#arizona chapter 7 bankruptcy exemptions

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Are financial problems driving you to file for bankruptcy? Choose bankruptcy chapter that allows keeping important assets through exemptions. To know more read the infographics

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What Are Bankruptcy Exemptions?

If you’re overwhelmed with debt, filing for bankruptcy with the guidance of the Wright Law team may be the best path forward for relief and better days. It’s a big step, and it’s understandable to have a lot of questions, and maybe even some hesitation. At Wright Law Offices, bankruptcy is our specialty, and we’re honored to be able to help our clients navigate the bankruptcy relief process and discover a fresh start.

Commonly, we get asked about what property or assets are protected from creditors for a bankruptcy filing. Our team is ready to discuss your specific situation and bankruptcy options with you personally, but here are some basics about bankruptcy exemptions. Remember that the purpose of a bankruptcy isn’t to strip you of all of your belongings, leaving you with nothing; it’s to give you a fresh financial start, so the basics of bankruptcy exemptions are an important aspect of bankruptcy to understand.

What Are Bankruptcy Exemptions? 

When filing for bankruptcy, whether it’s Chapter 7 or 13, there is certain property that is protected and kept safe per state and federal law. If an asset is exempt, that means the bankruptcy trustee responsible for your case can’t seize it and sell it to pay off creditors to settle your debts. All property, even property you are claiming as exempt, must be listed on your bankruptcy schedules when filing. The exemption laws are strict, and incorrectly claiming something as exempt that doesn’t actually qualify can have serious consequences, so obtaining experienced legal counsel like Wright Law can help you determine what property can be claimed as exempt and how to apply Arizona’s statutes about value limitations.

Exemptions for Chapter 7 vs Chapter 13 Bankruptcies

In bankruptcy law, the same amount of property is protected for both Chapter 7 and Chapter 13. The main difference is that with exemptions in Chapter 7, the bankruptcy trustee appointed to your case will sell non-exempt property to pay your creditors. When it comes to property in Chapter 13 bankruptcy, you’re basically allowed to keep all of your property while paying off some of your debt in a 3-5 year repayment plan. The value of property that can’t be protected with an exemption is calculated into the repayment plan, so with exemptions in Chapter 13 bankruptcy, exempting all or most of your assets will help keep your monthly payment low.

State vs Federal Bankruptcy Exemptions

Both state and federal bankruptcy exemptions exist, allowing debtors to exclude certain property up to a certain dollar in value. When filing in some states (Arizona isn’t one of them!), you are given a choice between exemption systems, meaning you can choose whether you use the state exemption list, or the list of federal exemptions outlined by federal law, but you can’t mix and match exemptions from the two sets. Again, Arizona doesn’t give you a choice of exemption; you must go by the state exemption list.

What Are Federal Non-bankruptcy Exemptions?

To further protect your property when filing in a state like Arizona where you must use the state exemption list, you may be able to take advantage of other federal exemptions found outside the bankruptcy code, which are called federal non-bankruptcy exemptions. These are just like bankruptcy exemptions because they prevent certain assets from being sold by the bankruptcy trustee to pay your debts. However, they are harder to qualify for, as you must be part of a certain occupation or other specialized group.

For example, your retirement benefits are fully exempt if you are classified as one of the following: civil, foreign, or military service employee, railroad worker, CIA, Veteran, Military Medal of Honor Roll, or a Social Security benefit recipient. Death and disability benefits are fully exempt for longshoremen, harbor workers, and government employees, in addition to any received benefits for risk, hazard, injury, or death from war. There’s more to the list that qualify as non-bankruptcy exemptions, so get in touch with our law firm to discuss whether you fall under one of the categories.

Doubling Exemptions for Married Couples

If you are filing for a joint bankruptcy with a spouse, there is exempt property that can be doubled, meaning you can claim or take twice the amount. If you are filing Chapter 7, doubling will allow you to keep more of your property, and for Chapter 13, you’ll pay less to unsecured creditors as part of your repayment plan. You and your spouse can each take the full exemption amount on a piece of property as long as you each have ownership interest in the asset.

What is Exempt When Filing For Bankruptcy in Arizona?

Under Arizona law, if you are filing for bankruptcy, and have lived in Arizona for all of the two years previous to filing bankruptcy, you may claim the exemptions made by Arizona law. If you happened to have lived elsewhere during that time period, you must claim the exemptions provided by the state you resided in for the greater part of six months.

