Bankruptcy can be a saving grace, but not everyone is eligible for it. Here, we answer some of the most commonly asked questions we get. If you have more questions or want to discuss your bankruptcy options today, contact us at The Law Offices of Shawn B. Hamp. We represent clients throughout Northern Arizona with offices in Flagstaff, Kingman, Prescott, Lake Havasu, and Bullhead City.
Northern Arizona Bankruptcy: Your Questions Answered
Bankruptcy may seem daunting, but it doesn't have to be if you are informed. Here are some answers to the questions we get most often.
Why Should I Claim Bankruptcy in Arizona?
There are many reasons why you should seriously consider bankruptcy, and below are the most common reasons.
- If you have collectors calling you, bankruptcy forces them to stop.
- If you have lots of debt you can't pay, bankruptcy can help you eliminate the debt or reorganize it so you can afford to pay it off.
- If you have a home you want to save, bankruptcy may be able to stop foreclosure.
- If you have a car you want to keep, bankruptcy could prevent repossession of a vehicle or other property or force creditors to return property even after a repossession.
- If your wages have been garnished, bankruptcy could put an end to it – if the wage garnishment is due to debt and not spousal or child support.
- If your utilities have been shut off, bankruptcy could restore them.
- If someone has committed fraud in your name, bankruptcy can allow you to challenge the debt associated with that fraud.
What Doesn't Bankruptcy Do?
Bankruptcy won't wipe out all debt. There are certain debt or financial obligations you'll have to keep paying, like:
- secured debt, like car loans and mortgages if you want to keep the car or home;
- child support
- spousal maintenance
- some student loans
- criminal fines
- court restitution orders
What Are the Negative Consequences for Filing Bankruptcy?
The first and foremost consequence of filing bankruptcy is your credit rating. That said, if you haven't been paying your bills or paying them timely, your credit score has likely already taken a huge hit, and bankruptcy may not make it much worse but could actually improve it.
Other negative consequences include things like not getting the credit card you want or the emotional impact of bankruptcy. That said, with regard to the first, you will still have credit card options. With regard to the last, the most traumatizing part of bankruptcy is deciding to file it – it gets better once you make the decision.
If I Already Filed for Bankruptcy, Can I File Again in Arizona?
You can file for bankruptcy again. Maybe in your earlier years, you had credit card debt and needed them wiped out and now you have secured debt that needs to be reorganized. It happens. But there are limits to filing bankruptcy more than once, and these limits are effectively waiting periods from discharge to discharge.
- If you filed Chapter 7, you have to wait 8 years before filing again.
- If you filed Chapter 13, you must wait two years after the discharge to file another Chapter 13.
- If you filed Chapter 7 and want to file Chapter 13, you can do so immediately after the Chapter 7 discharge because the Chapter 13 discharge isn't until another three to five years.
- If you filed Chapter 13 and want to file Chapter 7, you may have to wait 6 years unless the Chapter 13 discharge was in good father and you paid at least 70 percent of unsecured debt.
Which Chapter Bankruptcy is Right for Me?
The Chapter bankruptcy that's right for you depends on many factors. You should review our Chapter 7 and Chapter 13 pages to understand each better. Ultimately, it comes down to whether or not you qualify for the one over the other, too, as well as if you want to eliminate debt or restructure it so you don't have to liquidate or sell all your assets.
Can I Keep Any Property?
Any property the law designates as exempt is property you can keep. Arizona law outlines what is exempt, for example:
- some real property
- furniture (e.g., beds, chair dresser, table, lamps, washer, dryer, etc.)
- insurance (e.g., medical, dental, vision, disability, life up to a certain value)
- public benefits
- tools of the trade (e.g., farm machinery, tools, teaching aids, etc.)
Will I Have to Go to Court?
You have to participate in the "meeting of the creditors" meeting. There, you will meet the bankruptcy trustee and any creditor that wants to attend. Typically, these meetings are quick.
What Happens to Co-Signers in Bankruptcy?
Co-signers may be obligated to pay any debt when/if you file for bankruptcy.
If I'm Married, Can I File Bankruptcy in Arizona Without My Spouse?
You can file bankruptcy yourself, but your spouse will be liable for any joint debts. Sometimes, it makes sense to file on your own if you are the only one with debt. Other times, it makes sense to file together because doing so allows you to double your exemptions.
If My Ex-Spouse Files for Bankruptcy During our Divorce in Arizona, How Will It Affect Me?
If your ex-spouse files for bankruptcy when you are thinking of divorce and you don't, there are some things to consider.
- If you or your spouse is ordered to pay spousal maintenance or child support, those financial obligations can almost never be eliminated via bankruptcy.
- Debt is part of asset division, so the spouse's bankruptcy could impact asset division – it depends when the bankruptcy takes place (before, during, or after the divorce).
- If you are a co-signer on any debt your ex includes in his or her bankruptcy, then you may be held liable for that debt.
The effect your ex-spouse's bankruptcy has on you could materialize in different ways, too. It's always best to speak to an attorney with experience in both divorce and bankruptcy.
Contact a Smart, Resourceful Bankruptcy Attorney in Northern Arizona Today
Filing for bankruptcy is obviously a big decision to make, but it's a decision that has the potential to give you a second chance. There are obvious concerns to consider, so contact us at The Law Offices of Shawn B. Hamp. We know what's at stake on both sides of the coin: filing or not filing for bankruptcy. We will give you honest answers to your questions and outline your options. Call us today at (928) 753-6868 to schedule a consultation.