Bankruptcy Resources

Talk to a bankruptcy attorney immediately. Any good bankruptcy attorney is going to tell you if a bankruptcy is the right path for you now, sometime in the future or maybe not at all. You owe it to yourself to find out how you can protect your assets and settle your debts before you do something that harms your financial situation. Many times, I have had clients spend all of their retirement or get a Home Equity Line of Credit (HELOC) to pay debt and avoid bankruptcy, but they still end up filing bankruptcy because they did not pay it all. Unfortunately, when they did file bankruptcy, they had no retirement left or additional debt on their house which all could have been avoided.

NO, NO and NO!!! You are a human that has had life happen. To be clear, bankruptcy is a tool to help those who have had an unforeseen event cause a financial crisis get a much needed fresh start. People who file a bankruptcy are not failures. Under no circumstances keep that narrative in your head. It is a myth perpetuated by the uneducated and ill-informed.

Not really, unless they specifically search, or you tell them. There is no requirement for the bankruptcy filings to be published in a newspaper or anywhere. Bankruptcy filings are public records, but there are rules and costs to access the bankruptcy court filings.

Maybe, if you let it have power over you. I know you are scared, and you think that your life is over if you file bankruptcy, but it is not, I promise. I can 100% guarantee that this too shall pass and that we will (as a team) get through it. I think the uneducated will never understand bankruptcy unless they are ever in financial distress such that they need to file bankruptcy.

There will always be a few that abuse the system. However, in my experience, it is very, very, very rare, yet those cases are the only ones that anyone knows about and drive the public perception. My clients, generally, have lost a job, had a family member get sick with little or no insurance, got divorced, had a business fail or had some combination of all four. Bankruptcy was not the master plan, but they can use it as a tool to rebuild and move forward (better and stronger).

You should talk to an attorney that regularly practices in the area where you live. The Internet is a beautiful thing and information is power. I applaud people getting educated and informed, but it is important to consider the source and the physical location of the source. Bankruptcy is governed by federal statute so the procedure and the basic law are the same nationwide. However, the application of the federal bankruptcy law varies wildly state by state and even varies between Southern Arizona and Northern Arizona counties. Be sure the information you are getting is for your specific location and also from a reputable source (not AI). Because of the intricacies between jurisdictions, we only handle bankruptcies in Southern Arizona which includes Pima, Cochise, Santa Cruz and Graham counties.

Every single U.S. citizen may file a bankruptcy case on any given day regardless of whether they have filed bankruptcy before or when, what debt they have, what assets they own or what income they receive. The questions really are: Should the person file a bankruptcy and what Chapter bankruptcy should they file? There is no qualification to file a bankruptcy case, but there are requirements to be in different chapters of bankruptcy that hinge on income, type of debt, assets, previous bankruptcies and debt amount. Still, this should never scare anyone from finding out what bankruptcy can do for them because ALL chapters of bankruptcy will eliminate debt and get you where you need to be.

Aside from sending us all of your documents and filling out our questionnaire, the only thing you need to do is to take the online Credit Counseling class. Calling it a class is really a misnomer as it is more of a questionnaire that you complete online or by phone. The cost is less than $20 based on the company you use. We will send you information on the company we work with, but you may use any company that has been approved by the court. We will need the certificate showing you have completed the class before we can file your case. The company we use will email it directly to us. Certificates of Completion are good for 6 months.

Yes. Many times, folks with high income are able to maintain their monthly minimum payments but are never going to dig out of the debt. A Chapter 13 bankruptcy provides a way to stop interest rates from increasing the debt and allow you to pay what you can over a period of 5 years to eliminate the credit card debt. Again, you should talk to an attorney to see if bankruptcy is right for you.

If you are in a place where bankruptcy is a good idea for you, your credit score is not going to remain high for long. If bankruptcy is truly a good idea for you, rip off the band-aid and file the bankruptcy case so you can move forward. You will be able to rebuild your credit so that it is excellent again and you will be able to do it faster than you think.

An “exemption” is the property that you are automatically allowed to keep when you file any type of bankruptcy. Exemptions vary wildly from state to state. You must still pay for the exempt property if you owe money on it, but you do not need to pay money to your creditors otherwise to keep it. If property is not exempt, you do not have to give it up, but you need to pay over the amount of equity to your creditors. This is always doable one way or another, so speak with a bankruptcy attorney to discuss your options.

The most common exemptions for the State of Arizona are below. You calculate your exemption amount; by finding the value of the property and then deducting the amount you owe on it to determine the equity.

Homestead (where you live): $414,800 in equity as of 1/1/24

Vehicle (one per spouse): $15,600 in equity as of 1/1/24

The law increases the exemption amounts for vehicles and homestead annually based on inflation so the amounts listed will change annually.

No, so long as you pay for them. If you are behind on payments you may need to file a Chapter 13 bankruptcy to deal with the arrearage, but you will not lose your house or your car(s) so long as you can afford them. In fact, sometimes we are able to modify your home mortgage through the bankruptcy court’s Mortgage Modification Mediation (MMM) program. We also may possibly be able to adjust the interest rate on your vehicle or the amount you have to pay for it in a Chapter 13 bankruptcy.

You can surrender any property that you owe money on and give it back to the creditor when you file a bankruptcy case. If you are underwater on either your vehicle or your house, you may want to consider surrendering the property or consider other options through the MMM program or in a Chapter 13 bankruptcy. If you surrender property in your bankruptcy case and it is sold for less than what you owe on it, you will not have to pay any deficiency balance.

Don’t panic. You are not alone. Every person that files a bankruptcy case has non-exempt property, but generally it has little to no value. If you have property that is valued over the exemption (protection) amount, you will have to pay over the difference between the exemption amount and the actual value of the property. For example, if your car is worth $17,000 (free and clear) and the exemption amount is $15,200, you would need to pay your unsecured creditors $1,800 which can be done in a lump sum after you file your bankruptcy or handled through a Chapter 13 Plan. We will discuss any non-exempt property you have and the options to handle it at your initial consultation.

Because those are the rules. Again, what you have to do in Arizona is different from what your friends may have to do in a different state. Think of it this way: if you are eliminating $50,000 in debt, but you have to pay $1,800 for the non-exempt equity in your car and you get to keep your car, that is a great deal. Paying $1,800 to eliminate $50,000 in debt is a huge savings. Bottom line is the exemptions are the exemptions and if you have non-exempt equity in property you may have to pay it to your Trustee in your bankruptcy. Again, we will discuss this at length at our initial consultation.

Yes, 99% of all retirement accounts are 100% protected in bankruptcy unless as account exceeds $1,000,000. Please do not use your retirement accounts to pay off debt without first speaking with a qualified bankruptcy attorney.

In the State of Arizona, you may have up to $5,000 in your bank account on the DAY you file your bankruptcy case or if you are married, you may have up to $5,000 in two different bank accounts or $10,000 in one bank account. This only matters for the DAY of filing your bankruptcy case. Once the bankruptcy is filed, the amount in your bank accounts is not an issue and you may use and receive income as you normally do.

A Chapter 7 bankruptcy is what most people think of as a typical bankruptcy. It is called a “liquidation” which is kind of a silly name as most people don’t have any assets to liquidate and in Arizona, we do not really liquidate assets. The idea is that the person that files bankruptcy has some automatically protected (exempt) property and some non-exempt property. The non-exempt property gets sold and the creditors get their pro rata share of the proceeds from any sale. The reality is if a person has non-exempt property in Arizona, we generally either pay for it in a Chapter 13 bankruptcy or pay the Chapter 7 Trustee cash to keep it. Sometimes the Chapter 7 Trustee will let us pay the amount over a period of time, but that is not guaranteed and if paid in installments, generally the full amount must be paid within 6 months. Both individuals and businesses may file a Chapter 7 bankruptcy. There are no debt limits for a Chapter 7 bankruptcy, but individuals must be under a certain income level to qualify based on the means test.

A Chapter 7 bankruptcy is not an option for businesses that want to continue to operate. Businesses have no requirements to qualify for a Chapter 7, but they have no exemptions, and all of the businesses assets will be sold (liquidated) to pay creditors on a pro rata basis. I rarely file Chapter 7 bankruptcies for businesses as I find that there are other alternatives for dealing with the business debt that are more effective. Still, a Chapter 7 bankruptcy for a business is a tool in the arsenal and there are no debt limits.

The “Means Test” is a formula to determine if an individual’s income is low enough to qualify for a Chapter 7 bankruptcy. It also allows individuals with high income to determine the amount of their monthly disposable income that will need to be contributed to their Chapter 13 Plan payment.

First, we look to the median income for the State of Arizona that is provided by the U.S. Trustee’s office using census bureau data. (link to median income in BK resources) Next, we calculate the last 6 months of your gross income, multiply that amount by 2 to determine your annual income for means test purposes. If you are under the median amount for your location, the inquiry stops and you qualify to file a Chapter 7 bankruptcy and if you file a Chapter 13 bankruptcy you are not considered to have disposable income that must be included in your monthly Chapter 13 Plan payment. If you are over the median amount, we look to your actual expenses and IRS standards to see if after those are deducted from your annual income, you are still above the median amount. If you are still over the median amount after deduction of your allowable expenses, you will need to file a Chapter 13 bankruptcy as you do not qualify to file a Chapter 7. This is not a bad thing as a Chapter 13 will get you where you need to be with your debt and there may be other benefits to you in a Chapter 13. You should always speak to a bankruptcy attorney about the means test. The means test is not a time for DIY.

