Are you facing financial difficulties that seem insurmountable? Bankruptcy might be the best option to help reorganize your finances and to get you back on track. In the United States, bankruptcy is a legal process governed by federal law and regulated by the United States Bankruptcy Code. In Arizona, the bankruptcy process is similar to other states, but there are many differences and nuances that are statutory in nature that deal with your property, any exemptions you may claim in the bankruptcy arena to keep that property, among other important considerations. It is not a process you should go through on your own, nor is it one you should entrust to a bankruptcy document preparer (typically a paralegal who charges only a nominal doc prep fee, and then leaves you to file and represent yourself, since he/she is unlicensed to do so). It is important to understand the different options and steps involved in the bankruptcy process and get the help you need to get a fresh financial start. For those individuals or businesses that are considering whether bankruptcy is the best option for them, here are some key details to help with navigating the bankruptcy process.
Consideration Before Starting the Bankruptcy Process
Before starting the bankruptcy process, it is important to understand the different types of bankruptcy available. The two main types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is a liquidation bankruptcy, which means that most of the individual’s or business’s non-exempt (see above) assets are sold to pay creditors, following which the court approves a discharge of the remaining qualifying debt. It is important to note that certain types of debt are non-dischargeable, such as certain types of government backed student loan debt, child support obligations, or judgments for damages caused by intentional torts, like assault and battery for example. Chapter 13 is a reorganization bankruptcy, which allows individuals to restructure their debts and to pay a percentage of them off over time, following which the court approves a discharge from the remaining obligations.
Once you have worked with a bankruptcy lawyer to determine that bankruptcy is the best option and the type of bankruptcy protection you qualify to file for, Chapter 7 or 13, you will need to get all the required paperwork in order, including the petition, schedules, and statement of financial affairs. It is important that these forms are completed correctly and accurately with all the required financial records and data in support to ensure a smooth bankruptcy process. You will need to review the paperwork carefully and make sure that all information is accurate and up to date. This is one of the main reasons you should not attempt to navigate the bankruptcy process without the representation of an experienced bankruptcy lawyer.
After filing the required paperwork, a creditors meeting will be scheduled and you will appear at the Bankruptcy Court for the meeting that will be conducted by a court appointed Bankruptcy Trustee. During this meeting, the creditors and the trustee will be able to ask questions about the individual’s or business’s debts, finances and financial obligations. And, the individual or business will be required to provide proof of income and they may also be asked to provide additional information on their ability to make payments, among other things. This is another important reason why you should have an experienced bankruptcy lawyer present and representing you during the creditor’s meeting, who can advise you on how to strategically answer any questions the creditors or the bankruptcy trustee who is conducting the meeting might have.
Once the creditors meeting is complete, the individual or business may also be required to submit additional documentation to the court, which may include a repayment plan, if filing for Chapter 13 bankruptcy. Having all these details organized and accessible will definitely improve the likelihood your plan will be approved. The repayment plan must be approved by the court and creditors before it can take effect. After approval, the individual or business must make regular payments to the court-appointed trustee in order to pay off their debts.
Similarly, if filing for Chapter 7 bankruptcy, the individual or business must attend a 341 meeting of creditors. At this meeting, creditors and/or the trustee assigned to the case will typically ask questions about the individual’s or business’s finances. The trustee will also review any assets and determine whether they are eligible for protection and to what extent they are exempt from liquidation to pay creditors.
Once all outstanding debts have either been paid down to the extent required pursuant to a Chapter 13 Plan and/or fully-administered in a Chapter 7 proceeding, the individual or business can receive a discharge in bankruptcy on any remaining obligations. This discharge will release them from all debts that were included in their bankruptcy filing and allow them to begin rebuilding their credit again.
The bankruptcy process can be complex and time-consuming, but it is important to understand all steps involved before beginning. With careful planning and proper guidance from an experienced bankruptcy lawyer, individuals and businesses can use bankruptcy to get back on track financially.
Types of Bankruptcy in Arizona
When considering bankruptcy in Arizona, it is important to understand the different types of bankruptcy available and which type is right for you. Chapter 7 bankruptcy is the most common type of bankruptcy in Arizona. It is commonly known as a “liquidation” bankruptcy. It is designed to help individuals erase their debt and start fresh. This type of bankruptcy involves selling non-exempt assets to pay off creditors. Chapter 13 bankruptcy is the other type of consumer bankruptcy available in Arizona. This type of bankruptcy is known as a “reorganization” bankruptcy. It allows individuals to restructure their debt and pay it off over a three to five year period.
Chapter 11 bankruptcy is also an option for businesses who are looking to restructure their debt. This type of bankruptcy enables corporations to restructure and settle their liabilities in a more feasible fashion. It is imperative to understand that each type of bankruptcy has distinct prerequisites and implications. Working with an experienced bankruptcy lawyer is essential to make sure your company has chosen the best approach, type of bankruptcy, and a plan that is likely to be approved.
