support, alimony, fines, restitution, some taxes, loans obtained by fraud, student loans, debts due to a DWI, and debts resulting from “willful and malicious” harm.

I can protect my property by hiding it or giving it away before I file bankruptcy?

No. It’s a crime to hide property and not disclose it. It is a crime to give property away without telling the Court in the bankruptcy papers. The Court Trustee will seek to recover any property wrongfully transferred prior to a bankruptcy filing.

Will I lose my job if I file bankruptcy?

The bankruptcy code prohibits an employer from discrimination based on a bankruptcy filing.

I filed a bankruptcy before, can I file again?

The law prohibits someone from filing a new chapter 7 bankruptcy within less than 6 years of a previous filing. Even within the six-year time period, a chapter 13 case may be filed.

Can Taxes be eliminated in bankruptcy?

Many taxes are eliminated in bankruptcy. There are several complex rules that apply. Eliminating taxes depends on how old the taxes are, when the returns were filed, and whether the taxes have been assessed, and the type of taxes. Both federal and state income taxes can be eliminated in bankruptcy.

Do I need to be totally broke to file bankruptcy?
No. There is no requirement that a person be destitute. The bankruptcy code doesn't require that you be unemployed, homeless, or own no property. In reality, you can file bankruptcy without quitting your job, giving up your home, or having your property taken away.

What is a bankruptcy?
Bankruptcy is a Constitutionally guaranteed protection designed both to help an individual or business that cannot meet its financial obligations and to protect the creditors involved. This is a very complicated process and full of traps for the unwary. Always use experienced lawyers, who practice bankruptcy law full time.

How much does it cost to file bankruptcy?
The Court's filing fee is $299.00 for a chapter 7 (personal and company) and $274 for a chapter 13, whether you are filing bankruptcy individually or jointly with your spouse. In addition to the court filing fee there are also two classes each individual must take; The cost for the two classes is approximately $_______.
Attorney Fees - Dependant on the facts. Attorney fees for a chapter 7 case start at $1,275.00 for an individual with consumer debts and no past due child support or alimony, no contested matters, no delinquent taxes or business issues. Attorney fees for a chapter 7 that includes the problems listed above, and/or others, start at $1,750.00. Small business Chapter 7 bankruptcy starts at $2,000.00. Attorney fees for a Chapter 13 case are approximately $3,500.00 for an individual, with no business issues; $4,500.00 for the Chapter 13 with business or more complicated issues.

Bankruptcy Fraud?
Without exception you must disclose all assets and liabilities. The United States Trustee's Office is very aggressive about uncovering bankruptcy fraud

Who can file bankruptcy?
Any person who resides in, does business in, or has property in this country can file bankruptcy. There is no threshold of debts versus assets required in order to file a bankruptcy. In order to file in Arizona you must live here for the greater part of the last 6 months.

Can both husband and wife file a joint bankruptcy petition?
Yes. Under the bankruptcy laws a husband and wife may file a joint bankruptcy petition, using the same set of forms. Only one filing fee is charged for a joint petition, so it costs no more to file a joint petition than to file a single petition.

Can I file bankruptcy if my debts are being administered by financial counselors?
Yes. A financial counselor has no legal status and cannot prevent you from filing bankruptcy.

How does filing bankruptcy affect lawsuits and attachments that have already been filed against me?
The filing of a petition in bankruptcy will automatically stop most lawsuits. A few days after your bankruptcy is filed the court will mail a notice to all of your creditors, ordering them to stop all actions against you.

Wage Garnishments - bankruptcy stops creditors from garnishing your wages; with the exception of child support or alimony payments.

What about child support, alimony/maintenance and/or property settlements?
11 U.S.C. § 523(a)(5) states that a person who files bankruptcy generally cannot discharge his or her obligations to pay support to a child, to a spouse, or to a former spouse in divorce.

What are the Credit Counseling and Debtor Education Classes I have been hearing about?
Every person who files Chapter 7 or 13 bankruptcy will have to take a credit counseling "briefing" within 180 days PRIOR to filing their bankruptcy and file a certificate of compliance. There is also a budget class that must be taken within 45 day s after filing your bankruptcy.