If your debt is over 51% non-consumer debt, you do not have to pass the means test to file a Chapter 7 bankruptcy. Consumer debt is considered any debt that was incurred to benefit the health and welfare of your family vs. non-consumer debt which is generally personal guarantees for your business and some taxes.

A Chapter 13 bankruptcy is what we call a “reorganization”, and it is for individuals only. The debt limits for a Chapter 13 are up to $465,275 in unsecured debts and no more than $1,395,875 in secured debt. Individuals propose a plan of reorganization which commits any disposable income from the means test to pay their creditors (whatever that amount may be, if any). Chapter 13 Plans of reorganization may also be used to pay priority taxes, lower the interest rate on a vehicle, decrease the amount to be paid for a vehicle (if it has been owned for more than 2.5 years), pay mortgage arrears and pay vehicle arrears. Chapter 13 bankruptcies are 3 to 5 years long depending on your specific circumstances. If you need to save a house or a vehicle, you will need to file a Chapter 13 bankruptcy case so you can pay the arrearages as well as the ongoing monthly payments.

“Secured debt” is any debt that can be paid by taking back property. For example, your car or your house would be secured debts. If there is a lien on any of your property to secure a debt, that debt is considered secured. “Unsecured debt” is debt with no collateral. Typically, credit cards, medical bills and personal loans are unsecured debt. Both Chapter 7 and Chapter 13 bankruptcies eliminate your dischargeable debt.

A Subchapter V, Chapter 11 bankruptcy is generally for businesses that want to remain operational. A Subchapter V may also be filed by individuals that exceed the debt limit for a Chapter 13 and a Chapter 7 bankruptcy is not a good option for them for some reason. A Subchapter V is a hybrid between a traditional Chapter 11 (generally large businesses) and a Chapter 13. It is designed to be a cost-effective solution to reorganize businesses or individuals with no more than $3,024,725 in total secured and unsecured debt. Many of the requirements of a traditional Chapter 11 have been eliminated in the Subchapter V and it operates much like a Chapter 13 with the creation of a plan and monthly payments.

If you are in arrears on your house or your car, you need to file a Chapter 13 bankruptcy to pay those arrears. This is what people mean when they say they filed a bankruptcy to save their house/car. Other times folks owe more on a car than the car is actually worth, if they have owned the vehicle for 2.5 years we are able to renegotiate the amount that needs to be paid for the car to its actual value and not the amount of the loan which can be a huge savings. If folks owe any type of taxes, a Chapter 13 bankruptcy is a good way to resolve the tax debt (as penalties may be eliminated which can significantly reduce the overall tax debt). Also, if you have a significant amount of non-exempt equity in some property, we many times will file a Chapter 13 bankruptcy so you can pay the non-exempt equity amount through a Chapter 13 Plan. These are just a few of the reasons why someone might choose to file a Chapter 13 bankruptcy even when they qualify for a Chapter 7. We will discuss the pros and cons of both types of bankruptcy with you so you can make an educated decision about what is right for you and your family.

If you have a way to pay all of your debt in less than 5 years or you will pay less on your overall debt without a bankruptcy, do it. Generally, Chapter 13 Plan payments are less than your monthly minimum credit card payments and interest stops on all of your credit card debt, so you still pay a lesser total amount over the length of your Chapter 13 bankruptcy than without a Chapter 13 bankruptcy.

Just because you are in a Chapter 13 bankruptcy does not mean you cannot live your life. You are not stuck. As we all know, things can change (jobs lost, cars need to be replaced, people need to move or sell/buy a house, etc.). All of these things are possible while you are in a Chapter 13 bankruptcy. Think of your Chapter 13 bankruptcy as a refinance plan for your debt that can be adjusted for your changing circumstances.

A Chapter 13 Plan is the repayment plan you propose to resolve your debt. It is based on your income as well as what debt you are required to pay like taxes and sometimes a car or mortgage payment. Think of your Chapter 13 Plan like a plan to refinance your debt. You begin making a monthly payment 30 days after we file your bankruptcy case, and you continue to make a monthly payment for the duration of your bankruptcy which is no less than 3 years and no more than 5 years depending on your circumstances. Chapter 13 plan payments may be made electronically through www.tfsbillpay.com.

It depends. Mainly, it depends on why you are in a Chapter 13 bankruptcy. If it is because your income is above the threshold for a Chapter 7, your income will determine your Chapter 13 plan payment. If you are in a Chapter 13 to pay back taxes, your Chapter 13 plan payment may hinge on the amount of taxes you are required to pay (called priority). If you are lowering a car payment or resolving mortgage arrears, your plan payment will include your lower car payment and/or your mortgage payment. Chapter 13 Plan payments for only credit card debt rarely are more than the minimum monthly payments on those credit cards (but after 5 years the debt is gone). Really, it depends on your situation, and we will not be able to tell you until we see all of your paperwork. I can give you an educated guess of an estimated plan payment at our consultation, but it will only be a guess.

A “conduit” Chapter 13 Plan is a Chapter 13 Plan that requires you to pay your regular monthly mortgage payment as part of your monthly Chapter 13 Plan payment. In turn, the Chapter 13 Trustee will make your regular monthly mortgage payment directly to your mortgage company while you are in bankruptcy. You are required to be in a conduit Chapter 13 Plan if you are behind on any monetary amount on your first mortgage on your home which is why if possible, we like you to be current on your first mortgage when we file your Chapter 13 bankruptcy case. Sometimes this is not possible as we will be paying your arrearages in the Chapter 13 bankruptcy (so you can keep your home) or so that we may participate in the Mortgage Modification Mediation (MMM) Program (to obtain a loan modification) as part of your Chapter 13 bankruptcy case.

We will adjust your Chapter 13 plan according to your new income. Many times, losing a job will make a difference in your Chapter 13 Plan payments if your income was high at the time of filing your bankruptcy.

Yes, you can purchase a new(er) car while you are in a Chapter 13 bankruptcy if we get permission from the court or the trustee for you to do so. If your case has not been confirmed (obtained final approval from the court), we must file a Motion with the court to get permission for the purchase and if your Chapter 13 Plan has been confirmed, we only need to get a letter from the Chapter 13 Trustee giving you permission to purchase the vehicle. As long as you are reasonable in your request and have the income to do so, we are almost always able to obtain permission for the purchase of a new(er) vehicle. There are many lenders that are willing to work with folks who are in Chapter 13 bankruptcies so obtaining financing is not an insurmountable obstacle.

Yes, you can sell your home and/or buy a home while you are in a Chapter 13 bankruptcy if we get permission for you to do so. If your case has not been confirmed (obtained final approval from the court), we must file a Motion with the court to get permission for you to buy/sell and if your Chapter 13 Plan has been confirmed, we only need to get a letter from the Chapter 13 Trustee giving you permission to buy /sell. As long as you are reasonable in your request and have the income to do so, we are able to get permission for you to purchase a house. There are many lenders that are willing to work with folks who are in Chapter 13 bankruptcies so obtaining financing is not an insurmountable obstacle. Selling your house during a Chapter 13 bankruptcy is possible, but not always advisable. It is a longer conversation that we would need to have before you decide to sell your home while in an active bankruptcy case. If you are thinking of selling your home in the immediate future, we should have that conversation about it prior to filing any bankruptcy case for you.

Do NOT pay friends and family back for any loans or make large purchases using credit cards. Do not use your retirement accounts or get a Home Equity Line of Credit (HELOC) to pay credit card/medical debt. Until you talk with a bankruptcy attorney, do not sell, transfer or pay off any property.

Pay your mortgage and car and regular bills (stop paying for what you don’t need or what you will not be keeping). Also, continue to pay spousal maintenance/child support. If your house is in foreclosure, you will not be able to pay your mortgage unless you can get it current. In that case, pay utilities and the other bills for the things that you are keeping (car, car insurance, cell phone, water, gas, etc.). Do not use or pay your credit cards.

Do not hide from your mail or a process server that comes to your door. If you get a certified letter in the mail, go get it. If you get mail, open it. No attorney can truly help you if we do not know everything that is happening. We also need to know all of your creditors so that we give everyone notice of the bankruptcy, so they stop contacting you. This is not the time to put your head in the sand.

Yes. It is likely that somewhere long ago in a galaxy far away, you signed an agreement with your bank that gave it permission to take funds from your account when you did not pay for your credit card. It is generally best practice to switch your bank account to a bank or credit union where you do not owe money to be sure that none of your money from your account is used to pay the credit card debt that you will discharge in bankruptcy. If you owe your credit union money on a credit card, you definitely need to change banks prior to filing bankruptcy as the credit union will close your account based on your credit union membership agreement. If you only have an account at a bank or credit union to facilitate payment for your mortgage or car and you do not bank there, there is no reason you need to change or close those bank accounts. There is also no reason to close your account if you bank where you owe money. Best practice is to draw down the amount in the account to a small amount and then use the new bank account for your future banking.

If you owe money on a credit card issued by your credit union, the credit union will close your account when you file your bankruptcy case. You should change banks prior to filing bankruptcy so the money at the credit union has already been moved. Based on the credit union’s membership agreement with its account holders, any time an account holder causes the credit union financial harm (like eliminating a credit card debt through bankruptcy), the account holder may no longer be a member at the credit union. Move your money prior to filing your bankruptcy case as it is much easier. If you owe your credit union for your car that you are keeping (so continuing to pay for) and do NOT have a credit car with the credit union, you do not need to change accounts as the credit union will not close your account when you file for bankruptcy.

