Bankruptcy attorneys in Phoenix will tell you to consider these things before you move forward with filing a Chapter 7 or Chapter 13 bankruptcy in Phoenix.
Bankruptcy Attorneys in Phoenix – is Bankruptcy is the Best Choice for You?
Filing for bankruptcy in Phoenix can have lasting effects on your life. It can affect your credit for a while and make it difficult to buy a house. The negative effects are not permanent by any means and we have a Fresh Start Credit Repair Program to get you back on the right track. Still, bankruptcy is a big decision and you should know that there are alternatives to filing for bankruptcy in Phoenix in some cases. The bankruptcy attorneys at Phoenix Fresh Start Bankruptcy Attorneys have decades of experience helping people resolve their debt problems. During a free consultation, one of our experienced bankruptcy attorneys will take the time to understand your situation and explore your options, including alternatives to bankruptcy.
But, you can start here to learn more about your Alternatives to Filing for Bankruptcy in Phoenix.
Which Chapter of Bankruptcy Should You Choose?
After you have discussed your financial situation with a bankruptcy attorney from Phoenix Fresh Start Bankruptcy Attorneys, you will better understand the benefits of both types of consumer bankruptcy (Chapter 7 & Chapter 13). But, briefly, Chapter 7 bankruptcy may be a good alternative for you when you primarily have unsecured debt, your property is protected with exemptions and you meet the qualifications for Chapter 7.
Our bankruptcy attorneys may alternatively recommend filing Chapter 13 bankruptcy in Phoenix if your property is not protected by exemptions, you are trying to avoid foreclosure, or you do not otherwise qualify for a Chapter 7 bankruptcy in Phoenix. A Chapter 13 bankruptcy in Phoenix could allow you to pay back just a fraction of your total debt over three to five-year period. It can also give you options to resolve mortgage and foreclosure problems that would otherwise be unavailable to you.
Ultimately, there are many factors that should be taken into consideration when deciding which chapter of bankruptcy is right for you. However, you do not have to make the decision alone. The bankruptcy attorneys from Phoenix Fresh Start Bankruptcy Attorneys are here to help. Start with a free, no obligation consultation and then take advantage of our easy payment plan and free credit repair that is included with every bankruptcy in Phoenix that we file.
You may can learn more about Chapter 7 and Chapter 13 at here: Is Chapter 7 Bankruptcy better than Chapter 13 for Me? and Is Chapter 13 Bankruptcy better than Chapter 7 for Me?.
Does Bankruptcy Really Eliminate Your Debt?
The answer to this question is, “it depends on the type of debt.” A bankruptcy attorney from Phoenix Fresh Start Bankruptcy will give you’re a free debt analysis to help you determine which of your debts can be discharged (eliminated) in bankruptcy. Most unsecured debt like credit cards and medical bills can be completely discharged in bankruptcy. But, certain other “priority obligations” like child or spousal support and newer tax debt cannot be discharged in bankruptcy. In some cases, old tax debt and student loans may be discharged in bankruptcy.
Our bankruptcy attorneys from Phoenix Fresh Start Bankruptcy Attorneys may advise you to file a Chapter 7 if all your debts can be wiped out by doing so. Alternatively, our bankruptcy attorneys may recommend a Chapter 13 bankruptcy which may allow you to pay back non-dischargeable debts over a 3 to 5-year period.
We explain in more detain how it works here: Debts Dischargeable in Chapter 7 Bankruptcy and Dealing with Non-dischargeable Debt in Chapter 13 Bankruptcy.
Are You Facing Foreclosure or Repossession?
Secured debt is debt (loan) that is secured by an asset like a home or a car. If you have fallen behind on your payments you may be facing foreclosure or repossession. The bankruptcy attorneys from Phoenix Fresh Start Bankruptcy Attorneys may be able to stop foreclosure or repossession in its tracks. Bankruptcy law has built in protections for people like you know as the “automatic stay”. This is an order of the court that is issued automatically upon filing for bankruptcy. It prevents creditors from taking any action against you with the permission of the bankruptcy court.
The automatic stay gives you and your bankruptcy attorney time to work with the bankruptcy court, your creditor and the bankruptcy trustee to resolve your debt crisis.
With secured debt, the automatic stay is usually gives you temporary protection Chapter 7 bankruptcy. However, Chapter 13 bankruptcy may allow you to catch up on your payment, push down the amount that you owe and even strip the lien off from certain property.
