What to Do Before Filing Chapter 7 in Phoenix to Protect Your Assets

Don’t Let Debt Wreck Your Life: Take Control with Chapter 7 Bankruptcy

Most people, if not all, hope to achieve financial stability or freedom. We work hard and do the best that we can to achieve that goal. However, even the most hardworking individuals can be confronted with financial hardships. Unforeseen circumstances could lead to overwhelming debt, sometimes even resulting in filing for bankruptcy. In such situations, it is important to know what to do before filing Chapter 7 in Phoenix.

We have outlined the most important things you must understand when filing Chapter 7. We will walk you through the process and help you understand the eligible debts and necessary considerations when filing a liquidation bankruptcy in Phoenix, Arizona.

Quick Summary:

• Chapter 7 bankruptcy, also known as liquidation bankruptcy, offers individuals and businesses a way to eliminate most of their debts. It’s a complex process that requires careful consideration and often involves seeking professional legal advice.
• To qualify for Chapter 7, you generally must meet certain requirements, including being an Arizona resident for at least 90 days, passing a means test, and completing credit counseling. The process involves filing a petition, attending a creditor’s meeting, and awaiting a discharge order. Chapter 7 bankruptcy usually takes between three and six months to complete, but the specific timeframe can vary depending on individual circumstances. 
• While you can file for Chapter 7 yourself, it’s highly recommended to work with a qualified bankruptcy attorney. They can guide you through the process, help you understand your options, and ensure that your rights are protected.

What is Chapter 7?

Chapter 7, or liquidation bankruptcy, can be a lifesaver for individuals and businesses with overwhelming debt. When Chapter 7 is filed, a court-appointed trustee takes over your stuff and sells it to pay your creditors. It’s like hitting the reset button on your finances. It is important to understand that not all debts can be wiped clean with Chapter 7, like debts owed to government agencies and child support obligations. But it can be a real game-changer for those struggling to recover from financial setbacks.

Am I Eligible to File for Chapter 7 in Arizona?

At this point, you may be eager to find out what actions must be taken to get debt relief through Chapter 7. But you need to know how to be eligible for Chapter 7 bankruptcy in Phoenix first: 

• Residency: You generally need to be an Arizona resident for at least 90 days before filing for bankruptcy. That means you must have lived in Arizona for the past three months. This is to ensure that the bankruptcy court has jurisdiction over your case.
• Previous Filing: If you already had a Chapter 7 discharge, you usually cannot get another one within 8 years. This means you can’t be relieved of your debts again for that period. It’s best to consult a bankruptcy attorney to help you understand your options and eligibility.
• Credit Counseling: You must complete and file a “Debtor’s Certification of Completion of Instructional Course Concerning Personal Financial Management” within 180 days (approximately six months) of filing. For accredited providers, visit the US Trustee Program website.
• Dismissed Bankruptcy Case: If your previous Chapter 7 case has been dismissed voluntarily or due to your non-compliance,  you will not be able to file another Chapter 7 case.
• Income and Means Test: Your income highly affects your Chapter 7 eligibility. The means test checks if your income and expenses allow you to file. If your income is below the Arizona median for your family, you might qualify for Chapter 7 filing. However, some exemptions allow individuals and businesses to still file for bankruptcy even if they don’t pass the means test. For instance, if your debts are mostly related to your business, you may not need to meet the income requirements. However, the trustee and court will closely examine your business debts and may need more documentation.

What are the Steps I Should Take for Chapter 7?

If you are facing financial hardships, filing for Chapter 7 bankruptcy may be a viable option for you. However, filing this type of bankruptcy involves several key steps. Here’s a breakdown of the process:

• Consult with a Bankruptcy Attorney: A qualified bankruptcy attorney can assess your financial situation, explain the Chapter 7 process, and determine if it’s the right option for you. They can also help you gather the necessary documents and guide you through the filing process.

• Gather Necessary Documents: This typically includes proof of income, expenses, debts, and assets. You may also need to provide copies of your tax returns, bank statements, and credit reports.

• Complete Credit Counseling: Before filing for bankruptcy, you must complete a credit counseling course. This course will provide you with information about financial management and budgeting.