Don’t ignore it. Breathe. Put it in your pile to give/can to us so we have contact information for all the creditors, collection agencies, collection attorneys and anyone else we will need to send notice to. Keep in mind they can do nothing to you UNLESS they sue you and if they sue you, your bankruptcy will stop the lawsuit.

Ignore them. You can block the number. Anyone you truly need to talk to will leave you a voicemail. Any messages from debt collectors may be deleted. They likely will not stop until you are able to give them a bankruptcy case number. You can also answer unrecognized calls if you want, but you are not required to.

Yes, if the autopay is for the payment of credit card debt or any other debt that we will eliminate in bankruptcy. If you have your utilities or other monthly expenses (like insurance, cell phone, etc.) on autopay, those will remain unaffected. If you change banks, you will need to change the autopay settings for the bills that you need to continue paying. If you are paying for your vehicle or mortgage though autopay, they will likely not allow you to do that while you are in bankruptcy so be sure to obtain the most recent statements for those debts prior to filing your bankruptcy case so you have the information to make those payments by mail (or by having your bank send a check) while you are in bankruptcy.

If you can get a good deal and you really need a newer vehicle, go ahead and purchase a vehicle prior to filing your bankruptcy case. However, understand that you will not be able to lower the amount you have agreed to pay for it, and this will be a monthly payment that you will make after bankruptcy so make sure it is affordable. If you cannot get a decent deal on a newer vehicle and you can wait, file the bankruptcy and purchase a vehicle either after your Chapter 7 bankruptcy discharge or after you have received approval (confirmation) of your Chapter 13 Plan. One other important note if you are purchasing a newer car prior to filing bankruptcy, the lender MUST perfect its lien (file it with the Arizona Department of Motor Vehicles) against the vehicle within 30 days of its purchase so potentially, the Trustee could avoid (ignore) the lien and you would have to work with the Trustee to keep the vehicle. There is no way for the public to search the Arizona Department of Motor Vehicle’s database electronically, but you can contact a third-party title company in town to run a search or go to the DMV directly and ask.

It is generally best practice to keep your social security money separate from any other income you receive. The reason to do this is because social security money is 100% protected and other income is not. What this means is you may have a bank account with $40,000 of social security funds in it and it is 100% protected. However, the social security money may not be mixed (co-mingled) with any other money. If you can, have all of your other income diverted to another bank account. Spend any non-social security money first and if you need to spend social security money to pay bills. You can spend social security money with no problem but mixing it with other money means it is no longer considered social security money and is no longer 100% protected. We can discuss this at our consultation.

Sometimes you will receive a tax refund or you need to spend excess money in your bank accounts prior to filing bankruptcy. It is important that all pre-bankruptcy expenditures are reasonable and for the health and welfare of your family. Here are some examples:

1. Replacement of tires or repairs for car(s)
2. Kids – clothes for school, school supplies, fees and anything needed for the school year.
3. Medical – if you or a family member needs new glasses, teeth cleaning, eye exam or other medical appointments/necessities, these expenditures are acceptable.
4. If you don’t have a homestead, you could pre-pay rent (depending on the amount of your security deposit). Don’t do this without specifically speaking to us.
5. Prepayment of your natural gas or electric bill for 6 months. Talk to us before prepaying these utilities.
6. Paying your attorney or CPA for any bankruptcy services you will need is also an appropriate way to spend your tax refund or excess funds in your bank accounts.

Reasonable and necessary for the health and welfare of your family are the key considerations when spending money prior to filing bankruptcy. Keep a record of your pre-bankruptcy spending with receipts, if possible. If you have any questions about appropriate, prebankruptcy spending always seek the advice of counsel. We will also discuss specifics during our initial consultation.

Yes. Filing a bankruptcy case at any time during a lawsuit will stop the lawsuit from proceeding any further. I prefer to file bankruptcy for my clients before a judgment is obtained as I do not want the judgment to be recorded against their homestead. If you are being sued, talk to bankruptcy counsel as soon as possible.

Keep a record of the date you are served. The Summons you receive will state that you have 20 calendar days to respond. However, if you don’t respond within 20 calendar days, the Creditor must file and mail you what is called an Application for Entry of Default. Once you receive that you have 10 days (excluding weekends and holidays) in which to file an Answer. If you do not, the Creditor will be allowed to request a judgment against you which generally takes a few weeks (but this is not guaranteed to take that long). Once a creditor has a judgment against you, the creditor may record it as a lien against your homestead and also start proceedings to garnish your bank account(s) as well as your wages.

Yes. Filing a bankruptcy case will stop a wage garnishment at any time. Creditors who have received monies in the last 90 days prior to the date of the bankruptcy filing may be required to give the money back so it may be paid to your creditors.

Maybe. If your bank account has been frozen by a bank garnishment and you file bankruptcy prior to the creditor receiving the funds, a bankruptcy will stop the disbursement of the money to the creditor. If the funds have already been sent to the creditor and it is within 90 days of the bankruptcy filing date, the creditor may be required to send the funds to your Trustee so the money may be distributed to all of your creditors (pro rata). No further bank garnishments will occur if the underlying debt is included in your bankruptcy.

It really depends on your circumstances, and you should seek the advice of an attorney sooner rather than later. Keep in mind that if both you and your spouse speak with a bankruptcy attorney and later one of you wants to file bankruptcy with that attorney after the divorce, that attorney would need a waiver of conflict from the non-filing spouse in order to file the bankruptcy. Also, if you jointly file bankruptcy prior to obtaining the divorce and at ANY time, you do not get along or cannot agree, your attorney will have to withdraw, and you both would need to hire your own bankruptcy attorney. My best advice is for one or both of you to seek bankruptcy advice independently from different attorneys to see what the attorneys say. It may not be a good option to jointly file bankruptcy and they may recommend that you file two separate bankruptcies after the divorce is final. You may only file a joint bankruptcy while you are still legally married. If you file by yourself before a divorce is final, you may stop the divorce proceedings until the bankruptcy is complete and you may also have to pay your ex-spouse for debts discharged in the bankruptcy. Again, the best advice is to seek counsel to know your options.

Yes, there is nothing that prevents only one spouse from filing bankruptcy. Given that Arizona is a community property state the debt is not just yours, but the debt of your marital community. Creditors may look to both spouses for payment of a debt even if only one spouse is on the credit card. If only one spouse files for bankruptcy relief, the other spouse may still be responsible for the debt because he or she did not file for bankruptcy. I rarely see it happen, but it can, so it is something to consider. Also, regardless of whether or not both spouses file bankruptcy or not, both spouses will need to provide their income information as well as a list of all of their assets if only one spouse is filing a bankruptcy.

Yes, a property settlement debt from a divorce may be discharged if a Chapter 13 bankruptcy is filed and a discharge obtained. A property settlement debt from a divorce is not discharged in a Chapter 7 bankruptcy.

Contact bankruptcy counsel IMMEDIATELY. You do not have time to wait. Many attorneys will not handle urgent bankruptcy cases because there is no time to prepare. You can still negotiate and speak with your mortgage company, but many times that will not resolve the problem and by the time you know that it is too late to properly prepare your case. You can still file an emergency bankruptcy, but it is not ideal, and this is when big mistakes occur. Bankruptcy might be a better alternative to any negotiation because the Mortgage Modification Mediation program offered through the bankruptcy court allows you to negotiate with the mortgage holder under court supervision. Regardless, you need to speak with counsel as soon as possible so you know your options so you can make educated decisions.

Any person that files a bankruptcy case may apply to be in the Mortgage Modification Mediation (MMM) Program. The MMM program allows borrowers to apply for a loan modification through the bankruptcy court. All supporting documents are submitted through a secure portal so there is no chance that any document is misplaced such that you have to resubmit it repeatedly. The servicers will review the application for modification and either offer a loan modification, or not based on their internal guidelines. Currently, there are no mandatory federal loan modification guidelines in effect. In the MMM program if a borrower is denied a loan modification, borrowers are entitled to a mediation to discuss the basis for the denial. Many times, the mediation helps resolve miscommunications between the parties. Regardless, the servicer may not foreclose on your house while you are in bankruptcy. Even if you do not obtain a loan modification, you will still have options to handle the foreclosure through standard bankruptcy procedures, so you do not lose your house.

NO, this is not true. You are in bankruptcy and unless the mortgage company obtains permission from the court to continue the foreclosure process, the mortgage lender may not sell your house. Unfortunately, I cannot control third parties, and neither can your mortgage lender. Here is what happens. When you file for bankruptcy, the mortgage lender stops the foreclosure so they will not sell your house on the appointed date. However, they do not cancel the sale immediately, they merely continue it to a different time, generally about 90 days from the first foreclosure date. They are allowed to do this, and it is a good practice. The reason is a lot of people file bankruptcy with no intention of following through. The mortgage lender does not want to start the foreclosure process all over if the debtor is dismissed from the bankruptcy. As such, the mortgage lender will continue the sale multiple times until (generally) the Debtor’s Chapter 13 Plan is confirmed (receives final court approval). At that point, they know the Debtor is serious and the mortgage situation will be resolved by the bankruptcy, and they will cancel the foreclosure sale. In the meantime, house buyers only know that the foreclosure sale has is being continued and not that you are in bankruptcy so they will constantly try to buy your house by scaring you into thinking that it is still going to be sold. First, whatever they say to you is wrong. Second, they have no right to be on your property so call the cops if they do not leave. Third, if you do speak with them, tell them you are in bankruptcy. If they are savvy, they will get what that means and if not, they may be back in another 90 days. Sorry about that, but they are independent agents working on their own so there is nothing the mortgage company or I can do about it.