Filing for Bankruptcy in Arizona
Navigating the bankruptcy process in Arizona can be a daunting task for anyone unfamiliar with the process. That is why it is important to understand the steps to filing for bankruptcy in Arizona, the documents that are required, and the costs associated with bankruptcy. The first step to filing for bankruptcy in Arizona is to determine if you meet the state’s eligibility requirements. You must have an Arizona address and have resided in Arizona for at least 90 days prior to filing for bankruptcy. Additionally, you must also complete a credit counseling course prior to filing for bankruptcy. The next step is to gather all the documents required for filing for bankruptcy. These documents include your credit report, proof of income, a list of assets, a list of liabilities and creditors, proof of payment of filing fees, and any other documents the court requires. You will also need to complete the bankruptcy petition and statements and schedules, which will need to be filed with the court. The last step is to pay the filing fees associated with the bankruptcy process. In Arizona, the filing fee for a chapter 7 bankruptcy is $335 and the filing fee for a chapter 13 bankruptcy is $310. Additionally, you will also be required to pay a $15 administrative fee. Although the process of filing for bankruptcy in Arizona can be a long and complicated one, understanding the steps to filing as well as organizing and preparing the required documents and costs associated can help make the process easier. This is where an experienced bankruptcy attorney can really help you and alleviate the stress and pressure that invariably comes with filing for bankruptcy protection.
Bankruptcy Alternatives in Arizona
Navigating the bankruptcy process in Arizona can be an overwhelming task, but with the right guidance, it can be done. Before considering bankruptcy, there are a few alternatives that should be explored first. Debt consolidation is a popular alternative to filing for bankruptcy, which involves taking out a loan to pay off all of your debts. In a previous article, we detailed some of the major considerations when exploring debt consolidation versus bankruptcy. Debt consolidation loans generally offer a lower interest rate than the individual debts you currently have on credit cards and other types of revolving credit lines, rendering it a more cost-effective solution than paying them off individually in small increments over an extended period of time. Many credit cards and other debt types only require minimum monthly payments that may not even cover the interest accruing on your debt, so that if you only make those minimum payments, you may never pay off the debt. Debt settlement is a more involving and labor intensive alternative, wherein one negotiates with creditors to pay a fraction of the debt and have the remaining amount pardoned. We have the resources to assist with that process if desired and can help with the stress of negotiating with your creditors for settlement if bankruptcy or obtaining a debt consolidation loan are not available as options for you. Credit counseling is an additional choice, which entails collaborating with a credit counselor to devise a debt payment plan that is suitable for both the debtor and the creditors. All of these alternatives should be explored before considering bankruptcy, as they may be the best route for you depending on your individual situation.
Work with an Experienced Bankruptcy Lawyer
Navigating the bankruptcy process in Arizona is no easy feat and requires a lot of preparation and dedication. While it can be a stressful process, understanding the steps and working with an experienced attorney can make things go much more smoothly. The first step is to determine which type of bankruptcy is the best fit for your particular situation, whether it be Chapter 7, Chapter 11, or Chapter 13. Once you have made this determination, you will need to file a petition with the bankruptcy court in Arizona and supply them with documents such as tax returns, bank records and other debt and financial statements from creditors and the like. After the filing process is complete, you will need to attend a creditors’ meeting and take a credit counseling course. After the creditors’ meeting, you will need to prepare and submit a repayment plan to the court for review and approval if proceeding under either Chapter 11 or 13. Once the repayment plan is approved, you will be able to start making payments and the process of discharging your debts will begin.
While the bankruptcy process in Arizona can be a lengthy one, it is also an incredibly rewarding experience. Going through the process will allow you to rid yourself of the debt that binds you, and have a fresh start. You won’t be burdened by debt anymore and can begin to reconstruct your credit. The process can be time-consuming and there is an expense element to it for the representation, and the bankruptcy filing will stay on your credit report for seven to ten years. You should also understand that not all debts can be eliminated, like student loans and some taxes, among other things. Ultimately, bankruptcy should be seen as a last resort, and you should speak with an experienced attorney to make sure it is the right choice for you.
If you or your company are struggling with debt and looking for a way to get back on track, the experienced attorneys at RSN Law are here to help you explore all of your options and create a path to a brighter financial future. We can provide you with the advice you need to determine if debt negotiation, consolidation or bankruptcy protection is the best choice for your situation, and which chapter you may qualify for relief under. Don’t let debt hold you back any longer – let us help you get back on track! Contact us today at 480-712-0035 to schedule an appointment with our bankruptcy attorneys or make an appointment on the contact us page of our website.
RSN Law intends this article to be for informational purposes, not to be relied on a specific legal matter, and does not create an attorney-client relationship.