Before filing bankruptcy you must take one class called credit counseling: Institute for Financial Literacy YOU MUST TAKE THIS CLASS BEFORE THE ACTUAL DAY THE BANKRUPTCY IF FILED

After filing your bankruptcy you must take a class called Personal Financial Management. Arizona Learning Connections, LLC . DO NOT TAKE THIS CLASS BEFORE FILING YOUR BANKRUPTCY.

Important Note: Be sure to confirm that they are approved by the US Trustee's Office - Credit Counseling and Debtor Education .

Credit Counseling Class- Congress requires that you take a credit counseling class before you are permitted to file for bankruptcy. If you are married both must take this class. The class can be taken on the internet by phone. One accepted source is Institute for Financial Literacy . You will be issued a certificate once the class is completed. Be prepared to provide the completion Certificate.
NOTE: The Certificate expires in six (6) months.

What is involved with filing a bankruptcy?
In order to file a bankruptcy you must complete a series of documents that list all items that you own, all debts that you owe and all rights that you have. This includes your income and expenses. Everything you own or owe must be listed. You will keep all exempt property. At a creditor's meeting you will be asked to testify that you have reviewed all the documents filed with the Court and that they are true and accurate.

All Debtors must appear at a §341 meeting, also called a creditors meeting. The Trustee assigned to your case will ask you questions under oath about your assets and liabilities and other important issues. Creditors can also question the debtor on those subjects, but seldom appear. Generally, the only responsibilities you have after the 341 meeting is to cooperate with the Trustee in providing any information requested and assist your attorney in addressing any assets that you want to keep. In a chapter 7 case, all wages you earn after the case belong to you. Monies that were owed to you before your case was filed belong to your creditors, such as tax refunds, inheritances, accounts receivable, and money from any lawsuits.

What information do I need to provide in order to file bankruptcy?
In order to file bankruptcy you must fill out several forms. These forms will include basic information about all your debts, all your real and personal property and all significant transfers you have made in the last year. You will complete some educational classes; obtain a recent credit report (if you are married you will need a separate report for each spouse) and fill out more information on the Bankruptcy Intake Form at the web site.

What is a Chapter 7 bankruptcy?
Chapter 7 bankruptcy is called a liquidation bankruptcy. It is intended to give the individual debtor a fresh start. Debts such as credit cards, medical bills and lawsuits are discharged. The debtor keeps most of their property (exemptions) that are not considered luxuries
In most consumer cases, all the assets are exempt, and therefore there are no assets to liquidate and there is no money to be paid to creditors.

What is the means test?
The means test is used to determine whether the Debtor is eligibility for Chapter 7 or 13 bankruptcy.

Where can I file bankruptcy?
The Bankruptcy code 28 U.S.C. §1408 specifies that you can file only in the state in which you have had your domicile, residence, principal assets or principal place of business for the majority of the last 180 days. Therefore, you can file in Arizona in the office of the Clerk of the United States Bankruptcy Court in the District where you have lived or where you have maintained your principal place of business for the last 180 days.

When should I file bankruptcy?
The answers depend on the status of your dischargeable debts and the nature of your none—exempt assets. It is not wise to file bankruptcy if you are likely to incur sizeable new debts in the near future.

How long after filing the bankruptcy will the creditors stop contacting me ?
Once a creditor becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you retained an attorney.

What property can I keep after a bankruptcy?
Debtors often worry that they will lose personal possessions and household goods when they file bankruptcy. Most Chapter 7 cases are no asset cases: that is, the debtors give up nothing to the trustee because used household goods and personal effects are worth very little to anyone, other than the Debtor. The point of bankruptcy is to get a fresh start and that is only possible if the debtor has something to start over with.

The Bankruptcy Code allows each individual who files bankruptcy to keep basic assets deemed necessary for the debtor's "fresh start" after bankruptcy. That property is the debtor's "exempt property".

Who will notify the creditors that I have filed bankruptcy
After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules. The 2005 Bankruptcy Reform Act requires that you send notice to all addresses on any bills, statements, or letters received from any creditor or collection company in the 90 days prior to filing. Therefore, it is very important that you list all the addresses on your schedules, otherwise the creditor will not stop its collection activities. It usually takes a couple of weeks fro the creditors to receive notice of the bankruptcy filing. If you have a creditor that is ready to foreclose on your home, repossess your car or garnish your wages then you can ask our office to send special notice to that creditor.