Maybe. Depending on your circumstances, you may be able to fully or partially discharge your federal student loans. Additionally, in July 2024, borrowers in a Chapter 13 bankruptcy with Direct Loans will be credited for their student loan payments while they are in bankruptcy (whether the government receives payment through the Chapter 13 Plan or not). These borrowers will be 5 years closer to forgiveness of their student loan debt at the end of their Chapter 13 bankruptcy. This alone may be a reason to choose to file a Chapter 13 bankruptcy over another type of bankruptcy as sometimes the payments in a Chapter 13 bankruptcy plan are less than what the student loan payment would be. As a general rule, federal student loans are not dischargeable and will be a debt that needs to continue to be paid after the bankruptcy is complete.

If you meet the requirements to show that paying your federal student loans is an undue hardship, you may be able to discharge some or all of the federal student loan debt. Again, this depends entirely on your circumstances. The U.S. Department of Justice has put out guidance for its attorneys in handling these types of cases that makes them more streamlined.

Private student loans are generally not dischargeable in bankruptcy. However, many private “student loans” may not actually be “student loans”. Depending on the college and the circumstance of the student loan, you may be able to challenge the characterization of the debt as a student loan and make it dischargeable. Also, private lenders have recently been more willing to work with borrowers in bankruptcy to create a workable repayment plan. However, as a general rule, private student loans are not dischargeable and will remain a debt that needs to be paid after the bankruptcy is complete. That said, after the bankruptcy, you will have more disposable income to make the payments on the private student loan so depending on your circumstances, bankruptcy still may be a good solution to your financial situation.

They do sound good. Be sure to read the fine print. Also, be sure to talk with a bankruptcy attorney before you decide to go this route. Many times, debt consolidation/settlement companies have you pay an amount to them per month (like a Chapter 13 Plan), and they do not do anything to negotiate the debt until they have received a certain amount of money (generally, their fees). They tell you not to respond to creditors, they tell you to ignore lawsuits as they will handle it and sometimes, you are garnished because nothing has been done. I have many clients who signed up for debt consolidation/settlement only to pay the monthly fees (which are essentially lost) and then file bankruptcy anyway.

Again, read the fine print. If the company is saying or guaranteeing that they have a special arrangement to resolve debts with a certain credit card company, ask to see it. No one can guarantee a resolution of a debt except a bankruptcy attorney. We can guarantee that your debt will be resolved and sometimes without paying the credit card company anything (depending on your circumstances).

Yes, you can always file bankruptcy at any time. Stop making the monthly consolidation/settlement payment and contact bankruptcy counsel. Many times, you are able to get a refund of what you have already paid the company, but not always. It never hurts to ask.

Yes, sometimes. I will only attempt negotiation of debt for clients in certain circumstances. The client must have only 1 to 3 debts and be a candidate for bankruptcy. The client must also have funds to pay any settlement or alternatively, be uncollectible because he or she only receives social security as monthly income. The only way settlement works is if ALL creditors agree. If not, you will be back where you started with less money in your pocket. I also use the fact that you are a candidate for and are willing to file a bankruptcy case to attempt a settlement with your creditors. I have had this work many times and many times the creditors just don’t care and will not settle no matter what I say.

Yes, but again, if ALL of your creditors do not agree to reduce your debt to a manageable amount, there is no point. Settling with some and not all of your creditors just takes money out of your pocket unnecessarily.

The business owner’s personal liability for an SBA loan or EIDL may be discharged in a bankruptcy. If the business remains operational, it is more complicated and will depend on whether the business files bankruptcy or the business owner files bankruptcy. It is critical to have detailed records on how the EIDL money was spent before filing bankruptcy. The U.S. Trustee’s office is pursuing cases where the EIDL money was not used entirely for business purposes and asking that the debt not be discharged. Definitely talk to counsel about your particular circumstances and be ready to provide documentation of the expenditures of the EIDL money.

Commercial lenders may file a Uniform Commercial Code Financing Statement (UCC-1) on any secured business debt. It is important to know when planning a business dissolution or bankruptcy if the business debt is secured or unsecured. If there is a UCC-1, the debt is secured and if not, unless it is a vehicle or real property (which are both secured other ways) the debt is likely unsecured. The Arizona Secretary of State maintains the database for UCC-1 Financing Statement liens in the State of Arizona (link below).

I get it. The offers do sound tempting, but generally they are a stop gap before the onset of a larger problem which is paying them back. Before ever getting one of these loans, seek the advice of counsel and see what bankruptcy can do for you and your business. If you decide to get a private loan, read the fine print. Many times, money is pulled from your bank account weekly, the interest rate is high, and some loans require you to agree to a judgment against you and your business at the time you sign the loan. This means if you stop paying the loan, all the lender has to do is file the judgment with the court(s) and begin to collect from you.

A “personal guarantee” is your promise to pay your business entity’s debt if your business entity fails to pay the debt. Personal guarantees must be in writing and signed by you. If you are married, they should be signed by your spouse as well otherwise your community property is not subject to collection of the guaranteed debt. This is not necessarily true for credit card debt in Arizona.

No, the personal guarantee is your PERSONAL promise to pay a debt. Once a business dissolves or is terminated, your obligation to pay the debt kicks in. However, many times creditors do not pursue the personal guarantee as they cannot find their paperwork, or they choose not to. Unfortunately, the statute of limitations on these debts in Arizona is six (6) years so you may not know for some time if the creditor is going to pursue you personally. Personal bankruptcy eliminates personal guarantees on business debt. Alternatively, if you have no other debt that would make bankruptcy a good option, you can try to negotiate a settlement/payment plan on these debts.

Personal guarantees must be in writing and signed so look to your contracts with the creditor. This is not always true with credit card debt in Arizona. If you go through the dissolution process for your business your creditors are required to send the proof of what your business entity owes them so many times, we are able to determine if there is a personal guarantee on a debt that way. If you are a sole proprietor or a general partnership, you are 100% responsible for any business debt and there is no need for a formal written personal guarantee as you have no business entity separate and apart from you personally.

The two biggest mistakes that companies in financial distress make are: failure to talk to a qualified attorney about their options as soon as they know they are in financial distress; and failure to pay Payroll Taxes (Withholding Taxes)/TPTs (sales tax). First, speaking with a qualified attorney is helpful as each state has dissolution statutes that will guide the process. Many times business owners go about dissolution without advice and they miss some excellent opportunities for dealing with business creditors. Arizona has some incredibly helpful statutes to deal with creditors while dissolving an LLC or corporation and it is important to know what the options are as soon as possible so that you can make a plan. The second biggest mistake business owners make when their business is in financial distress is failure to pay Payroll Taxes and TPTs. These taxes are considered trust fund taxes and the owners of the company (and in some instances their bookkeepers) may be held 100% responsible for their payment and penalties. Pay these taxes when due even if it hurts. Failure to do so will create additional problems for both the business and its owners.

Corporations, LLCs and various partnerships may file a Chapter 7 (liquidation) or Chapter 11 (reorganization) bankruptcy for the business entity itself. Chapter 7 bankruptcies are only for those businesses that no longer want to operate. Chapter 11s are for businesses that wish to continue to operate. Only individuals may file a Chapter 13 bankruptcy. It is not available to any business entity. However, a Chapter 11 (Subchapter V) is a hybrid between a Chapter 13 and a Chapter 11 that allows smaller businesses to reorganize and maintain their businesses without the costs and rigors of a traditional Chapter 11. Many time a Subchapter V helps businesses reorganize because they can back their creditors off while they take steps to become financially healthy.

Yes, but it may not be the best idea for you and your business. Filing a Chapter 7 bankruptcy for the business at the onset of a shut down, would not be my recommendation. It generally is more cost-effective and less intrusive to handle a business shut down through state law dissolution. Arizona has some excellent and effective dissolution laws that allow LLCs and Corporations to handle their debts outside of bankruptcy. Generally, I recommend proceeding with the dissolution first and see if you can resolve the business debt issue that way.

When your next tax returns are due, you need to make sure that the returns are marked “Final”. This is true for both federal and state tax returns as well as TPT reports and WTH reports. You may also close your business account with the IRS if you want to although it is not necessary.

No, you must list all of your creditors and all of your debts in your bankruptcy documents filed with the court.

Wrong. We must list every debt and every creditor in your bankruptcy case. If you are keeping your house and/or your vehicle, we state that you are keeping them, but they are included. The difference is we make it clear that you will continue to pay for them and that you are not giving them up.

Make sure you have the six (6) most recent mortgage statements for your mortgage and vehicle. You may have to mail paper checks/money orders or have your bank send a check on your behalf to make these payments, so you need to know where to do so. Get any other information you think you may need off of the lender’s website as they may shut you out of it once you file your bankruptcy case. If you are filing a Chapter 13 bankruptcy, be sure to make your mortgage payments on the 1st of the month prior to filing your bankruptcy (even if you have a grace period and even if you don’t normally pay on the 1st of the month).