Here is a small sampling of some commonly assets that qualify as exempt property in Arizona:

Homestead Property Exemption. In Arizona, homestead exemptions mean that up to $250,000 of a home, condo, mobile home, or other property (plus the land) where you reside can be exempted, and therefore protected. This homestead statute states the amount cannot be doubled if filing with a spouse.

Motor Vehicles. Arizona’s exemption for motor vehicles allows you to protect up to $6,000 in one vehicle, or up to $12,000 if you’re elderly or disabled, or have a dependent who is.

Personal Property. For keeping property in bankruptcy, beyond a home and a vehicle, there is quite a bit that can be exempted as personal property, and all can be doubled for a spouse. Up to $6,000 (total fair market value) in household appliances, household furnishings, and electronics may be exempted. Other miscellaneous assets that have their own specific limits include a wide range of household items including: computers, musical instruments, sewing machine, typewriter, bicycle, firearms, books, a watch (sorry, but that Rolex is not going to be exempt), engagement and wedding rings, and more. Even household pets are listed. Again, it’s a very specific list outlined by Arizona statute, and that’s why having a personal bankruptcy lawyer on your side to best protect your assets and YOU is imperative throughout this process.

Life Insurance Benefits. A life insurance policy not greater than $20,000 payable to a surviving spouse or child, as well as payments to a beneficiary under any health, accident, or disability policy are subject to exemption.

Pensions & Retirement Plans. Various employee funds in pension plans are exempt, as well as funds in retirement accounts that are tax-exempt.

If you have a specific question about whether or not an asset of yours will be protected when filing for bankruptcy, please contact us. Every situation is unique, and we are more than happy to get you the information you need to rest easier and envision a brighter path forward free from financial stress.

Phoenix’s Best Bankruptcy Attorney

Bankruptcy proceedings can be daunting and certainly confusing, but you don’t have to go through it alone. In fact, you shouldn’t. At the Wright Law Firm, we’ve dedicated our careers to helping Arizonans file bankruptcy, and help our clients understand the exemptions in bankruptcy cases that are available.

If you have questions about bankruptcy, debt assistance, or loan modifications, call our team at 602-456-6085 or click here for a free consultation. Let us help you discover a fresh start.

The post What Are Bankruptcy Exemptions? appeared first on Phoenix Bankruptcy Attorney | Phoenix Bankruptcy Lawyer | Wright Law Offices.

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Find Out What Happens to Your Bank Account After Bankruptcy

What will happen to your bank account in the event of a bankruptcy? This is one of the most common questions Arizona residents ask before moving forward with the filing.

In Arizona, certain assets are protected in the event of bankruptcy filing. The chapter under which you file will be determining for these exemptions. Typically, you don’t have to worry about your bank account. Here are the additional details.

Chapter 7 Bankruptcy and Bank Accounts

A checking or savings account isn’t going to be closed automatically in the event of a Chapter 7 bankruptcy filing. You will also retain the right to open new accounts, make deposits and withdrawals in the future.

The amount of money in your bank account, however, could be affected in specific circumstances. A few of the most common ones include the following:

If the bank account balance exceeds the exemption amount for Arizona, the surplus will be used to cover some of the debt

If the bank account holder owes the money to the bank, the account balance could be affected

In some situations, institutions could issue orders to have the sum in a bank account “frozen”

Arizona’s bankruptcy exemptions state that up to 300 dollars in a single bank account on the date of the filing will be protected. If you receive a salary via a bank account, keep in mind that 75 percent of the income or 30 times the minimum federal hourly wage (whichever is higher) will also be protected by the exemption.

A few additional exemptions (for example – the homestead exemption) could be used to protect the money in your bank account. To make this happen, however, you’ll have to partner up with an experienced legal professional that’s familiar with the Arizona bankruptcy regulations and how they could be applied to your specific situation.

Chapter 13 Bankruptcy and Its Impact on Bank Accounts

Generally speaking, a Chapter 13 filing does not qualify as a liquidation bankruptcy. As a result, you do not have to worry about your checking or savings account.

In the case of a Chapter 13 filing, the bankruptcy trustee will be responsible for coming up with a debt payment plan that will be valid for a three to five year period. Once the plan is determined, you can have the specific sum deducted automatically from your bank account every single month. The rest of the money is yours and you’re free to do with it whatever you want.

