To File Bankruptcy In Arizona I Must Be Delinquent On All My Debts
;I often have clients that file bankruptcy in Arizona who are current on all their debts. However, they can see the writing on the wall. Often they have been transferring debts from one credit card to another and want to end the vicious cycle of debt. Or, a change in income forces a measure to eliminate debt.
Your Lit Prepares A Report To The Osb If Required
In certain circumstances, the;LIT;prepares a report regarding your application for discharge and submits it to the OSB. Although this report is not usually required, it can be helpful to the bankrupt if, for example, you were convicted of an offence under the;Bankruptcy and Insolvency Act, or your conduct before or after bankruptcy might influence the court to refuse your discharge. It gives the;LIT;an opportunity to further describe your financial situation and analyze the various details of your bankruptcy, including the reasons for filing, and can give further details about your conduct.
Get Your Filing Fee And File Your Case
Once youâve completed the paperwork, youâll need to get together your filing fee. The current filing fee for Chapter 7 is $338, which is due in full when you file your Chapter 7 bankruptcy case with the court. Itâs the same amount for single and married filers. The payment must be paid by cashierâs check or money order, you canât make this payment using a credit or debit card. If you feel that you canât afford this fee, you can request a fee waiver, provided you are earning less than 150% of the federal poverty line, considering your combined household income. If the waiver request is not granted , you can also request to pay the filing fee in installments.
Next, print out all the paperwork to file the case with the bankruptcy court. Make certain that you are printing on only one side of the paper and that you have as many copies as needed. If you are unsure, you should reach out to the court clerk to check. It is always a good idea to have a complete set for yourself, both for your records and to use for your 341 hearing.
Then you are ready to go to court to file your documents and officially begin your Chapter 7. You usually also have the option to file by mail, but itâs best to go in person to make sure that everything is complete.
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The Means Test For Chapter 7
Whether to file for Chapter 7 or Chapter 13 is not your decision alone. The courts also impose a means test to determine whether you are eligible for Chapter 7. The means test first compares your average income over the previous six months with the median income for a household of your size in your state; if you earn less than the median, you should be eligible for Chapter 7.
Even if your income is higher than the median, you may be eligible after subtracting certain allowable expenses. But if the calculation shows that you’d have enough disposable income left over to begin repaying your debtsrather than having the slate simply wiped cleanthe court may decide that Chapter 13 is your only option. To help determine your eligibility, you will be required to fill out this 122A-2 Form.
Do My Debts Qualify For Bankruptcy
Not all debts qualify for bankruptcy.;Debts that cant be wiped out are child support, alimony, some types of taxes, debts to government agencies, debts for personal injury caused by driving while intoxicated and any court fines or penalties.
Debts that can be wiped out in Chapter 7 bankruptcy include credit card debt, medical bills, personal loans, lawsuit judgments and obligations from leases or contracts. Chapter 13 bankruptcy wipes out those debts, plus debts from a divorce , debts for loans from a retirement plan. Technically, student loans can be discharged if you prove undue hardship, however, this is often a difficult task.
There are some people who are considered judgment proof because everything they have is exempt under state law. People that are judgment proof may not need to file bankruptcy because creditors cant touch their assets if their source of income is from social security, pension plans, 401 retirement savings, disability benefits, veterans benefits, alimony or support payments.
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How Can I File A Fast Low
The fastest, cheapest way to file bankruptcy is to file an emergency petition with a simple three-page document. The form can be filled out in about 15 minutes without the help of a lawyer, and it is not necessary to pay the standard bankruptcy fee when you deliver the abbreviated application to the federal bankruptcy court. The paperwork is available from a court clerk.
Should I File For Chapter 7 Bankruptcy
- Read this in:
Learn about the pros and cons of filing for bankruptcy and what types of debts you can discharge. #0103EN
What is bankruptcy?
It is a legal process to help people who are unable to pay their outstanding debts.
How are Chapter 7 and Chapter 13 bankruptcies different?
Chapter 7: the court cancels your debt.; Your bills vanish. You are no longer responsible for them.; You get a clean slate and a chance to start over with no debt.
Chapter 13: the court puts you on a 3- to 5-year payment plan to repay your debts.; This can help you try to avoid foreclosure of your home or to pay off other debts, such as traffic tickets or legal financial obligations , that you cannot discharge.
My wages are being garnished.; Can a bankruptcy help?
Probably. The day you file for bankruptcy, the court issues a stay.; This means all collection action, including garnishment, must stop immediately.
Which bills can I discharge in a Chapter 7?