We will pull your credit reports so everything there will be listed when we prepare your case. You can also pull your credit report to verify what we already have (insert link to credit reports). If you know that a certain hospital or doctor, for example, provided you services, but you have not yet received a bill, give us the name and address of who you think you might owe money. It is better for us to list a potential creditor than not to list a creditor. We can amend your documents later to add creditors if we must, but there is a filing fee to do so. Generally, it is best to notice every creditor we know of or think we know at the beginning of the case.

Maybe. It depends on the circumstances, but we absolutely, 100% need to know EVERY piece of property where you may have an interest. Please search the public records to verify that you are not on any real property you did not know about. If you are and we don’t know, the Trustee is going to ask, and you will look like a liar because we did not disclose it or deal with it prior to the bankruptcy. You can search both the Pima County Assessor’s Office and the Pima County Recorder’s Office to verify if you are on title to any properties. If you live in another county, you will need to search your local county databases if you can online or go to the office to have a search on your name run. You should search multiple versions of your name to be sure you have found everything where you are listed or know that it is not you on the title.

Yes. We must list every business you were a part of in the last 6 years. Please verify that the business (LLC, Corporation, etc.) is actually closed with the Arizona Corporation Commission. Just because you are no longer using it, does not mean it does not exist. If it exists, it is still an asset with no value, and we should shut it down prior to filing your bankruptcy case. If you were part of an LLC/Corporation and no longer are a member, officer, manager, director or shareholder, verify with the Arizona Corporation Commission that you have been removed from the public records. Many businesses fail to keep their public records accurate, and it will cause you problems if we do not clean it up prior to filing your bankruptcy case. In addition, if you were a part of a company in another state, you need to verify the same as above with the Secretary of State in the state where the business was formed. If you have a trade name registered with the Arizona Secretary of State or the U.S. Patent & Trademark Office, we need to know about that as well. Please provide us with all information that you have and can obtain from public records for any business that was in existence in the last six (6) years (even those that stopped operating but were never closed). More information is never too much and letting us know will allow us to prepare your case accordingly.

You do not have to, but I would and I can help you. We will discuss this at your initial consultation. There are many reasons why it is the best practice to formally terminate your LLC/Corporation prior to filing bankruptcy. In addition, even if you are not filing a bankruptcy case, it is best practice to dissolve/terminate business entities if there is no reason to keep them given the reporting requirements of the Corporate Transparency Act (CTA).

The second you file any type of bankruptcy case an “automatic stay” is imposed. What that means is that all action (lawsuit, garnishment, other collection efforts, etc.) stops (stay = stop). It generally takes a week or so to stop all the bills from coming to you, but that is because creditors receive notice from the bankruptcy court directly by U.S. Mail and it is not immediate. If you get collection calls after you file bankruptcy, this is the time to answer as if you give the caller your bankruptcy case number they will stop calling. If they don’t and you continue to get collection correspondence after about a month, we can ask the court to make them stop. Keep records of any correspondence or calls you receive after you file bankruptcy.

A bankruptcy “Trustee” is the person assigned to your bankruptcy case at the time we file it. He or she administers your case which means he/she collects financial information from you (which we will provide to the Trustee, so you do not have to), collects any money that you need to pay your creditors (if any), and pays your creditors their share of the money the Trustee collects. The Trustee is also the person that conducts your 341 Meeting of the Creditors. This is a very general definition for a “Trustee” in Chapter 7 and Chapter 13 bankruptcies.

After you file bankruptcy, you must take the second required class called “Financial Management” which you can do online with the same company as you used for the first class. Each bankruptcy Trustee requires that we fill out a questionnaire and provide some documentation of your finances. We will do that for you as our client. You, however, will need to send us your bank statements from all of your accounts that show the date you filed the bankruptcy so we may prove the balances in those accounts on the day of filing. In addition, you will also need to attend (via Zoom) the Meeting of the Creditors. Please practice using Zoom with our tutorials so you are prepared for your Meeting of the Creditors. We will reach out to you prior to the Meeting of the Creditors so we can jointly prepare and be sure you are comfortable. If you are in a Chapter 13 bankruptcy, you will need to begin making your monthly Chapter 13 Plan payment 30 days after we file your case.

No, after you file bankruptcy, you do not need to worry about what is in your bank account. The exemption of $5,000 in a bank account for each person filing bankruptcy only matters as of the DAY of filing bankruptcy. We care about what is in your bank accounts on the day we file your case. For this reason, you will need to send us your bank account statements showing what was in all of your accounts on the day you filed your bankruptcy case. Once your bankruptcy case is filed, you do not need to maintain a balance at or below the Arizona exemption amount.

No, you do not need to tell us about any documents you receive from the Court. Bankruptcy is the only area of law where the court sends you copies of most of the documents filed in your case even if you are represented by an attorney. If we have filed your case, you need not worry about what you receive by mail from the court and you do not need to send documents to us. We receive all documents filed in your case electronically, so we have seen them even before you receive them by mail. If there is something you need to know about it or out of the norm, we will reach out to you. If you do not hear from us, there is nothing to worry about and whatever you received is just a standard, normal, expected filing with the court.

No, if you are my client, we will have already submitted all of the documentation that the Trustee requires as well as the questionnaire that we had you fill out at the time we were filing your case. We will ALWAYS handle any Trustee correspondence for you as that is our job and why you hired us. You do not have to worry about any mail you receive from the Trustee if you are our client. The only thing we might need from you if you have filed a Chapter 7 is your bank statements from all of your accounts indicating the balance in those accounts on the day you filed your Chapter 7 bankruptcy case. Once you receive them, send them to us and we will send them to your bankruptcy Trustee.

NO, do not contact the Trustee with questions. Your Trustee is not your friend (to quote one of our local Trustees) and not your attorney. If you are my client, I handle all correspondence with your bankruptcy Trustee, so you do not have to. You may at times receive a letter or an email from the Trustee sending you documents, etc. PLEASE DO NOT RESPOND DIRECTLY TO THE TRUSTEE. This is our job and we have been copied on any correspondence you receive. If you want to ask about the email, reach out to me separately and privately. Do not respond to the email from the Trustee to ask me a question. You need to send me a separate email. If you do contact the Trustee, he or she is going to direct you back to me as you are represented by counsel, so it is a waste of time and only annoys the Trustee and the Trustee’s staff. If there is something we need to deal with, we will have already or will reach out to you about what we need to do. If you do not hear from us, there is nothing for us to do or we have already handled the matter. Reference these Frequently Asked Questions (FAQs) often throughout your case as I may have already answered the question you have in these FAQs and if not, please reach out to us and we will be happy to answer any questions that you have.

Unfortunately, once you file a bankruptcy case many mortgage servicers and vehicle lenders will no longer allow you to pay electronically and will not let you have access to your electronic dashboard. They may also not send you a monthly paper statement either. The lenders view this as possibly violating the automatic stay provisions of the bankruptcy code. You will need to pay these creditors by check (which you can do electronically through your bank by having your bank send it to them) or send them a money order by mail. If you send a money order or other payment by mail, be sure to keep records. Also, mark your calendar to be sure you do not forget to make your monthly payments because if you do, the creditor may ask to take the property back. We will receive annual tax information and Notices of Mortgage Payment Changes by mail through the bankruptcy court (so watch your mail for those). If we receive a tax document for you that you did not also receive, we will send it to you.

Maybe, it depends entirely on when you filed your case, how much you will receive and if your Chapter 7 Trustee thinks it is enough to distribute to your Creditors. The Chapter 7 Trustee is entitled to the portion of your tax refund that you will receive for the upcoming year based on the date of your bankruptcy case filing. For example, if you file your Chapter 7 bankruptcy case in June 2024, the Chapter 7 Trustee would be entitled to one half of your 2025 tax refund (June is one half of the year). You should adjust your deductions so you neither owe taxes, nor have a large tax refund. Any amounts that you receive as a refund for the Child Tax Credit or Unearned Income Credit listed on lines 27 or 28 on IRS Form 1040 do not have to be turned over. Sometimes we wait to file your bankruptcy case so you can file your taxes, receive your refund and spend it prior to filing your Chapter 7 bankruptcy. Consult with a bankruptcy attorney about the appropriate ways to spend your tax refund before spending it, as there are many pitfalls in how you spend your refund that may cause problems in your bankruptcy case. The IRS has a tax withholding calculator to help you make any adjustments to your deductions that you may need to.

In a Chapter 13 bankruptcy filed in Southern Arizona, you are required to submit a copy of your state and federal tax returns to the Chapter 13 Trustee for every year you are in your Chapter 13 bankruptcy. In addition, you must turn over any amount you receive over $1,000 as supplemental funding to your plan (amounts on Lines 27 and 28 of IRS Form 1040 are not included and you may also deduct any amounts that you paid for having your taxes prepared). Any tax refunds that are turned over to the Chapter 13 Trustee do not count towards your plan payments so you should adjust your withholdings, so you are not receiving more than $1,000 in a tax refund. The IRS has a tax withholding calculator to help you make any adjustments that you may need to.

No, in most bankruptcies you never have to go to court. You will have a 341 Meeting of the Creditors with your bankruptcy Trustee about 30 – 45 days after we file your bankruptcy case, but that is done by Zoom and it is not court. We will know the date of your 341 Meeting of the Creditors on the day we file your bankruptcy case so you may get time off work. Prior to that Meeting of the Creditors, we will submit a copy of your photo identification (driver’s license/passport or an acceptable equivalent) and your social security card to the Trustee assigned to your case. We will also submit the Trustee’s questionnaire and any required documentation to the Trustee for you, so you do not need to worry about missing anything. Generally, the only time you may have to go to court is if an adversary proceeding is filed with the court, which is not a common occurrence.