As a debtor doing a Chapter 13 bankruptcy, you’re also free to open new bank accounts. In this instance, you’ll simply have to meet the respective financial institution’s requirements.

All of these conditions apply to people who are punctual with their monthly payments. If you fall behind on the Chapter 13 plan, the situation will probably change.

When doing a Chapter 13 filing, you should also be aware of the bank’s set off privilege. Whenever you owe money to your bank, the financial institution has the right to set off the debt against the funds in a checking or savings account.

A bank has the right to initiate the set off procedure at any given moment and not solely during a bankruptcy filing. A set off, however, will not occur that often. Banks will often sell the debt to other institutions that will be responsible for handling it. Such institutions do not have the right to carry out an account set off. In addition, an automatic stay comes in effect at the time of the bankruptcy filing. In order to lift the automatic stay, the bank will have to petition the Arizona bankruptcy court.

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patrick armstrong athens | Easy Steps for Filing Personal Bankruptcy and Obtaining Fast Financial Obligation Relief

If you just recently experienced major financial troubles, it may be a great suggestion to think about filing for personal bankruptcy. If you are seriously taking into consideration declaring individual bankruptcy, after that you should a minimum of understand what the steps are for submitting personal insolvency and getting quick relief from your financial troubles.

 The first point you have to do is to arrange all your individual monetary details. They would consist of all your secured and unsecured financial obligations, actions to your property residential properties, income tax return, car titles as well as various other papers that could be appropriate to your financial resources. For even more benefit, you can obtain your full credit score report.

 After making sure you have all the important financial papers with you, you will need to finish individual bankruptcy types. The kinds will really explain your existing monetary scenario and most recent purchases. At this moment, you can work with Arizona insolvency attorneys or Phoenix az bankruptcy attorneys to make sure you responded to each concern on the kind correctly and choose which type of personal bankruptcy to file, a Phase 7 insolvency or Chapter 13 bankruptcy.

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A Phase 7 insolvency will certainly leave you with no properties yet all your financial debt will be erased. On the various other hand, if you file for a Phase 13 bankruptcy, you get to maintain all your exempted possessions as well as pay your creditors within a duration of 3 to 5 years under the supervision of the insolvency court.

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If you want to declare a Chapter 13 insolvency, you will need to submit a settlement strategy proposal along with your application. You will need to pay a declaring fee: $200 for a Phase 7 bankruptcy as well as $185 for a Chapter 13 personal bankruptcy. As soon as the personal bankruptcy application is filed, all your financial institutions are prohibited from calling you as well as staking insurance claims to your properties. One month after, you and also your Arizona personal bankruptcy legal representatives or Phoenix metro personal bankruptcy attorneys will be summoned for a conference with your lenders to work out and also address questions. A concession ought to be gotten to and if not, the personal bankruptcy judge will likely to mediate. If an arrangement is reached, you must anticipate a notification from the personal bankruptcy court after four to six months, discharging the individual insolvency.

 Completion of an individual insolvency will certainly offer you an opportunity to begin with a clean slate. You can begin re-building your life, making sure that you have learned from such an experience.

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Mesa Bankruptcy Law Firm

Read this infographic to learn about bankruptcy in Arizona and know how our Arizona bankruptcy attorney at Zolman law can help you to choose right option for you. For more information call us at (480) 566-9335.

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What Happens to Your Car in Chapter 13 Bankruptcy?

Whether you own a car, a truck or a motorcycle, you will obviously want to know how they will be impacted in Chapter 13 bankruptcy proceedings. The differences between Chapter 7 (liquidation) and Chapter 13 bankruptcies are significant. These differences extend to the fate of vehicles. So, do you get to keep your car in Chapter 13 bankruptcy?

Do You Get to Keep Your Car in Chapter 13 Bankruptcy?

Chapter 7 bankruptcies are known as liquidation proceedings. This means that nonexempt property will be liquidated for the purpose of paying back creditors. Chapter 13 bankruptcies are different. Liquidation usually doesn’t occur and the debtor agrees to pay a certain amount back to creditors every single month. The repayment plan lasts for a period ranging from three to five years.

Generally, vehicles are not liquidated in Arizona Chapter 13 bankruptcy proceedings.

