CHAPTER 7 BANKRUPTCY
PHOENIX CHAPTER 7 BANKRUPTCY
Filing Chapter 7 bankruptcy in Phoenix, Arizona is part of the federal bankruptcy law. Plus, filing a Chapter 7 bankruptcy and having it discharged will let you get rid of many financial obligations. Additionally, all of your unsecured debts including Medical Debt and Credit Card Debt will be discharged in the bankruptcy filing. Without debts and regular monthly payments, you should quickly be on the road to a “Fresh Start.” Call our Chapter 7 bankruptcy attorney today.
One of the biggest benefits of a Chapter 7 bankruptcy is that you are allowed to keep your personal property while alleviating debt. Additionally, a Chapter 7 bankruptcy stops creditors. Also, ch 7 stops other debt collection personnel from hounding you with collection calls. Even if you have judgements, bank levies, or garnishments; collection efforts legally have to stop once you file for chapter 7 protection in Maricopa County, Phoenix, Arizona. Get debt free today with a Phoenix chapter 7 bankruptcy.
File Chapter 7 with $0 Down
Stop A Wage Garnishment
Benefits of Chapter 7 Bankruptcy
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CHAPTER 7 BANKRUPTCY FREQUENTLY ASKED QUESTIONS
ANSWER: A Chapter 7 Bankruptcy is a liquidation of most of your unsecured debts. This means debts that aren’t attached to property, like credit cards, medical bills, and payday loans will be discharged and you no longer have to pay them.
You will be required to submit a bankruptcy petition, take two credit counseling courses, and attend a 341 Meeting of Creditors to successfully complete your case. The goal in a bankruptcy is to get your case “discharged.” Your case can also end in a dismissal, or the court throwing out your case. This can happen if you fail to disclose assets on your petition, fail to provide the trustee with requested documents, etc.
ANSWER: If you are drowning in debt and struggle to make monthly payments, Chapter 7 may be a good option for you. Another great reason to file a Chapter 7 is if you are financing a vehicle that is out of your budget. You can surrender your vehicle in a Chapter 7, discharge the associated debt, and finance a new vehicle the day after your case is filed.
The most common reason people file bankruptcy is to discharge medical debts. The second most common reason is credit card debts. Many clients come to us after these creditors have received a judgment against them, and are about to garnish their wages. Filing bankruptcy can prevent those creditors from garnishing your wages and otherwise collecting on those debts.
ANSWER: The lowest of the fees associated with filing a Chapter 7 are the credit counseling course fees. These can start as low as $15 per class, but you will likely need to pay these on your own, not through your attorney.
The second fee associated with a Chapter 7 is the court fee. This goes towards the court’s operating expenses, but you will pay it to your attorney, who will pay the filing fee on your behalf when they file your case. This fee is $335.
Legal representation fees vary based on your location, the complexity of your case, the experience of the attorney, and numerous other factors. You should schedule multiple consultations to make sure you are comfortable with your attorney and the payment options they offer.
ANSWER: The most immediate benefit of filing Chapter 7 Bankruptcy is that you can provide your creditors with your attorney’s information once you retain, and they are no longer allowed to contact you about your debts. If they continue to contact you, you should report any further harassment to your attorney so your attorney can seek sanctions against them.
Once your case is filed, the Automatic Stay goes into effect, which protects you from wage garnishment, repossession, and other forms of debt collection. The Automatic Stay is discussed in detail below.
After your bankruptcy is filed, you may see little or no change in your credit score. We provide our clients with a copy of their credit report with a projected credit score one year after filing. Most of our clients see a significant increase. You will likely receive offers for new lines of credit, and have an easier time financing a new vehicle.
ANSWER: A Chapter 7 bankruptcy simply discharges your debt, while you must complete a 3-5 year repayment plan in a Chapter 13. While this may sound unfavorable, many filers are seeking to catch up on payments on their home or a beloved vehicle. A Chapter 13 allows them to spread out the arrearages over those 3-5 years.
There are time restrictions on a Chapter 7 that aren’t present in a Chapter 13 bankruptcy. If you have already filed a Chapter 7 bankruptcy in the past, you will be ineligible to file again for 8 years and may only be left with the option of a Chapter 13. There are also income restrictions for a Chapter 7 bankruptcy. You must either make below the median income level for your family size in your state, or pass a means test. If you can’t prove that you qualify for a Chapter 7 bankruptcy through either of these methods, you will probably have to file a Chapter 13 instead.
ANSWER: A Chapter 7 Bankruptcy will remain on your credit for 10 years. You will have to wait 2 years after your bankruptcy to be eligible for a home loan.
ANSWER: An Automatic Stay prevents your creditors from collecting on your debts, either temporarily or permanently. If you are facing a foreclosure, repossession, or utility shutoff, a Chapter 7 automatic stay will buy you a few months to either catch up on those payments, or surrender the asset (or service).
The Automatic Stay also protects you from wage garnishment. If your wages are being garnished for dischargeable debts, such as credit cards and medical bills, the garnishment will be stopped permanently upon discharge. If your wages are being garnished for non-dischargeable debts, such as child support, the garnishment will recommence once your bankruptcy is discharged or dismissed.
ANSWER: Many offices will require you to pay your legal fees in whole before your bankruptcy is filed. Our office realized that especially for clients whose wages are being garnished, this simply isn’t possible. If you are unable to pay your fees before your case is filed, we can bifurcate our services. This means we are able to split our fees into services provided before your bankruptcy is filed, and services provided after your bankruptcy is filed. You will be set on a payment plan for post-filing services.
Although you may end up paying more in the long run for a $0 down bankruptcy, it isn’t without its benefits. Your payments in a post-filing payment plan will be credit reported, allowing your score to rise faster post-bankruptcy.
