Frequently Asked Questions
Bankruptcy wipes the slate clean for most unsecured debt. It stops collection efforts by creditors including garnishments, foreclosures, bank levies, and harassing creditor calls and collection letters. Bankruptcy is governed by Federal Law under the Federal Bankruptcy Code. This is also known as Title 11. The two most common forms of bankruptcy are Chapter 7 and Chapter 13. Throughout history many famous people have filed for bankruptcy protection. Bankruptcy is a vital part of a thriving economy, because it encourages risk taking and innovation. Imagine how much more cautious we would all be if we didn’t know that we could file for bankruptcy protection as a last resort. There are still a few countries in the world who have not grasped the concept of bankruptcy, and many of their economies are stuck in the dark ages.
Bankruptcy is not for everyone. The decision to file for bankruptcy must be informed by a number of different factors, which includes your income/expenses, assets, debts, urgency (such as a pending foreclosure or garnishments) and your ability to repay your debts outside of bankruptcy. An experienced bankruptcy attorney can evaluate your circumstances and help you decide whether bankruptcy is right for you.
Many people are surprised to hear that they can keep all of their property when they file for bankruptcy. This includes their house, cars, furniture, etc. The term we use in the bankruptcy world to protect an asset is called “exemptions.” If you have lived in Arizona continuously for the two years prior to filing your bankruptcy, then you will be permitted to use Arizona’s bankruptcy exemptions. Among other things, Arizona allows a bankruptcy filer to protect $150k equity in the home they reside in. Arizona also allows you to keep a vehicle (up to $6k equity), household goods (up to $6k), wedding & engagement rings (up to $1k equity). For a summarized list of all Arizona exemptions, click here. It’s important to note that exemption laws are not all black and white. An experienced bankruptcy attorney will be able to evaluate your assets and determine which assets will be protected in your bankruptcy filing. Furthermore, if it is found that you own property that is not covered by an exemption (such as a boat, for example), then your attorney will be able to discuss pre-bankruptcy planning options that will help to limit your losses without running afoul of the law.
A bankruptcy discharge is the end goal of almost all case filings. This is the point in your case where the bankruptcy Judge assigned in your case signs an general Order declaring that your debts are wiped out. Discharges are general in nature so they will not specially dictate which debts were wiped. However, your attorney will explain to you that debts like credit cards, medical, evictions, repossessions, pay day loans, utility bills and other debts are eligible to be discharged. Some common examples of debts that cannot be wiped in a discharge include student loans, domestic support obligations, government fines/penalties and most tax debts.
In virtually every case the debtor will need to appear at a hearing called a section 341 meeting of creditors. Section 341 refers to the section of the bankruptcy code that requires that this hearing take place. At that hearing you will need to present your ID and proof of your Social Security Number. Debtors will be sworn in and asked questions by the trustee while under oath. All creditors are also invited to appear to question the debtor, however creditors rarely show up at this meeting. Other situations may arise in your case requiring your appearance before the Judge or other hearings. However, this is more of the exception rather than the rule.
There is a three step process. STEP 1: Meet with attorney Alexander D. Sanchez (“Alex”) for a free case evaluation. During this meeting we’ll advise whether bankruptcy is right for you and which Chapter we recommend. During this meeting we will also introduce our petition preparation packet (“PPP”). STEP 2: Complete the PPP and return it to the Firm with attached documents. STEP 3: Once we have completed a final draft of your petition, we will meet to review it and obtain required signatures. Once the above steps are completed, we will be able to file your bankruptcy petition with the court.
If you feel confident enough in your own ability to navigate the quagmire of bankruptcy laws, then your main cost will be the Court filing fee. If you want to make certain that your case is handled the right way, then we highly recommend hiring an experienced attorney to file for bankruptcy. Attorney fees run an average of $1700 for a basic Chapter 7 filing. At our firm we strive to make access to legal representation affordable to all. Our fees for a Chapter 7 cases will start at $695, with affordable payment plans available to fit any budget. For full details on the fees and costs at our firm, click here.