Your motor vehicle equity, however, could play a role in determining the monthly installments.

The rule followed in Chapter 13 bankruptcies is that the debtor has to pay back an amount that is equal to their non-exempt property. Having more than one vehicle will increase the non-exempt property and as a result, the credit payments will increase.

Usually, most people do not have a lot of excess equity in their car. An automobile collection or several different vehicles may bump the monthly installments up.

When is it a Good Idea to Give Up the Car?

In some instances, it may be a good idea to get rid of the car.

If your car is worth less than the car loan, for example, you may want to walk away and allow the repossession of the vehicle. It’s a simple matter of mathematics. If you can’t make the calculations on your own, a talk with an experienced Arizona bankruptcy attorney will shed some light on the situation and the financial decision that will make the most sense.

Whenever a car is repossessed, the lender will sell the vehicle for a certain amount. The sale proceeds will be taken to cover the remaining credit. In the unlikely event of a specific sum being left over, you will be entitled to that amount.

car in chapter 13 bankruptcyIn most cases, however, the opposite is true. The amount acquired through the repossession and the sale of the car will not be sufficient to cover the outstanding credit debt. The amount that remains after the sum from the sale is applied is the one that you will now owe.

This sum is going to be included in your list of unsecured debt. Through the repayment plan, you will have to pay some of it but typically – not the entire amount.

Keep in mind that negotiating with the lender and attempting to sell the car on your own in such instances can produce much better results, especially if the car loan is significant. Car loan cramdowns are also possible in Chapter 13 proceedings. In the case of a cramdown, the value of the loan will be brought down to the actual value of the car. This is yet another option you should consider before allowing a repossession or moving forward with a vehicle sale. Should You Keep or Should You Surrender the Car?

Chapter 13 bankruptcies offer a lot more flexibility than Chapter 7 proceedings. Property liquidation does not take place, which is a good thing. You, on the other hand, will be left with several important decisions.

The value of your car, whether it is included in the exempt property and your car loan debt will all be taken in consideration when determining if keeping a vehicle is the smart thing to do. In many instances, surrendering the car will make a lot of sense in Chapter 13 proceedings. If you don’t want to let go, however, you don’t really have to.

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Is Bankruptcy Law Difficult?

We know that the line, “Bankruptcy should be hard,” is not something anyone who is suffering through financial hardship wants to hear. However, we want you to consider the reasons that bankruptcy is not an easy process:

Bankruptcy cannot become something that is so easy that people do not think twice before taking on too much debt.

Creditors should be able to recoup as much as possible on the amounts they are owed.

If everyone who had debt filed for bankruptcy, the entire system of credit would likely collapse and inhibit economic growth.

There are many reasons that people find themselves in a situation in which bankruptcy is an option and it is not always because of irresponsible spending behavior.

A person could be going through an unexpected divorce in which their assets are significantly altered as a result.

They could be laid off from their job, something that can happen to people at all income levels.

Major and unexpected medical expenses are a common reality for many people.

External political decisions can cause companies to go out of business or disrupt their customer base.

The list of reasons why people face insurmountable debt problems goes on, but luckily there are options. Both Chapter 7 and Chapter 13 bankruptcy can help individuals get back on track financially.

Making The Right Choices

We need to say that this is not a decision you need to consider on your own. Talk to your family and friends about your options. More importantly, securing the advice of a qualified Arizona bankruptcy attorney is vital. A bankruptcy attorney can help you determine whether or not you need to even file and help you figure out which type of bankruptcy you qualify for.

For both Chapter 7 and Chapter 13, a person is looking for a way to get their debts under control or discharged. Chapter 7 is the most common type and is usually the best option for people who do not have a regular income. With this type of bankruptcy, most of a person’s assets (with some exemptions for vital possessions) will be liquidated to settle as much debt as possible. Chapter 7 will stay on a person’s credit report for ten years.

Chapter 13 is a better option for people who have a regular income and lets a person keep most of their possessions. Essentially, a person can restructure their debt with the help of the courts and set up a 3 to 5-year payment plan. Chapter 13 does also does not affect a person’s credit in the same way as Chapter 7.