You can discharge most bills, including credit card debt, hospital and medical debt, debt owed to a former landlord, and debt owed due to the repossession of a vehicle.
You cannot discharge:
Traffic tickets and fines . Read My Drivers License was Suspended. Can I Get it Back? to learn more.
When should I think about Chapter 7 bankruptcy?;
You can only file for bankruptcy once every 8 years. Before filing for Chapter 7, at least 1 of these should be true:
If you are a homeowner:
When do I not need bankruptcy?
If You Have A Complicated Chapter 7 Bankruptcy
Filers don’t have an automatic right to dismiss a Chapter 7 case. If you make a mistake, you risk having your case thrown out, your assets being taken and sold, or facing a lawsuit in your bankruptcy case to determine that certain debts shouldn’t be discharged. So if you own a small business, have income above the median level of your state, have a significant amount of assets, have priority debts, or have creditors who can make claims against you based on fraud, you’ll likely want a lawyer.
When To Stop Digging A Hole You Can’t Escape
Most of us feel we have a moral obligation to pay what we owe if we can.;But typically that ship has sailed by the time people realize they need to consider bankruptcy. They can continue trying to chip away at debts they may never be able to repay, prolonging the damage to their credit scores and diverting money they could use to support themselves in retirement. Or they can recognize an impossible situation, deal with it and move on.
If you can pay your bills, obviously you should. If youre struggling, check out your options for debt relief. But bankruptcy may be the best option if your consumer debt the kinds listed above that can be erased equals more than half your income, or if it would take you five or more years to pay off that debt even with extreme austerity measures.
Heres what you need to know:
You need a bankruptcy attorney: Its easy to make a mistake in the complicated paperwork, and an error could cause your case to be dismissed. If that happens, you end up with no relief but still have;credit scores tanked by the bankruptcy filing.
Dont wait too long: Theres a misconception that people file bankruptcy at the drop of a hat or when they still have other options. The reality for most is quite different. Some drain assets, such as their retirement accounts, that could have been protected from creditors in bankruptcy. People throw good money after bad until they have no money left to seek relief.
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Should I File For Bankruptcy
The first step to declaring bankruptcy in Canada is recognizing and assessing your financial situation. Filing for personal bankruptcy starts with understanding your debt situation. The sooner you can accept your financial struggles, the sooner you can begin your bankruptcy claim. If you have been wondering whether or not you should file for bankruptcy, here are a few signs that you might need to consider taking this step:
- Your credit cards are always at their limit;
- You are paying bills with your credit cards or cash advances;
- You continually fail to make one or more important payment each month;
- You have received letters threatening legal action against you in order to collect money owed
- Loss of income in the household means there is no money to pay the debts;
- You are making the payments but the debt isnt going anywhere and its too much to maintain;
- You are credit reliant the cost of the debt is so high there is no money left for everyday expenses so you need use your credit cards to buy gas and groceries;
- You are overwhelmed and stressed out about your finances and its affecting your sleep and personal wellness; and,
- You have reached the borrowing limit and your bank will not provide you any further financial assistance.
Make sure all of your questions and concerns are addressedbefore deciding if bankruptcy is the right choice.
If any of those apply to your current debt situation, declaring personal bankruptcy may be the right choice to make.
Think Of Your Financial Future
Do you want to own a home or a car in the future? Or go back to school? After filing for bankruptcy, focusing on your financial future, including these types of life goals, can help you stick to a budget and remain motivated to continue funding your savings.
Making good decisions about finances and managing cash flow is the best way to secure your financial future, says Tayne.
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Who Should Wait To File
Certain activities can complicate a Chapter 7 bankruptcy and waiting a little bit of time can help. If you’re still relying on your credit cards to make ends meet or you’ve made large purchases in the last 6 months, then it’s best to wait to file and pay off your most recent charges first.
If you paid back or transferred property to a family member or friend in the last year, then itâs best to wait to file, if you can. You have to disclose these activities in your bankruptcy paperwork and your trustee will ask you about them.
If you’re suing someone or planning to sue someone, then itâs best to hold off on filing bankruptcy until you know the final outcome of that case, if possible. People often delay Chapter 7 bankruptcy if theyâre expecting a personal injury settlement.
Also, if you owe your landlord money and you don’t plan to move, try to catch up on missed rent payments before filing. The same generally goes for car loans, if you want to keep the car.
Finally, if you expect your financial situation to get worse, then you may want to delay your filing. You can only file Chapter 7 bankruptcy once in an 8 year period, so you donât want to file if you know that youâre going to fall into more debt.