The “341 Meeting of the Creditors” is the time for you to prove your identity to your Trustee and answer basic questions under oath to prove that you have the legal right to file bankruptcy in Southern Arizona. It is governed by 11 USC § 341 of the Bankruptcy Code. We have created a list of the types of questions that are generally asked in both Chapter 7 and Chapter 13 bankruptcy cases for you to review. The name “Meeting of the Creditors” is a bit of a misnomer as 99% of the time creditors do not attend. However, they are allowed to, but only to ask about the information contained in your bankruptcy documents. The Meeting of the Creditors takes approximately 5 – 10 minutes, and four (4) meetings are set during every half hour. All Meetings of the Creditors are by Zoom and you must appear on camera. Please check out our tutorials on Zoom.

Rarely do creditors appear at a 341 Meeting of the Creditors, but they are entitled to come. If a creditor or creditor’s counsel comes to a 341 Meeting of the Creditors, they may only ask questions about the documents you filed with the bankruptcy court (called Petition and Schedules). If they want to ask other questions about your financial circumstances, they may do so by setting a Rule 2004 Examination. These are not common, but they happen. (link to Rule 2004 Examinations FAQ) Generally, the only people that appear at a Meeting of the Creditors are unrepresented ex-spouses or business partners who do not know the purpose or the meeting and want to make you uncomfortable. Don’t worry, I am there. Your trustee is there, and the calendar is tight. In the rare circumstance a creditor appears, you will be fine.

Recently, attorneys for the U.S. Small Business Administration (SBA) have been appearing at 341 Meetings of the Creditors in cases where there is an SBA loan (like and EIDL or an unforgiven PPPL). The main purpose for the appearance is to request documentation as to what the loan was used for. We try to provide that information to the SBA attorney assigned to the case prior to the Meeting of the Creditors which is sometimes not possible as we do not know who will be representing the SBA. Regardless, we will be prepared for any questions that an attorney for the SBA may have so that your Meeting of the Creditors runs smoothly. Remember you are not alone. We are there guiding you through this.

A “Reaffirmation Agreement” is an agreement that is made with your creditor for a secured debt (generally a car, but sometimes a mortgage) where you agree to repay the debt as though it was not a part of the bankruptcy. Generally, Reaffirmation Agreements have the same terms as your original purchase agreement. The Reaffirmation Agreement becomes your new contract with the lender. Reaffirmation Agreements are only available in Chapter 7 bankruptcies because in a Chapter 13, the debt has been handled as part of your Chapter 13 Plan.

In your Chapter 7 bankruptcy paperwork, you will state that you wish to reaffirm the debt. The creditor/lender is required to send your attorney the Reaffirmation Agreement. You will sign the paperwork and indicate that you can and will make the payments for the vehicle/house after your bankruptcy is over. In certain circumstances, the bankruptcy judge may not allow you to reaffirm the debt, but you can still keep the property so long as you pay for it. This generally happens when you owe a significant amount more than the car is worth. During your Chapter 7 bankruptcy, you need to continue making the payments for your house and car if you are keeping them even if you have not signed a Reaffirmation Agreement.

The Reaffirmation Agreement is a new contract for the debt (like a car). If, for example, after your bankruptcy you cannot pay for your car, the lender may repossess it, sell it and sue you for the difference in the amount you owe and what the lender was able to sell the car for at auction (the deficiency). You will have to pay the deficiency balance. This is not true when you have signed a Reaffirmation Agreement, and the judge has not allowed it.

In Arizona, for many years, attorneys have not been entering into Reaffirmation Agreements for houses as they make no sense. If you are keeping your house and continuing to pay for it, the lender is protected. If you fail to pay for your house after your bankruptcy, the lender may foreclose on it. In Arizona, it is VERY, VERY RARE that a homeowner would have to pay the difference between what is owed for the house at the time of the sale and what it is sold for (the deficiency) as a matter of law (with or without the bankruptcy). The mortgage lender almost never will be able to collect a deficiency from a homeowner even if they have never filed bankruptcy (unless the property is on more than 2.5 acres of land). For this reason, in Arizona a Reaffirmation Agreement for a house makes no sense and they are disfavored. A bank requesting a Reaffirmation Agreement on a house just really does not know the law and is following a rule book that requires it. The best suggestion in this situation is to refinance your house (if it makes financial sense) and get away from that lender. After a bankruptcy discharge, you may not enter into a Reaffirmation Agreement by law so the bank telling you that you need to call your attorney to do so is nonsense. It is not possible. Plus, Reaffirmation Agreements are created by the lender so even in a bankruptcy your attorney is not responsible for preparing the Reaffirmation Agreement. It is the lender’s contract and the lender’s terms in the contract. They are supposed to create it.

You may have an argument against whatever internal rules the bank has regarding Reaffirmation Agreements because you said you were willing to reaffirm the debt and the bank failed to send your attorney the Reaffirmation Agreement. Contact your bankruptcy attorney about what action you can take.

Generally, you don’t need to do anything but wait for your Order of Discharge to be issued 60 to 90 days after the 341 Meeting of the Creditors. This is true only if you have already completed your Financial Management class and the Trustee has not asked for any additional documents (like a copy of next year’s tax returns) or you have to pay the Trustee for non-exempt equity in any of your property. If you need to do any of these things, do them and after that you wait. If you do not need to do any of the above, all you do after your Meeting of the Creditors is wait (and breathe a huge sigh of relief as your bankruptcy is almost finished).

No, you will still obtain your discharge as normal (so long as you have completed your Financial Management Class). The Chapter 7 Trustee only wants to see your next year’s tax returns to determine if your tax refund is enough for him/her to collect and distribute to your creditors.

Depending on your Chapter 7 Trustee, he or she may make an entry on the Court document that is called a “Chapter 7 Trustee’s Report of No Distribution”. What this means is that the Chapter 7 Trustee has reviewed your case and determined that there are no assets (tax refunds or non-exempt equity) to be collected and paid to your unsecured creditors pro rata. There is no written notice mailed to you as it is only an entry on the court’s docket. If you are our client, we will always let you know when this occurs as it is a big deal.

Always continue to make your monthly Chapter 13 plan payments on time. After the Meeting of the Creditors, we need to obtain final approval of your Chapter 13 Plan which is called confirmation. The Trustee will issue what is called an “Trustee’s Plan Objection/Evaluation with Notice of Potential Dismissal if Conditions are not Satisfied.” Don’t be scared, I need this to confirm your plan. It sounds scary, but it is just a document telling me what the Trustee would like me to do so that she will sign off on confirmation (final approval) of your Chapter 13 Plan. I will submit a document to the Chapter 13 Trustee within thirty (30) days of receipt of the Objection/Evaluation called a “Stipulated Order Confirming Chapter 13 Plan” (SOC) which is a document that the Chapter 13 Trustee will sign and submit to the Court for final approval of your case. Once I submit the proposed SOC to the Chapter 13 Trustee, we wait. It generally takes a few months for the Chapter 13 Trustee’s office to submit the SOC to the judge for signature as the entire Chapter 13 case must be reviewed thoroughly. In the meantime, continue to make your monthly Chapter 13 Plan payments on time.

The main thing you have to do after your 341 Meeting of the Creditors in a Chapter 13 bankruptcy case is make your monthly Chapter 13 Plan payment on time. You can break it up to have some come out each paycheck or when you receive your monthly income, but you need to make the full amount of the plan payment on time every month or your case will be dismissed. Hiccups happen so if they do and you cannot get current within a month, let us know immediately. You also need to send us a copy of your STATE and FEDERAL tax returns each year while you are in bankruptcy. We will not remind you and your case will be dismissed if we do not send a copy of your tax returns to the Chapter 13 Trustee each year. We will do this for you. Also, if you receive a net refund in excess of $1,000 you will need to turn over anything over $1,000 to the Chapter 13 Trustee as a supplemental payment which means it does not count toward your plan payments so you will need to still make those even if you turnover a portion of your tax refund. You may send your tax refund as a one-time manual payment through TFS Bill Pay. We can deduct any cost you have for preparing your tax returns if we have a receipt for that so send us a copy of that when you send copies of your tax returns.

The Chapter 13 Trustee prefers electronic payments through www.tfsbillpay.com. This is the only way to make your Chapter 13 Plan payments electronically. You may also send a money order or cashier’s check via regular U.S. mail to “Dianne C. Kerns, Chapter 13 Trustee, P.O. Box 366, Memphis, TN 38101-0366”. You must include your name and case number on any check or money order mailed to the Chapter 13 Trustee. In addition, you may NOT use any other delivery service other than the U.S. Mail. If you need to overnight your payment, you may use U.S. Postal Service Express Mail. Whether you pay electronically through TFS Bill Pay or your mail your check, it will take 7-10 days to post on the Trustee’s website. Your first Chapter 13 Plan payment is due thirty (30) days after we file your Chapter 13 bankruptcy case. TFS Bill Pay will allow you to automatically have your Chapter 13 Plan payment paid from your bank account as many times per month as you would like. I suggest that my clients schedule one half of the payment to come out of their bank account a day after each paycheck (or receipt of retirement/social security). I also suggest that they start making their plan payments before the first due date so that they are always ahead on making their Chapter 13 Plan payments. Your case will be dismissed if you do not make TIMELY Chapter 13 Plan payments. You should register with National Data Center (www.ndc.org) to monitor your Chapter 13 Plan payments.