The Statistics

There were 15,743 bankruptcy filings in Arizona during 2018. Out of those, there were:

12,668 Chapter 7 filings

2,957 Chapter 13 filings

We bring you these numbers to point out that you are not alone when it comes to debt trouble. We want to stress the importance of not putting off filing for bankruptcy because you are afraid of what others may think or that “the situation might get better.” Once you reach a certain point, the debt will continue to snowball out of control, making unassisted recovery nearly impossible.

How We Can Help

Seeking the assistance of an Arizona bankruptcy attorney will go a long way towards getting you out of your debt trouble. The complexities of filing for bankruptcy, regardless of which route you choose, are beyond what most people want to handle on their own. Let a qualified attorney walk you through the process and handle the hard parts so you can focus on getting back on your feet.

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How Does Bankruptcy Affect Your Tax Refund in Arizona?

What happens to tax refunds during a bankruptcy? That’s a valid question but to get a reliable answer, you need to understand there are different types of bankruptcy. The effects will be different in the cases of Chapter 7 and Chapter 13 filing.

Tax Refunds and Chapter 7 Bankruptcy

Chapter 7 bankruptcies are liquidation proceedings in which non-exempt property and assets will be used to pay off priority debt.

Naturally, people wonder whether their tax refunds will be used for the purpose.

To know the answer, you will have to determine whether the return is produced from income earned before or after the filing. If you have a return that’s the result of income you earned after the bankruptcy will be yours to keep.

Tax refunds that are based on income you earned before the bankruptcy will be included in the bankruptcy estate for liquidation purposes. It doesn’t matter if you receive the sum before or after the date of the bankruptcy filing, the rule is still in place.

There are a few ways in which you can keep a refund. The first one is to use the amount on necessary expenses (not just on buying anything because such behavior could be considered bankruptcy fraud). A bankruptcy exemption could also be used to protect a certain amount.

In Arizona, tax refunds are not protected under a state bankruptcy exemption. You could, however, benefit from a federal exemption in a few instances. The federal wildcard exemption is set at 1,250 dollars plus up to 11,850 dollars of the unused portion of the federal homestead exemption.

Click here for information on who carries the most debt in America?

Tax Refunds and Chapter 13 Bankruptcy

The Chapter 13 bankruptcy features the creation of a payment plan that’s based on your disposable income. The aim here is to cover a portion of your debt. A Chapter 13 payment plan is valid for a period ranging from three to five years, after which remaining debt will be discharged.

To address the tax refunds question, you will have to learn whether the sum is included in your disposable income calculation.

Disposable income is a term that refers to the amount left after you pay all of your monthly necessary expenditures (food, medicines, transportation, rent, utilities, etc.).

If you do not include the tax refunds in the payment of essentials, the bankruptcy trustee will count the sum towards your disposable income. Hence, the payments you will have to make under the Chapter 13 plan will be higher than in the instance of having no tax refunds or using the money to cover essential expenditure.

Thus, the simplest way to exclude a tax refund from the disposable income calculation is to show that it’s needed to make necessary payments. Usually, however, people find it very difficult to justify their desire to keep the sum.

Because a Chapter 13 payment plan lasts for several years, it will affect you on an annual basis.

You have the right to file a plan modification every single year. In this modification request, you can petition the court to exclude the tax refund from the disposable income calculation. A valid reason will have to be presented for the petition to be considered in court.

A tax refund will be excused only in instances when your living expenses increase and you have to use the money to cover the essentials.

If your car breaks down suddenly, for example, the court may allow you to use the tax refund to cover the cost of the repairs.

As you can see, individual circumstances will play a role each time. This is why you need to hire a skilled Arizona bankruptcy attorney. Your legal representative will examine your income, advise you about the best type of bankruptcy filing and the ways to keep funds or valuables that you need.

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Arizona Bankruptcy Laws Chapter 7

Chapter 7 bankruptcy is one of the most common types of bankruptcies.  This blogpost will explain certain key points that an individual should know before deciding to file in Arizona court.

