Can I keep my car if I file for bankruptcy?
Can I keep my house if I file for bankruptcy?
Do I have to hire a lawyer to file for bankruptcy?
What are priority debts?
What are secured debts?
What is Bankruptcy?
When will all the collection calls stop?
Will I lose all of my stuff if I file for bankruptcy?
How do I know if I am eligible for Chapter 7?
How do I know if I am eligible for Chapter 13?
Q: Can I keep my car if I file for bankruptcy?
A: Are you current with your car payment? Is your monthly car payment affordable? Do you have less than $6,000.00 in equity? If the answer to all of these questions is YES, then absolutely you can keep your car. However, if you are not current with your car payment, and/or it is not a payment you can afford, then the most important question is whether it makes sense to keep the car, or take advantage of the protections of the Bankruptcy Code and surrender the vehicle to the lender.
Q: Can I keep my house if I file for bankruptcy?
A: Are you current with your mortgage? Is your monthly mortgage payment affordable? Do you have less than $150,000.00 in equity? If the answer to all of these questions is YES, then absolutely you can keep your house. However, if you are not current with your mortgage payment, and/or it is not a payment you can afford, then whether or not keeping the house is possible first turns on whether it makes sense to keep the house, and if so, whether you can fund a Chapter 13 Plan that will bring your mortgage current over the next 5 years.
Q: Do I have to hire a lawyer to file for bankruptcy?
A: That is a fair question, and we would like to give you a fair, and straightforward answer. You should hire a knowledgeable bankruptcy attorney in Mesa Arizona to represent you through the bankruptcy process because even though it is possible to represent yourself in a bankruptcy, the chances of you doing something wrong – not on purpose, but simply because you don’t know any better – are very, very high, and that can in turn lead to a dismissal of your bankruptcy, loss of property that could have been protected with some pre-bankruptcy planning, the denial of your discharge, and well… lots of things that won’t really make your life easier can happen when something gets messed up.
It is true, our system was set up so that no one needs an attorney – everyone has the right to represent themselves in court. However, it is also true that this system was created back in the day when a breach of contract action was one guys saying ‘He sold me broken goods and here are my witnesses’ and the other guy says ‘nu-uh… here is the product, it’s not broken’ and so on. Somewhere in between that time, and the current time, Congress drafted a bankruptcy code that is not only overly long, but also includes sentences like this:
“Property listed in this paragraph is (A) subject to subsections (o) and (p), any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition at the place in which the debtor’s domicile has been located for the 730 days immediately preceding the date of the filing of the petition or if the debtor’s domicile has not been located at a single State for such 730-day period, the place in which the debtor’s domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place;” 11 U.S.C. § 522(a)(3).
And believe it or not, understanding this particular section can make the difference between being able to keep that house you own free and clear, or not…
So, between Congress employing a writing style that can only be described as convoluted, and the Courts all making their own interpretations of what it really means, filing for bankruptcy has become quite complicated. There are constantly new opinions issued by the court in order to ‘clarify’ the code, and lay out the rules for us mere mortals, and this is exactly why having a competent, knowledgeable attorney on your side is more important than ever.
As far as your hard-earned money is concerned…. well, just keep in mind that we too have to earn our money, and always remember that the money, assets, stress, trouble, worries, and frustrations that we will be able to save you will in the end be worth it.
Q: What are priority debts?
A: Priority debts are unsecured debts that are entitled to be paid ahead of other unsecured debts that are not entitled to priority status. Priority refers to the order in which these unsecured claims are to be paid. Priority debts are often non-dischargeable. Examples are domestic support obligations such as child support and debts owed to governmental units, such as taxes.
Q: What is Bankruptcy?
A: Bankruptcy is a federal process created by Congress with the goal of giving debtors a financial “fresh start” from burdensome debts. The Supreme Court articulated the purpose of the bankruptcy laws in a 1934 opinion as follows: “[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).
Bankruptcy laws help people who can no longer pay their creditors get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. Most cases are filed under the three main chapters of the Bankruptcy Code – Chapter 7, Chapter 11 and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court. (Source: www.uscourts.gov/FederalCourts/Bankruptcy.aspx)
Q: When will all the collection calls stop?
A: The moment your bankruptcy petition is filed with the Court, the automatic stay – an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the you – goes into effect protecting you from all future collection activities.
Q: Will I lose all of my stuff if I file for bankruptcy?
A: Absolutely not! The laws are designed to allow you – the debtor – to keep those things that everyone should have in order to continue being a productive member of society. Things like clothing, household goods and furniture, even vehicles with equity up to $6,000.00 and a home with equity of up to $150,000. On the other hand, there are certain assets that are not protected and can/will be liquidated for the benefit of your creditors. Going through an asset analysis with an attorney will allow you to go into the case knowing what you may “lose” and how the process would work.
Chapter 7 Bankruptcy
Q: How do I know if I am eligible for Chapter 7?
A: With the 2005 Amendments to the Bankruptcy Code, filing for Chapter 7 bankruptcy in Mesa became a little more restrictive. Essentially – you cannot make too much money to qualify for Chapter 7. The first step is to determine whether you are above the median household income for a household of your size in your state. If you are, then the inquiry turns to whether you have any disposable income left after deducting certain expenses from your gross monthly income. This is known as the means test.
Chapter 13 Bankruptcy
Q: How do I know if I am eligible for Chapter 13?
A: Pursuant to 11 U.S.C. § 109(e), any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $383,175 and secured debts are less than $1,149,525. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.
That’s the legal requirement for ‘eligibility’. The next step of the inquiry is whether Chapter 13 bankruptcy in Mesa Arizona makes sense for you. Can you propose a plan that accomplishes your goals and leaves you with a realistic budget to meet your monthly living expenses. This part is a little harder to figure out, and that is where having a knowledgeable and caring attorney can make all the difference.