Be wary of attorneys who advertise $0 down but still require you to pay your filing fee up front. As the filing fee is $335, this usually isn’t insignificant to Chapter 7 filers and can delay their case.
ANSWER: Unfortunately, student loans aren’t dischargeable in bankruptcy. If you are being garnished for your student loans, this will be temporarily paused during the Automatic Stay period. Domestic obligations such as child support and alimony operate in the same way. You should check with your attorney if you are unsure about the dischargeability of your debts.
If you open new credit cards 90 days before your bankruptcy and purchase frivolous things, the court may presume fraud and order you to pay those debts.
Back debts to the IRS must meet four requirements to be dischargeable: (1) the taxes must have been due for at least 3 years; (2) the taxes must have been filed for at least 2 years; (3) the debt must have been assessed at least 240 days ago; and (4) no fraud can be involved in the filing. If your back taxes don’t meet these requirements, they won’t be discharged in the bankruptcy.
ANSWER: In most cases, you will be able to keep your retirement if you file Chapter 7 Bankruptcy. Most retirement and Social Security Income is exempt. This means it won’t count towards your income for the purposes of Chapter 7 qualification.
If you have a retirement account such as a 401(k) or an IRA, it will likely be protected in the bankruptcy as well. Your 401(k) is protected by Section 401(k) of the Internal Revenue Code. The exemption limit for an IRA is $1,362,800 per person. Annuities may be protected depending on when they are set to start paying out.
The first factor that determines if you can file for a Chapter 7 is your income. The first method of income qualification is by making less than the median for your state and family size. If you are married, your spouse’s income will count in the calculations. Only minor children will be counted towards your family size.
If you don’t make less than your state’s median, you will need to pass the Means Test to qualify for a Chapter 7. The Means Test averages the last six months of your income. Then, mandatory monthly expenses will be deducted from your averaged income. The remaining number will need to be at or below a certain amount depending on your state and family size to qualify for a Chapter 7.
When filing Chapter 7, your assets will need to fall under your state’s exemptions or they will be sold towards the bankruptcy estate. Your home, car, furniture, clothes, and wedding ring are typically covered by these exemptions. Some states even have a wildcard exemption that can be used on a miscellaneous asset. These exemptions aren’t typically very high, so if your assets are worth more than the exemption, you may want to consider Chapter 13 to avoid surrendering the asset.
Chapter 7 is a great tool to help you if you’re struggling with debt, but it can’t be used too frequently. You must wait 8 years between filing Chapter 7. If you have previously used Chapter 13 bankruptcy, you will need to wait 6 years from the filing date before you can file a Chapter 7.
If you have decided that the benefits outweigh the costs of bankruptcy, or have more questions, call our office to schedule a free consultation. We offer them telephonically and can sometimes even schedule appointments same-day. Take the first step towards a financial clean slate and get started today!
STEPS TO FILING CHAPTER 7 BANKRUPTCY IN ARIZONA
1. Consult with an Arizona Bankruptcy Attorney
Even if you decide to file pro se, or without an attorney, a consultation with an experienced bankruptcy attorney should be your first step to filing a bankruptcy in Arizona. The attorney should help you figure out which chapters you qualify for and any potential issues in your case. If you do choose to retain the attorney, they will provide you with a list of documents necessary to draft your petition. Many Arizona Debt relief Attorneys offer Free Consultations
2. Gather and Submit your Documents
Your next step will be assembling your documents for your attorney (or for yourself if you are filing pro se). Documents typically needed include two years of tax returns, six months of paystubs, registrations to vehicles, any divorce or child support documents from the past six years. Additionally, you will need discharge paperwork from any prior bankruptcies, and bank statements. Plus, you will also need to submit bills for debts that you’d like to be discharged. Be aware that submitting your documents doesn’t mean your bankruptcy is filed– your bankruptcy attorney will need some time to draft your petition once receiving all of your documents.
3. Take your First Credit Counseling Course
4. Review and Sign your Petition with your Attorney
After you have completed your first course, you and your attorney will go over your petition to make sure there are no mistakes or updates to add. Your wet signature will also be required on the Declaration of Electronic Filing. If there isn’t anything to fix on the petition, your attorney will file the petition during or shortly after your petition signing. They will also likely take the chance to prepare you for your 341 Hearing.
5. Attend your 341 Meeting of Creditors
You should receive a letter from your trustee after your petition is filed. The trustee will provide you with your court date, and likely request additional documents. You should provide those documents to your trustee as soon as possible, or bring them to the 341 Hearing if you are unable to provide them sooner. Your 341 Meeting of Creditors will usually be held approximately 30-45 days after you file. Attending your 341 Meeting of Creditors is absolutely necessary, whether or not you have an attorney. Your case may be continued if you fail to attend, but it may be dismissed if you miss too many hearings. The trustee will have questions about your petition, along with any creditors who choose to attend.
6. Take your Second Credit Counseling Course
You must take a second credit counseling course within 60 days of your 341 Meeting of Creditors. Once this step, along with all of the steps listed above, is completed, you will just be waiting for your case to be discharged. Your creditors will have 60 days after your 341 Hearing to object to your debts being discharged if they were unable to attend the hearing. Your case may not be discharged exactly on the 60th day- it may be a few days or even weeks before the court completes the necessary paperwork.
While Chapter 7 can be boiled down to six simple steps, it is usually more complicated than that in practice. If you have further questions about Chapter 7 or any other chapter of bankruptcy, our office is here to help. We offer free consultations to help you get started towards a financial clean slate 100% risk-free. The only way to get started is to call, so schedule your consultation today!