“Fresh Start” or “Do-over” are a couple of terms that generally pop up when the term Chapter 7 arises.  Chapter 7 is called a liquidation.  The Bankruptcy Court will liquidate assets to satisfy debts. Overview

Filing Chapter 7 allows a person to discharge debts, keep assets that are exempt, and continue to pay on certain secured debts that the debtor wants to keep, like a house or car.  A debtor will turn over any non-exempt assets to the Bankruptcy trustee.  Chapter 7 focuses on unsecured debts.  Secured debts like a house and a car that a person wants to keep, must continue to remain current.  A Chapter 7 bankruptcy will not let you keep the assets if you are not going to remain current. Who Can File

An Arizona permanent resident may file for Chapter 7 bankruptcy Arizona courts.  To be a permanent resident, you must have lived in Arizona for at least half of the last 180 days (or 91 days) in order to file. Exempt Property

Exempt property in Chapter 7 is things that you can keep.  Filing for Chapter 7 Bankruptcy triggers the Bankruptcy Trustee to take all non-exempt property and then sell it to satisfy creditors.

A home and the land on which the home resides may be exempted up to $150,000.  Personal property including household furniture, household goods, consumer electronic devices, and appliances may be exempted up to $6,000.  A couple may double all personal property exemptions, meaning a couple could exempt personal property up to $12,000.

All food, fuel, and provisions for the debtor’s individual or family use to last up to six months can be exempted. Musical instruments may be exempted for total fair market value but not greater than $400.

These are just a few examples of exemptions.  A full list can be found here. Secured v. Unsecured Debts

Bankruptcy will require a debtor to list both secure and unsecured debts.  Unsecured debts include personal loans, credit card debt, vehicle leases, and medical bills.  Secured debts include mortgages, car loans, and loans from finance companies.

When a debtor files for Chapter 7, the debtor will have to choose to affirm to continue to pay the secured debts or to surrender the secured items to creditors.  If a debtor surrenders secured property, the secured creditor is prevented from suing a debtor or trying to collect money. The Means Test

The Means Test is a test the bankruptcy court will use to determine if a person can file for Chapter 7 bankruptcy.  It is a formula that is established by Congress.  The test will determine if a person has enough income currently to pay expenses allowed, plus any extra money to pay unsecured creditors.

If a person’s debt is 51% or more related to business obligations, than the debtor does not have to go through the means test.  A person must calculate their current monthly income.  This includes income from a spouse or help from family or friends.  The allowed living expenses and payment of secured and priority debts are subtracted from the total income to equal a monthly disposable income  This monthly disposable income can be used to pay unsecured debts.

The means test can be complicated.  It is advantageous for a debtor to hire an attorney so that the attorney can run a test before filing for bankruptcy, ensuring that the debtor is eligible to file in Arizona.

Click here for information on bankruptcy dismissal vs discharge in Arizona.

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Common Bankruptcy Myths

No consumer enjoys filing bankruptcy at any point. We as humans hate admitting defeat, which bankruptcy essentially does. However, there are times when personal injury, sudden health issues and job loss bring our income below our debts.

Perhaps you’ve done research, read stories and became mortified knowing what bankruptcy does. Maybe you’ve been approached with unbelievable debt consolidation offers. Today, we’re going to debunk some myths and misconceptions that swirl when filing Chapter 7 or 13 bankruptcy is imminent.

Bankruptcy rules in Arizona are too strict

Taking the bankruptcy Means Test will determine if you’re eligible to file Chapter 7 or 13 petitions. Provided your income is less than the median income for your household size, you’ll pass that test. And, provided eight years have passed since your last petition filing (or 4 if filing Chapter 13 after 7), you’ll be able to file. Those are primarily the only rules imposed on debtors.

Bear in mind legal obligations such as alimony, child support, criminal restitution and some tax liabilities are non-dischargeable. Student loans, too, cannot be discharged unless paying them would cause undue hardship.

Filing bankruptcy in Arizona yourself is better

Laws are there to protect people, yet commoners aren’t privy of the numerous motions, legal jargon or formalities of approaching judges and other court officials. There are many, many things that could go wrong for pro se litigants in bankruptcy case, including their petition getting rejected due to missing information or incompleteness. You’re more than welcome to file Chapter 7 or 13 petitions without counsel, yet many choose to invest in their future by guaranteeing they’ll be fairly represented at any bankruptcy court in Arizona.

There’s no such thing as a cheap bankruptcy in Arizona. There’s inexpensive ones, but not “cheap”.

