Bankruptcy
Contact Us Today!Due to the deadlines of the CTA, at this time, we are not taking new bankruptcy clients. Please contact us if you need a list of referrals.
We WILL Get Through This TOGETHER.
Thompson Law Group has been helping people through the emotional and intimidating process of bankruptcy since 2001.
Not every case is the same, but the one thing that is the same is that if bankruptcy is the right option for you and your family, YOU. WILL. SURVIVE. and you will get a fresh start.
Our business is giving you peace of mind to handle your business.
Overwhelmed by Debt? BREATHE. There is a solution.
Bankruptcy is a tool to help folks who have found themselves on hard times. It is designed to give you a fresh start when you need one. Nobody wants to file for bankruptcy, but nobody plans to be hurt by a tough economy, lose a job, get sick, lose a loved one, have a family member get sick, have a business fail, get divorced or some combination of the above.
Unfortunately, life happens. Fortunately, we have laws to help.
Bankruptcy is a tool to get you back on track financially. Set up a consultation today, so you can get real information about what bankruptcy can do for you.
The Big Picture
Bankruptcy is a REAL Option for EVERYONE
No matter what your circumstances, income, debt amount, type of debt, assets, or if you have filed bankruptcy before, you may declare bankruptcy at any time.
Bankruptcy is always an option. The real questions are: what type of bankruptcy would you need to file given your particular circumstances; is bankruptcy the best option for you and your family; and if bankruptcy is not a good option now, will it be a good option in the future?
You owe to yourself and your family to learn ALL of the facts about bankruptcy and other options when you are in financial distress or even anticipate that you may be in financial distress in the future. We urge every person or business that is in financial hardship or anticipating financial hardship to seek the advice of an attorney before taking any action. Many times, bankruptcy is not the optimal solution to a financial problem, but it is important to get the facts about your particular circumstances from a knowledgeable professional. It is also important to have a plan so you can adjust to your circumstances when they change.
Common Bankruptcy Myths: GET ACCURATE INFORMATION
This is FALSE. In fact, the reverse is true. Folks exiting bankruptcy will be able to rebuild their credit rapidly after they are discharged from their bankruptcy case. After bankruptcy, folks are an excellent credit risk because typically, folks coming out of bankruptcy have little to no debt. Moreover, they do not want to file a bankruptcy again. Sure, the bankruptcy will be reported on their credit report for 7 to 10 years, but our clients have been able to buy houses and cars at good interest rates while they were in an active bankruptcy case and even immediately after they were discharged. This myth has been perpetuated by credit card companies that do not want folks to take advantage of the federal law designed to assist them when they hit hard times.
This is FALSE. Bankruptcy is NOT designed to devastate you. It is designed to help those who have found themselves in financial distress, for whatever reason, create a better financial future. Folks in bankruptcy need to have a place to live and transportation to go to work. Bankruptcy laws are designed to protect these things. You will be able to keep your house and you will be able to keep your car. You still have to pay for them, but if you do so, you will be able to keep them.
This is FALSE and just silly. Bankruptcy is a tool that has been used by many folks and businesses to reorganize and eliminate debt. We have many clients who bought into the promises that a debt consolidation company made. In particular, the debt consolidation will promise to settle debts for pennies on the dollar. No company can make this promise. Our clients believed them and paid them. The debt consolidation company took their money (much like in a Chapter 13 bankruptcy) and did not negotiate with the creditors until they had been paid the consolidation company’s full fee (read the fine print of the contract). By this point, our clients were being sued and garnished. They had to file bankruptcy to resolve their financial situation only at this time, they had lost the money they paid to the debt consolidation company for doing nothing and they had lost more sleep with worry. Had they consulted with a bankruptcy attorney first, they would have known that debt consolidation companies cannot guarantee results while a bankruptcy attorney can.