• File Bankruptcy Petition: The petition is a legal document that outlines your financial situation and requests relief from your debts. You will need to file this petition with the bankruptcy court in Arizona.

• Attend Creditor’s Meeting: After filing your petition, you must attend a meeting with your creditors. This meeting lets your creditors ask you questions about your financial situation.

• Await Discharge: If the court approves your Chapter 7 bankruptcy, you will typically receive a discharge order within a few months. This order will eliminate most of your eligible debts.

What Documents Should I Prepare?

Filing for Chapter 7 in Phoenix requires a lot of important documents with strict deadlines. Having these documents ready can help you reach a favorable outcome.  In this section, we’ll give you an overview of the documents you’ll need to prepare to support your case. 

• Initial Filing:
  • Voluntary Petition for Individuals Filing for Bankruptcy (Form 101, 101A, 101B)
  • Valid state-issued ID
  • Statement about Your Social Security Numbers (Form 121)
• Within 7 Days:
  • Typed list of your creditors
  • Credit Counseling Certificate from accredited credit counseling providers. Once you complete the course, the credit counselor will issue a certificate needed to file your bankruptcy petition with the court.
• Within 14 Days:
  • Financial Schedules (detailing assets, debts, income, etc.)
  • Statement of Financial Affairs
  • Statement of Intention (what you plan to do with your assets)
  • Income Statement (Chapter 7 specific)
  • Proof of wage garnishments within 60 days

Take note that these are general requirements. Each case is unique and additional information and documents may be required depending on your circumstances.

How Long Will The Process Take?

Chapter 7 bankruptcy can usually be completed within three to six months. However, that is just an estimate, and the actual timeline may vary depending on your unique situation. It’s always best to consult with a bankruptcy attorney in Arizona to get a more accurate estimate of how long your case may take. Here’s an overview of the typical process and timeline:

• Filing the Petition: This is the initial step in the process and your case begins as soon as you file the petition. The bankruptcy trustee will review your case to ensure that you have met all the requirements for filing.
• Notice of Commencement: After approximately 15 days from filing the petition, you will be receiving a Notice of Commencement of your case. This notice will provide information about a meeting with your creditors, which they will also receive.
• Creditor’s Meeting: This meeting is typically held within 30 to 45 days of filing. Remember, your presence at this meeting is required. Failing to attend may result in the dismissal of your bankruptcy case. Or else, you may need to file again.
• Discharge Order:  If the court approves your Chapter 7 bankruptcy, you will typically receive a discharge order within 60-90 days.

How Can A Bankruptcy Attorney Help Me?

While you can file for Chapter 7 without an attorney, it may be difficult to go through the process without the right legal guidance. Remember that filing for bankruptcy doesn’t always guarantee a positive outcome, so consulting with a bankruptcy attorney can increase your chances of reaching a favorable decision. Here’s why you should consult with a bankruptcy attorney:

• They can help you decide if bankruptcy is right for you and which chapter best suits your needs and situation.
• They can help you determine which debts might be forgiven and which may not.
• They can provide reliable advice on which assets you can keep and which might be at risk.
• They can inform you of how bankruptcy might affect your taxes.
• They can advise you on whether to continue paying creditors and how to handle their communications.
• They can explain the bankruptcy process to you and help you understand your rights and protect your assets.
• They can assist you in completing and filing the necessary legal documents.
• They can guide you through every step of your bankruptcy case.

A Fresh Start Awaits: Your Path to Financial Freedom Begins Here

Are you overwhelmed with debts and hoping to be relieved of all these financial struggles? The decisions you’ll make from here on can make or break the financial reset you need. At this point, you must be well-informed and properly guided on what to do before filing Chapter 7 in Phoenix.

Filing for Chapter 7 bankruptcy can be a powerful tool to help you get back on your feet and move forward with your life. Having a local bankruptcy attorney dedicated to guiding you through this critical process can potentially lead you to a Chapter 7 discharge, relieving you of your overwhelming debts. 

Don’t let debt hold you back from reaching your goals. Your path to financial freedom starts now. Contact Phoenix Fresh Start Bankruptcy for a free, no-obligation, stress-free financial analysis to get started.