I’ll lose my home and car after I file

Although bankruptcy requirements in Arizona require individuals to put all debts owed (even to their parents), some debts can be reaffirmed. If you’re unable to take public transportation or walk to work, you’ll want to reaffirm your car loan unless you’re upside down on your loan. Unless you’re wanting to downsize living arrangements, you’ll want to reaffirm your mortgage. In fact, you can reaffirm any debt you can afford, although many simply keep their car and house. By signing a reaffirmation agreement, and provided it’s approved by the lender, you’ll keep your home and vehicle.

When your attorney goes through bankruptcy exemptions in Arizona, and you’ve passed the means test, discuss reaffirming debt.

The bankruptcy cost in Arizona is too high

Honestly, bankruptcy is an investment into your future. Costs aren’t astronomical unless you’re filing Chapter 11 bankruptcy shortly after a Chapter 7. Attorneys normally charge a nominal fee for their services on top of your filing fee. You’ll need to take two tests and receive two certificates – one after you filed, and one closer to discharge. Both those are taken online, and filed by the company sponsoring the test. Apart from that, you’re excused from thousands in unsecured debt – debt which collectors could rightfully sue you for. Besides, bankruptcy restores your paycheck by virtue of stopped garnishments and bank levies.

Remember, the alternative to bankruptcy is debt consolidation. While I’m sure some people find great success with this type of debt relief, companies offering these services charge way more than bankruptcy attorneys at times. And, of course, bankruptcy wipes away debt.

Don’t believe the hype – bankruptcy isn’t as scary as you’ve heard, and does more good than harm to people drowning in debts they cannot pay. Just make sure you go through an accredited bankruptcy attorney so your petition is filed on time, and with 100% accuracy.

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Chapter 7 Bankruptcy

When a person is faced with insurmountable debt that he cannot overcome without significant changes in the nature of the debt and the payments that are due, it may be time to file a Chapter 7 bankruptcy case. A Chapter 7 action provides a person with an opportunity to eliminate many types of unsecured debt.  This provides a clean slate on which to build a strong financial foundation so that the person can move forward, build credit, and possibly purchase a house or other high-value items in the future.  However, only certain individuals qualify for this type of filing.

The Means Test

In order to understand whether or not a person qualifies for a Chapter 7 filing, he must undertake a means test.  This looks at the income of the individual.  If a person or household is under the median income for a household of the same size in Arizona, then he does not have to go through the formal means test.  However, it still may be possible to file a Chapter 7 action if the person is above the median income.  The means test involves an analysis of a person’s income and expenses.  The calculation looks at how much income is available over a five-year period to satisfy outstanding debt.  If the income is low enough, then the person may pursue a Chapter 7 rather than Chapter 13 bankruptcy case.

A Chapter 7 Case

When a person files a Chapter 7 action, a trustee is appointed to the case.  The person doing the filing must turn over all assets to the trustee that are not exempt under Arizona or federal law.  Exempt assets are specifically listed and may be excluded from the bankruptcy estate up to a certain dollar amount.  Exempt items may include clothing, household furnishings, and personal property.  Secured assets up to a certain amount also may be excluded from the bankruptcy estate.   However, most people who qualify for Chapter 7 bankruptcy do not have significant amounts of secured assets.  A person also may avail himself of some federal exemptions – a skilled Phoenix bankruptcy attorney can help a filer maximize his exemptions.  After the exempt property has been established, the trustee will then sell or otherwise liquidate the non-exempt assets and distribute the funds to creditors based on priority.  Although many types of unsecured debt may be discharged as part of a Chapter 7 bankruptcy case, some debt that is not available for discharge includes:

Student loans;

Child support obligations;

Alimony;

Debt that was accumulated as the result of fraudulent activities;

Some tax obligations; and

Debt incurred as the result of purchasing luxury items in anticipation of bankruptcy filing.

One of the major considerations for a couple contemplating bankruptcy is how to obtain the best possible relief, which may involve a joint filing, with each person claiming the maximum exemptions allowed under the law.

Many people who are eligible to file a Chapter 7 bankruptcy action are able to wipe out most, if not all, of their debt.  However, if they do have secured assets that they wish to keep, they may go through the process of reaffirming the debt.  This acts as a promise to continue to make payments on these items as due and owing.  It is important to consider this action carefully as a reaffirmation of the debt means that it cannot be discharged in bankruptcy for another eight (8) years.  The simple act of determining what type of bankruptcy case to file requires careful consideration and a skilled Phoenix bankruptcy attorney will guide a person through the process.