First, don’t freak out. This is what we need to confirm (obtain final approval of) your Chapter 13 Plan. This document is standard and normal and it is issued in every case. It tells me what we need to do to get your case confirmed. If we need to discuss any of the Chapter 13 Trustee’s recommendations with you or we need more information, don’t worry we will reach out and we will discuss it.

Almost all Deeds of Trust and mortgages have language in them that allow your mortgage company to charge you any fees it incurs to collect or maintain your mortgage. Many mortgage companies hire attorneys to review your bankruptcy case and file a Proof of Claim or any other necessary document. The “Notice of Postpetition Mortgage Fees, Expenses and Charges” is the mortgage company’s request for you to pay these fees. We will incorporate these fees into your Chapter 13 Plan as we are required to do, and they will be paid as part of your Chapter 13 Plan. At the end of your Chapter 13 Plan, these fees will be paid in full. In the meantime, if you still receive mortgage statements from your mortgage company, these fees may show on your mortgage statement. You are welcome to pay these fees directly, but we include them in your Chapter 13 Plan unless we have proof of full payment. Alternatively, you can pay them and also pay them through your Chapter 13 Plan and the money paid through your Chapter 13 Plan will just go to additional payments towards the balance on your mortgage.

Once your Chapter 13 Plan has been confirmed, it means that your Chapter 13 Plan has received final approval by the court. If we do not modify the plan, this will be your Chapter 13 Plan for the duration of your bankruptcy. If you have already completed your Financial Management Class, all you need to do after confirmation is continue to make your monthly Chapter 13 Plan payments on time and provide us with a copy of your STATE and FEDERAl tax returns every year until your Chapter 13 bankruptcy is completed. You also will have to turn over any amount of your total tax refund that is over $1,000 after deductions of tax preparation fees and additional CTC/EIC refunds the total refund amount. (link to the FAQ on Chapter 13 tax refunds above)

Your case will be dismissed if you fail to make your Chapter 13 Plan payments. However, if you cannot make your Chapter 13 Plan payment because your circumstances have changed (loss of job, increase in expenses, etc.), we can adjust your plan accordingly. Please reach out to us as soon as you know that there will be an ongoing issue so we can address it. If this is a one-time thing and your payment is going to be late once or you will not be able to make your Chapter 13 Plan payment for one month only, your case is not going to be dismissed, but you need to get caught up as soon as you possible. The Chapter 13 Trustee generally does not request that your case be dismissed until you are two (2) months behind in payments.

No. You must remember to make your Chapter 13 Plan payment every month. We recommend setting up automatic withdrawal with TFS Bill Pay so that you never miss a Chapter 13 Plan payment. If you are not using TFS Bill Pay to make your payments, you will need to find a way to remind yourself to get your payment mailed in so it arrives 7-10 days prior to its due date.

Yes, absolutely and please do. As we all learned in 2020, we cannot predict what will happen. If you have paid ahead into your Chapter 13 Plan, if something happens where you will be late on a payment or have to miss a payment, it will not have any effect. Again, if missing a payment or being late consistently is going to be ongoing because your circumstances have changed, please reach out to us as soon as possible so that we can make any adjustments that need to be made. If nothing happens to change your case, making plan payments ahead will just complete your Chapter 13 bankruptcy sooner (but it can never be less than three (3) years unless you are paying all of your unsecured creditors 100% of what they are owed).

If your case is dismissed, it is like you never filed bankruptcy at all. Your case may be dismissed if you fail to comply with any of the requirements of the bankruptcy court. Your case may also be dismissed if you do not TIMELY make your plan payments or submit copies of your State and Federal tax returns to the Chapter 13 Trustee annually within fourteen (14) days of filing them. Upon a bankruptcy case dismissal, your creditors may begin to collect from you as though the bankruptcy never occurred.

An “Order of Discharge” is the court’s order stating that you are no longer legally obligated to pay your dischargeable debt.

The most common types of dischargeable debt in ALL bankruptcies are credit card debt; medical debt; deficiencies for repossessed/foreclosed property; and private loans.

Taxes and student loans are generally not discharged in bankruptcy, but sometimes the amounts owed will be reduced and, in some circumstances, some or all of the student loan and tax debt may be discharged. Any debt that was incurred by some type of fraud is not dischargeable (generally, only if the debtor brings an adversary proceeding in the bankruptcy case and proves it). This is not an exhaustive list of nondischargeable debt, but it is a list of the most common type of debts that are not dischargeable. Talk to a bankruptcy attorney about your specific circumstances.

Spousal maintenance and child support are not dischargeable in bankruptcy. If you are in arrears on either, you may be able to pay the arrearages through a Chapter 13 bankruptcy to retire the arrearage debt, but you will always have to pay it and any ongoing child support/spousal maintenance obligations.

In a Chapter 7 bankruptcy, you will receive your Order of Discharge 60 – 90 days after your 341 Meeting of the Creditors. Creditors have 60 days after your Meeting of the Creditors to object to your discharge in all bankruptcy cases. In a Chapter 13 bankruptcy, you will receive your discharge after you have completed all of your Chapter 13 plan payments. The Court issues the Order of Discharge and depending on the volume of cases it may take a few weeks after the creditor’s deadline or completion of your Chapter 13 Plan payments to issue your discharge.

You will not get your Chapter 13 discharge until all of the checks the Chapter 13 Trustee has issued to your creditors have cleared. This usually takes 60 – 90 days after your last payment depending on when your payments are normally due. At the time all of the creditors’ checks have cleared, the Trustee will issue her Final Report and the bankruptcy court will generate a Certificate of Eligibility of Discharge for you to sign. We will send you the Certificate for signature as soon as we receive it by email. Once this is signed and we file it, you should get your Order of Discharge within two weeks.

Your bankruptcy case will be closed after all the monies due to your creditors have been paid and the U.S. Trustee reviews it. Unfortunately, we have no control over when this will occur. You may obtain your discharge, but you may not close for a year or two later. Chapter 13 cases tend to close very quickly after discharge.

No. Debt that is discharged in bankruptcy is not taxable as 1099 Forgiveness of debt. You may receive a IRS Form 1099 from your creditor. However all you need to do is submit IRS Form 982 to the IRS and you will not have to pay any taxes on your dischargeable debt. (link to Information on IRS Form 982 in Resources)

An “adversary proceeding” in a bankruptcy case is a lawsuit that is filed in the bankruptcy court. It is much like a regular civil lawsuit, but it is handled as part of your bankruptcy. A creditor, debtor or trustee may file an adversary proceeding. Debtors do not have to pay a filing fee to bring an adversary proceeding.

The number one reason why an adversary proceeding is filed is to argue about the dischargeability of a particular debt. Some debts, like child support or spousal maintenance, are automatically nondischargeable and other debts may not be dischargeable, but the bankruptcy court must make the determination. Some arguments for a debt to be nondischargeable are: fraud, breach of fiduciary duty or credit obtained by false pretenses. Adversary proceedings may be filed to make other determinations as well, like whether a transfer was fraudulent, a payment was preferential, or to determine the value of property.

Sometimes you may have an argument that your property value is less than your first mortgage debt so you should not have to pay your second mortgage. This may only be done in a Chapter 13 bankruptcy. You may also have a claim that a recorded judgment impairs your homestead exemption, and you need it removed as part of your bankruptcy case. In addition, if you are attempting to discharge some or all of your student loans, these arguments MUST be brought by an adversary proceeding. You may also bring an adversary to argue about the dischargeability of a certain other debt, like taxes. Sometimes these matters may be brought by a Motion, but generally they must be pursued by a formal adversary proceeding.

First, breathe. Second, talk to your bankruptcy attorney about the specifics. If you think a creditor is going to argue that you committed some type of fraud, don’t hide from it. Get ahead of it. I had a case where my client and I were fully prepared for an aggressive creditor to come into the bankruptcy case and make a bunch of noise about alleged fraud. We were ready and were shocked when the creditor did nothing. We do not know why, and this is not always the case. It could have been that the creditor did not want to pay an attorney or the filing fees to bring an adversary proceeding. It could be that the creditor just did not want to spend any more time on it. Again, we do not know, but we were not scared of the adversary proceeding being filed as we had already discussed what could happen. We had a plan and had already prepared documentation to aid with our defense. Creditors have to take affirmative action and pay money to bring an adversary case, so they need to be motivated to really pursue it. Often times the bankruptcy case causes them to lose their motivation to pursue the claim.

If a creditor is successful in arguing that a particular debt is not dischargeable, there will be a judgment from the bankruptcy court against you and you will have to pay that debt after bankruptcy. Don’t despair. If you have a non-dischargeable debt, there are ways to handle it after your bankruptcy case is discharged and all of your other debt is discharged. You still have lessened your debt load, and you can contend with the non-dischargeable debt as you need to. Keep in mind that student loans and taxes are non-dischargeable so often times folks have non-dischargeable debt after their bankruptcy, but they are better able to pay it as they have eliminated a significant of their pre-bankruptcy debt.