This is FALSE. First, if you are in the unfortunate circumstances where you need to file bankruptcy you are already stuck in a debt cycle that is not going to get better unless you win the lottery. If you were offered a guarantee that by making payments on your debt for 3 to 5 years would get you out of that cycle, you would do it especially if your Chapter 13 Plan payment was less than your minimum monthly credit card payments. A Chapter 13 bankruptcy is a guarantee that you are done with your credit card debt at the end of your Chapter 13 Plan (which can not be longer than 5 years. During your Chapter 13 bankruptcy, if you need a new car, house or need to sell your property, you may do so and obtain credit during that time so long as you get approval to do so. As long as your request to sell or buy property is reasonable, you will be given permission to do so. In short, you are not stuck and you will be able to do what you need to do.
This is FALSE. First, if you are anticipating you will be in or are already in the unfortunate circumstances where you need to file bankruptcy, your credit score is already decreasing. Bankruptcy wipes it clean so you can rebuild it. Rebuilding credit is actually easy and hinges on making timely payments on different types of debt. Many times a credit score can be raised within 90 days of discharge from bankruptcy. Also, your credit score only matters if you are obtaining new credit. If you already have a house and a car, you do not need new credit in the immediate future. If you need new credit after bankruptcy, you will be able to get it as you are a good credit risk given you will have little to no debt.
This is FALSE. Typically, the only people that will know you file bankruptcy are the ones you tell. While a bankruptcy is a public record, those records are not easily accessible. If someone from the general public wanted to know if you filed bankruptcy, it would take some sleuthing which is not impossible but requires motivation. In short, there is no publication requirement for bankruptcy filings as there was in the past so bankruptcy filing information is not readily accessible.
Bankruptcy Stops Collections So You Can Sleep Again.
Individuals and businesses that file for bankruptcy relief get to breathe again. Foreclosure, lawsuits, calls from creditors, garnishments and any other collection activity will stop once the bankruptcy case is filed. Harassment ends and creditors may no longer contact anyone who has filed for bankruptcy. Upon filing a bankruptcy case, the bankruptcy court imposes what is called an “automatic stay” which prohibits creditors from taking any further action against the debtor without express permission of the bankruptcy court. The stay is automatic and creditors that violate it may be sanctioned by the bankruptcy court. Creditors will not stop calling or collecting until they have a bankruptcy case number. You can tell them you are filing for bankruptcy, but they will continue their collection efforts until they have a bankruptcy case number.
Bankruptcy Gives You a Fresh Start
Bankruptcy is a way to get a fresh start. It is governed by federal law that allows individuals or businesses to eliminate debt and reorganize their financial affairs so that they get a clean financial slate. People file bankruptcy because they can no longer realistically pay their debts. This usually occurs when someone in the family has lost a job, has medical debt after an illness, is unable to work, got divorced or had a business fail. Many times, folks must file bankruptcy because of changes in the economy and they simply cannot afford to pay their bills and pay for basic necessities (food, utilities, housing, etc.). Bankruptcy eliminates many debts and also allows folks to reorganize so they can move forward with a fresh start. No one plans to file bankruptcy, but the option is available when it is necessary. There is no shame in using the federal laws designed to assist you if you are in these unfortunate circumstances.
Planning for Bankruptcy
What are the Different Types of Bankruptcy?
There are three types of bankruptcy cases: Chapter 7, 11 and 13. Chapter 7 bankruptcies and Chapter 11 bankruptcies may be filed by people or business entities while Chapter 13 bankruptcies may only be filed by people.
Chapter 7 bankruptcy is available to individuals as well as businesses. A Chapter 7 bankruptcy are referred to as a “liquidation” which is a scary term and as a practical matter, not entirely accurate. The concept is that all of the debtor’s assets are liquidated so that creditors may be paid their pro rata share of the proceeds from liquidation. The reality is, generally, debtors (with the exception of businesses in Chapter 7) do not have anything to liquidate and if they do, the property has little to no actual resale value, so it is not worth the trouble to sell (liquidate) it. Only businesses that want to completely shut down should file a Chater 7 bankruptcy. However, it is rare that a Chapter 7 bankruptcy is necessary as Arizona has dissolution statutes that generally will allow for a dissolution of a business without the need of a bankruptcy.