Will I have to go to court?
No, but between 20 and 40 days after your bankruptcy was filed, you will have to attend the “Meeting of Creditors.” It is held at the office of the United States Trustee. You will be put under oath and questioned about your bankruptcy papers and your assets by the U. S. Trustee. In all probability, none of your creditors will appear at the meeting. If the husband and wife file a joint petition, both must be present or the case will be dismissed.

Who is a bankruptcy trustee?
The bankruptcy trustee is an officer of the court, appointed to review all your documents, research public records for assets you have failed to disclose, gather your non-exempt property, turn it into cash, and pay this money out to the proper creditors. The law gives the Trustee a lot of power. Make sure to comply with the Trustee's request.

What are my responsibilities to the bankruptcy trustee?
The law requires the debtor to cooperate with the bankruptcy trustee in the execution of his or her duties. The Trustee will most likely request that you give them copies of the following documents: picture identification, proof of social security number, copies of all pay stubs or income statements for 3 periods before filing, copies of all bank or credit union statements for the last 3-4 months before filing, copies of all bills, cancelled checks, and check registers to support your expenses, last two years tax returns, along with W-2's, homeowners, life and casualty insurance policies, property appraisals, title documents, mortgagee and liens for all real and personal property, divorce and/or support orders. The Trustee will also request a copy of the next year's tax return. All tax refunds must be remitted to the Trustee. Do not cash or endorse the refund checks, send them directly to the Trustee. Throughout the process the Trustee may request more information. If you refuse to cooperate with the Trustee, your discharge in bankruptcy may not be granted or may be revoked.

What is a First Meeting of Creditors?
In order to fulfill that law governing bankruptcy you must attend a "hearing" called a 341 creditor's meeting. This meeting is not in a courtroom, it is not before a judge. This is not an adversarial forum where you will be cross-examined as to why you have filed bankruptcy. Your attorney will be present to help you with any questions. At this meeting you will meet the Trustee assigned to your case and will be sworn to tell the truth. You will also be asked to testify that the documents that you have filed with the court are true and accurate. In addition, this meeting is intended to give the Trustee an opportunity to ask you any questions regarding your documents. Also, any creditors can ask questions, but it is rare to have a credit appear at one of these meetings. As your attorney, my job is to help you through this meeting and help you to answer questions. A normal creditor's meeting last between 2 to 5 minutes. Of course, this varies depending on the complexity of your bankruptcy case.

YOU MUST BRING A PICTURE ID: DRIVER’S LICENSE, PASSPORT OR LEGAL RESIDENT ALIEN CARD and PROOF OF YOUR SOCIAL SECURITY NUMBER (YOUR SOCIAL SECURITY CARD, A W-2 FORM FROM THE MOST RECENT TAX YEAR, or A RECENT PAY STUB). FAILURE TO DO SO WILL CAUSE YOUR CASE TO BE DISMISSED.

What happens after the First Meeting of Creditors?
After the First Meeting of Creditors, the court may issue orders to you. These orders will be sent through the mail and may require that you turn money or property over to the Trustee, or they may require that you provide certain information to the Trustee.

What is a Discharge and how do I get one in a Chapter 7?
A discharge is the court's order stating that you do not have to pay your debts to the creditors that were listed in your bankruptcy documents, so long as the court did not entered a non-dischargeability order. Other debts that are not discharged under the current laws include student loans, child support, alimony/maintenance, government fines or penalties, most taxes and a few others.
The effect of a discharge is that debtors are released from personal liability for all dischargeable debts, and all creditors, whose debts are discharged, are prohibited from performing any act to collect such debts from the debtors.

How often can I file bankruptcy?
A discharge in bankruptcy cannot be granted if you have received a discharge in a chapter 7 bankruptcy case filed in the last 8 years.

How long does a bankruptcy remain on my credit report?
The Fair Credit Reporting Act - 15 USC 1681c(a)(1) provides that no consumer reporting agency may report "cases under title 11 or under the bankruptcy act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years".

Can I pay my friends, relatives or employer back monies they lent me?
Debtors frequently want to friends, family or employers back monies that they have borrowed. This is called preferential treatment. That means that you owed other creditors money, but preferred to pay your friend or relative. This includes not only family but also other creditors (paying off a credit card so they can keep it after the bankruptcy). If you made these preferential payments within 90 to 365 days prior to filing the bankruptcy, the Court can force the parties who received the money to give it to the Bankruptcy Trustee.

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Frequently Asked Questions