A “2004 Examination” is a deposition authorized by Federal Bankruptcy Rule 2004. A deposition is where you would answer questions under oath about your financial affairs and it is recorded. A bankruptcy Trustee, creditor or other interested party may request a 2004 Examination of you or any other person/entity that may have information on your financial affairs. You may also request a 2004 Examination of any person/entity if you need additional information for your bankruptcy case. This generally only occurs in Chapter 11 Bankruptcy cases. It is very rare that a 2004 Examination is requested in a Chapter 7 or Chapter 13 bankruptcies. There can be a 2004 Exam and not an adversary proceeding. Adversary proceedings allow for regular depositions during their proceedings.

Unfortunately, I cannot work for free. Just like your doctor or dentist do not provide free consultations, neither do I. At our initial consultation, we will discuss options for you to deal with your personal financial circumstances which many times includes filing bankruptcy, and sometimes does not, or it does not include filing bankruptcy at this moment, but perhaps in the future. You are paying for information tailored to your situation regardless of what you ultimately decide to do. Sometimes you just need to know that what you are doing the right thing, the wrong thing so you can fix it, or that bankruptcy is a good/bad option for you and your family. The information you will receive gives you the power to start to get your financial life back on track whether you file for bankruptcy or not. In addition, I will help you structure payment of your bills pre-bankruptcy to help with payment of legal fees. If you truly, truly cannot afford our consultation fee, you should contact Southern Arizona Legal Aid or another agency that might provide free assistance.

Yes, anyone may pay for your bankruptcy or consultation, but you may not take a loan to do so. We can discuss this at your initial consultation.

We could have higher fees that other bankruptcy attorneys. You are welcome to shop around. What I can tell you is, we provide personal service throughout the entire process. You never have to submit documents to your trustee yourself and you never have to wonder what is next. We will help you figure out how to pay for bankruptcy attorney fees and costs. We want you to have peace of mind. Again, shop around and determine what attorney is right for you. Also, consider the amount of debt you will be eliminating in your bankruptcy and compare it to the attorney fees and cost you need to pay. If you consider that, for example, you will eliminate $50,000 in debt by paying the amount you will need to pay for attorney fees, I guarantee you would not think attorney fees were that high.

I do not do $0 down agreements because I do not want to charge financing fees to increase the overall amount you pay for your bankruptcy. Read the fine print and make sure you understand the TOTAL cost of your bankruptcy and what services will be provided if you work with a $0 down attorney. I am not saying that you should not do it. Just make sure you are educated about it. Understand that bankruptcy is a big decision, and you only get one chance at doing it right so make sure you are comfortable with your attorney and the attorney’s process before you choose an attorney.

For Chapter 7s, we ask for the full flat fee prior to filing your bankruptcy case which includes the court filing fee ($338) and the costs of obtaining your credit reports ($45 individual/$90 married couple). Flat fees are based on the complexity of your case. We will give you a quote at the time of our initial consultation. For Chapter 13s, we require an upfront deposit which will include the court filing fee ($313) and the costs of obtaining your credit reports ($45 individual/$90 married couple). Since we will be representing you for 3 to 5 years in a Chapter 13 bankruptcy, we charge hourly which allows you to control (to some extent) the additional fees to be paid. All of our hourly Chapter 13 fees incurred after the bankruptcy filing are paid through your Chapter 13 Plan so they are included in your monthly Chapter 13 Plan payment. After you file your bankruptcy, there is no additional payment to us outside of your bankruptcy as it is all included in your Chapter 13 Plan payment. The court must approve any of our bills for fees and costs after we file your Chapter 13 bankruptcy as well.

No, you may not pay your bankruptcy attorney fees or costs by credit card.

NO!!! Spread the word and help me stop this myth. In fact, the opposite is true. Once you file your bankruptcy case, you will be inundated with offers for credit cards or to buy a new car. Savvy lenders know that folks who have filed bankruptcy will need to rebuild their credit after the bankruptcy has been completed. They also know that folks who have filed bankruptcy do not want to do it again. They further know that you are an excellent credit risk as you have NO to very little debt and should be able to pay the new debt. You will be able to get credit for what you need, and you will be able to get credit at market rate even with the bankruptcy filing on your credit report for 7 to 10 years.

Yes, absolutely. In fact, you will be inundated with junk mail offering credit cards and offers to purchase a vehicle. After you have completed your bankruptcy, you are a good credit risk as you will have no, or virtually no debt. The bankruptcy will be on your credit report for 7 to 10 years, but that does not mean that you will not be able to do what you need to do. Savvy lenders understand that sometimes people have to file bankruptcy and that you are a good credit risk because you have handled your debt.

Unfortunately, no. So long as the bill is addressed only to your business, the creditor can send it. If it is addressed to and demands money from you personally, that is a problem, and you should contact me. Your business is closed. It has nothing. It is not going to pay. The bills are a waste of paper, but there is nothing we can do about it. If you have been discharged from your bankruptcy (and unless I have told you otherwise specifically), you are not personally responsible for these bills. You may ignore them.

Many times, even after a debt has been discharged or still part of an active bankruptcy the lender will sell the debt in bulk with others to a collection agency or debt buyer. They do not tell the new debt owner about the bankruptcy. Send a copy of your Order of Discharge to the new debt owner and see if that stops the efforts to collect. If not, please contact us, but send the Order first. If you receive a collection notice or a bill while you are still in your bankruptcy, send them the Notice of the Meeting of the Creditors that we provided to you as that will give the existing creditor or the new debt owner notice of your bankruptcy. Again, if you do that and it does not stop, contact us.

It is a myth that creditors must report monthly payments on a debt to credit reporting bureaus. No creditor has an obligation to report any monthly payment on your credit report. The rule is that if a creditor does report your payment history that what is reported is accurate and true. Many times, creditors will fail to report post-bankruptcy mortgage payments on your credit report. Instead, the mortgage company will report the mortgage as discharged in bankruptcy. In Arizona, it is very rare that a homeowner has personal liability to pay for deficiency on a house after foreclosure. If you did not sign a Reaffirmation Agreement in your Chapter 7 bankruptcy case, your personal obligation for the debt for your home (even if you are keeping it) has been discharged, BUT you likely NEVER HAD A PERSONAL OBLIGATION to pay this potential debt in the first place. What this means is that if you decided to return the house to the lender or it was foreclosed upon, the lender could not ever sue you for the difference in what the lender sells the house for and the amount you owed at the time of the sale (the deficiency) whether you have filed bankruptcy or not. Technically, saying the personal responsibility for a mortgage debt has been discharged is incorrect as it likely never existed to be discharged. In Arizona, mortgage lenders only have the right to foreclose on your home (collateral) if you do not pay for it and they do not have the right to sue you for the deficiency unless your property is on more than 2.5 acres of land. For more information on Reaffirmation Agreements, click here.

It is a myth that creditors must report monthly payments on a debt to credit reporting bureaus. No creditor has an obligation to report any monthly payment history on your credit report. The rule is that if a creditor does report your payment history that it is accurate and true. Many times, creditors will fail to report post-bankruptcy car payments on your credit report. Instead, the creditor will report the debt as discharged in bankruptcy. This may or may not be true depending on if you signed a Reaffirmation Agreement. If you did not sign a Reaffirmation Agreement in your Chapter 7 bankruptcy case, your personal obligation for the debt for your vehicle (even if you are keeping it) has been discharged. What this means is that if you decided to return the vehicle to the lender or it was repossessed, the lender could not ever sue you for the difference in what the lender sells the car for and what you owed for it at the time of the sale (the deficiency) because your personal obligation to pay the debt was discharged in the bankruptcy. The lender only has the right to possess the car (collateral) and no right to sue you for a deficiency in that scenario. If you sign a Reaffirmation Agreement, the lender could sue you for a deficiency if the car is repossessed or returned after your bankruptcy discharge. For more information on Reaffirmation Agreements, click here.

If the negative reporting is accurate, there is nothing you can do, but take steps to build your credit now so that the negative reporting no longer has an impact. The general rule is: no company needs to report payments on debt on your credit report, but if they do, it must be accurate. You may have errors removed from your credit report, but you cannot rewrite history. If something negative happened, it will remain on your report so long as it is accurate.

If you have obtained your credit reports and there is inaccurate information on the reports, you should dispute the errors to each of the credit bureaus reporting them. If after your dispute letter the information is still not corrected, you may need to bring a case under the federal Fair Credit Reporting Act (FCRA) and you will need an attorney to do so. These cases are typically handled on a contingency basis (which means there are no attorney fees for you to pay unless you get a monetary settlement). Contact our office for a referral to a reputable FCRA attorney. Also, we can help you determine if your bankruptcy case is being reported correctly as many times they are not, and it is super confusing. Use the information in our Resources to find sample dispute letters.

The federal Fair Credit Reporting Act (FCRA) promotes accuracy, fairness and privacy of information in the files of consumer reporting agencies. It also governs the access to consumer credit reports and provides remedies for inaccurate reporting and wrongful disclosure.

This is the one of the only times where you do not need a professional. You can repair your credit report and make disputes to the credit reporting agencies yourself. In fact, in order to have a FCRA claim in federal court for failure to fix an inaccurate report (in the 9th Circuit), you must be the one that sent the letter to the credit bureau. Because of this, a credit repair company is likely going to just send you the same letter you can download at either the Consumer Financial Protection Board or the Federal Trade Commission for free for you to send. Alternatively, they are going to send the letter for you, but if that does not fix the problem, you are going to have to do it again to bring a claim. If you have serious violations, you may need to have a consult with a FCRA attorney as he or she may want to draft the dispute letter for you if you are anticipating litigation. Our Resources provide the links to the agencies that will provide you free guides and sample dispute letters.