A Chapter 11 Bankruptcy is a reorganization of people or businesses. If a business wants to continue to operate and needs to reorganize, it must file a Chapter 11 Bankruptcy. People generally only file a Chapter 11 when they need to reorganize and when their debt exceeds the debt limits of a Chapter 13 bankruptcy. There are no debt limits in a Chapter 11 bankruptcy. Chapter 11 also has a subclassification called a Subchapter V which is a streamlined and less costly version of a Chapter 11 bankruptcy for smaller businesses and people with debt that does not exceed a total amount of up to $3,024,725 in secured and unsecured debt combined.
A Chapter 13 bankruptcy is designed to restructure the debts of people. Currently, only people that have debts that do not exceed $465,275 in total unsecured debt and $1,395,875 in total secured debt may file a Chapter 13 bankruptcy. In a Chapter 13 bankruptcy case, individuals file a Plan to repay some or all of their debts over a period of time (3 to 5 years). The amount that must be paid to creditors is determined by an individual’s specific income and expenses. People who have become behind in their mortgage or car payments, owe taxes or need to pay for their nonexempt (unprotected) property so they may keep it may also choose to file a Chapter 13 bankruptcy.
When individuals file a Chapter 13 bankruptcy case, they will begin to make a monthly payment to the Chapter 13 trustee. The Chapter 13 Trustee will distribute the payment to the creditors that are entitled to be paid based on the Chapter 13 Plan. Once all of the Plan payments are made, the individual will be granted a discharge.
How do I Know What Type of Bankruptcy to File?
The type of bankruptcy an individual may file is based on the individual’s income and expenses and how it compares to what is considered the “median” annual income for the individual’s state. It also depends on the size of the individual’s household and specific expenses. At the initial bankruptcy consultation, an attorney will discuss what type of bankruptcy is available for the particular situation. In some cases, it is necessary for an individual to provide your financial documentation before the attorney can accurately determine the type of bankruptcy that is appropriate.
What Does a Bankruptcy Include?
Individuals who file for bankruptcy relief get to breathe again. Foreclosure, lawsuits, calls from creditors, garnishments and any other collection activity against the individual will end or be “stayed”. Harassment ends and creditors may no longer contact the individual who has filed for bankruptcy. Upon filing a bankruptcy case, the bankruptcy court imposes what is called an “automatic stay” which prohibits creditors from taking any further action against the debtor without express permission of the bankruptcy court. The stay is automatic and creditors that violate it may be sanctioned by the bankruptcy court. At the time of filing a Chapter 7 or Chapter 13 bankruptcy, the individual will be appointed a “trustee” that will administer the bankruptcy estate. The “bankruptcy estate” is all the property that an individual owns at the time of filing. The trustee will require that individuals provide documentation of their financial situation to prove the accuracy of their statements regarding their financial affairs.
What Bills Can I Keep Paying?
After an individual decides to file bankruptcy, the individual may not purposely incur additional debt. For example, an individual that is going to file for bankruptcy must not continue to use credit cards or take out new loans. An individual that is going to file bankruptcy may also not treat any creditors preferentially. For example, the individual may not pay family members back for loans instead of paying a credit card debt. All unsecured creditors must be treated equally. Continuing to pay for living expenses and insurance is always appropriate.
The Thompson Law Group, P.C. is a Congressionally-designated debt relief agency that provides legal assistance to consumers and small businesses seeking relief under the United States Bankruptcy Code.
We do not accept credit card payments for any bankruptcy services. Please contact our office to make arrangements for payment for bankruptcy services.
The information provided in this website is meant only as a general description of the current laws as of the date of the writing. It is not meant to be an exhaustive discussion of all the nuances of the law and is intended to be only an overview. Many issues may appear simpler than they are, and an individual should always contact an attorney to obtain a complete, accurate interpretation of the law given the individual's particular circumstances. Thompson Law Group, P.C. makes no representations as to how the law would affect a particular situation and intends only to illustrate areas of concern and give general information.