How To Assess Your Financial Situation
Here are a few questions to help you assess your financial danger zone:
- Do you only make minimum payments on your credit cards?
- Are bill collectors calling you?
- Does the thought of sorting out your finances make you feel scared or out of control?
- Do you use credit cards to pay for necessities?
- Are you considering debt consolidation?
- Are you unsure how much you actually owe?
If you answered yes to two or more of the questions above, you at least want to give your financial situation a little more thought. Simply put, bankruptcy is when you owe more than you can afford to pay.
To determine where you are financially, inventory all of your liquid assets. Don’t forget to include retirement funds, stocks, bonds, real estate, vehicles, college savings accounts, and other non-bank account funds. Add up a rough estimate for each item.
Then, collect and add up your bills and credit statements. If the value of your assets is less than the amount of debt you owe, declaring bankruptcy may be one way out of a sticky financial situation. However, bankruptcy shouldn’t be approached casually. After all, it’s not a simple, easy cure-all for out-of-control debt.
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Attend Your 341 Meeting
Your 341 meeting, or meeting of creditors, will take place about a month after your bankruptcy case is filed. Youâll find the date, time, and location of your 341 meeting on the notice youâll get from the court a few days after filing bankruptcy. Due to the COVID-19 pandemic, all 341 meetings are held either by video conference or via telephone until at least October.
The main purpose of the 341 meeting is for the case trustee to verify your identity and ask you certain standard questions and most last only about 5 minutes. Your creditors are allowed to attend and ask you questions about your financial situation, but they almost never do.
ââ You must bring your government-issued ID and social security card to the meeting. If you donât bring an approved form of both, the trustee canât verify your identity and the meeting cannot go forward. You should also bring a copy of your bankruptcy forms to the meeting, along with your last 60 days of pay stubs, your recent bank statements, and any other documents that your trustee has asked for. ââ
Start Saving Money And Build A Budget
After going through bankruptcy, the last thing you want is for history to repeat itself. To help ensure this does not happen, establish good financial habits including starting a savings account that you can access during financial emergencies and creating a budget that you use to manage your income and expenses and guide your day-to-day spending. These steps can help prevent your spending from getting out of control and reduce the chances of accumulating significant debt again.Knowing how to manage your money is an integral part of the rebuilding process, says Tayne. Prevention is the best medicine, and saving money, along with budgeting, creates healthy financial habits for your present and future.
One of the most effective ways to save money is to make doing so a habit. You can accomplish this by setting up recurring, automatic transfers to a savings account.
With every check or payment you receive, no matter the amount, deposit a certain percentage into a savings account of some type, says Sean Fox, president of Freedom Debt Relief. You should aim to save about 10 percent or more per paycheck, but select an amount that will allow you to comfortably and consistently keep making savings deposits.
Rebuilding Your Credit After Bankruptcy
As mentioned above, bankruptcy will remain on your credit report for either seven years or 10 years . That can make it difficult to obtain further credit, such as a bank loan or a conventional credit card. However, the effect of bankruptcy on your credit score will diminish over time, and your score will gradually improve if you show that you’re using credit responsibly.
One tool for doing that is a secured credit card, where you make a deposit with the issuing bank, which then becomes your credit line. By using that card judiciously and making your payments on time, you can begin to establish a fresh credit history. After a period of on-time payments, you may become eligible for a regular, non-secured credit card.
The process of rebuilding your credit and restoring your financial life can take time. But bankruptcyif you have no other viable choiceis not the end of the world.
Filing Bankruptcy As A Limited Liability Company
Operating as a limited liability company creates separation between the business entity and those involved in its operations. An LLC that files for Chapter 7 bankruptcy will result in the business assets being liquidated to resolve its debts.
Generally, the LLCs owners are not personally responsible for business debts unless, as with limited partners, the owners have personally guaranteed any of those debts. In that event, the owners may have to file personal bankruptcy to avoid their liability.
LLCs that simply have hit a rough patch and foresee a viable way forward also have the option of filing for reorganization under Chapter 11 bankruptcy. Once affordable only for large corporations, the Small Business Reorganization Act, which became effective in February, simplifies and streamlines Chapter 11 for small businesses. Check with an attorney for details.
Already, however, Congress response to COVID-19 has altered some SBRAs provisions. Among other important changes, the March 27; CARES Act raised the ceiling for new cases filed between March 28, 2020 and March 27, 2021, to $7,500,000 from $2,725,625.
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