We discuss how this works here: Avoiding Foreclosure with Chapter 13 and Keep Your Car in Chapter 13.
Collections, Garnishments and Lawsuits in Bankruptcy
When you owe someone money, they can take certain actions against you to get it back. It will typically start with you being turned over to a collection agency. They will report your late payments to the major credit bureaus and then follow up with harassing phone calls. This obviously does serious damage to your credit report, but the phone calls can really become unnerving. If the collectors cannot coerce you into paying, the legal action will start. A lawsuit may be filed against you and they will obtain a judgement, usually for an amount much greater than the original debt. Next, you will be facing garnishments. A garnishment can be executed against your bank accounts, paychecks and even your business. The IRS and some student loan lenders skip all of that and begin garnishing your accounts with going to court. (for more information see How Creditors Collect Debts).
When our bankruptcy attorneys from Phoenix Fresh Start Bankruptcy Attorneys step in to help, we can stop collection actions, garnishments and lawsuits in their tracks. If you are facing a collection action, garnishment or lawsuit, don’t wait! Call our friendly bankruptcy attorneys today.
You can read about how to stop collection actions, garnishments and lawsuits here: How Does the Automatic Stay Work?
Can You Keep Your Property in Bankruptcy?
One of the most asked questions we get at Phoenix Fresh Start Bankruptcy Attorneys is, “will I be able to keep my property in bankruptcy?” In most cases, your property will be protected by what is known as bankruptcy exemptions. Exemptions are simply a list of asset types and values that you can keep. In most situations, you will be able to keep all your property in bankruptcy. However, if you exceed the amount allowed by the exemption, you may be required to surrender the non-exempt property in a Chapter 7 whereas our bankruptcy attorneys may present different options to you if you file a Chapter 13 bankruptcy in Phoenix. In a nutshell, here is how it works:
- Chapter 7 bankruptcy. The bankruptcy trustee can sell any of your assets not covered by an exemption to repay your creditors.
- Chapter 13 bankruptcy. In Chapter 13 bankruptcy, you can generally retain all your property, but you must repay your unsecured debt in an amount equal to at least your non-exempt property.
Still confused? Call one of our bankruptcy attorneys for a free consultation.
How Does Equity Affect Exemptions?
No matter which chapter of bankruptcy you file, you may be able retain most or all your property because of bankruptcy exemptions. So, understanding how exemptions work is important.
Each state has a different set of exemptions that they follow (See Bankruptcy Exemptions in Arizona if you are curious). The exemptible amount is only applied to the amount of equity you have in your asset.
To better understand this, let’s look the Arizona automobile bankruptcy exemption.
- Example #1: You purchased a new car for $30,000 two years ago and made all your payments to date on a five-year loan. After two years, the car is now worth $10,000 but you still owe $20,000 on the car. You are upside-down in your loan by $10,000 or, stated another way, you have a negative equity of $10,000. The Arizona exemption amount for one car is $6,000 but since you have no equity, you should be able to keep your car in bankruptcy.
- Example #2: You purchased a new car for $30,000 two years ago and made all your payments to date on a three-year loan. After two years, the car is now worth $10,000 but you only owe $5,000 on the car. You have $5,000 equity in the car. The Arizona exemption amount for one car is $6,000, because you still have $1,000 left in the exemption, you should be able to keep your car in bankruptcy.
For more information on your property and bankruptcy, see: Chapter 7 Bankruptcy and Your Property and Chapter 13 Bankruptcy and Your Property.
Do You Qualify for Bankruptcy?
If you are planning to file either chapter of bankruptcy, our bankruptcy attorneys from Phoenix Fresh Start Bankruptcy Attorneys will explain how to qualify for them. Chapter 7 bankruptcy has what is known as the “Means Test.” The Means Test takes several factors into account to determine if you qualify for Chapter 7 bankruptcy, but basically it comes down to your income and how much disposable income you have left at the end of each month.
Chapter 13 bankruptcy has eligibility requirements. In Chapter 13 your debt cannot exceed a certain amount and you must have enough income to pay the payments of your Chapter 13 plan.
To see if you qualify for bankruptcy, Our Means Test Estimator, Do You Qualify for Chapter 7 Bankruptcy and Can I File a Chapter 13 Bankruptcy in Phoenix.