STEP ONE: GATHERING INFORMATION AND EDUCATING YOURSELF
A Chapter 7 bankruptcy in Arizona usually begins by you attempting to get as much information as possible about bankruptcy in Arizona, whether it is by searching the internet, purchasing the forms or a book about bankruptcy from your local bookstore, or meeting with an Arizona bankruptcy attorney. The more informed you are about bankruptcy in Arizona, the less stressed and panicked you will be about your situation and what is to happen over the next six months.
A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
Most individuals usually end up becoming frustrated with the complex nature of the new laws. Prior to October of 2005, many bankruptcies in Arizona were filed without the help of an attorney. Many people still choose to file their bankruptcy case on their own, or by using an inexpensive document preparer. However, many bankruptcies filed without the help of an attorney get dismissed due to the complexity of the new law.
Today, it is usually in your best interest to meet with an experienced Arizona bankruptcy attorney before making any decisions about your situation. Our bankruptcy attorneys will provide you with a free initial consultation to determine if bankruptcy is an option. Our experienced bankruptcy attorneys can help you navigate the difficult decision to file Bankruptcy in Arizona.
STEP TWO: CONSUMER COUNSELING
Once you have decided to file Bankruptcy in Arizona, you must then complete a two-hour credit counseling session that generally costs about $50. A list of approved credit counseling firms can be found at the United States Department of Justice website.
This counseling must be completed before your case can be filed. If you fail to complete the counseling, your case could be dismissed.
STEP THREE: FILLING OUT YOUR BANKRUPTCY SCHEDULES AND STATEMENTS
At this step in the bankruptcy process, you must begin filling out your bankruptcy schedules and statements. These documents are required, and provide the Arizona Bankruptcy Court with a look into your current financial status. You are required by law to provide the Bankruptcy Court with information about your assets, debts, your current income and monthly expenses, and summary of your financial transactions before you filed your case.
If you have hired Davis Miles, we will fill out these documents for you. You will need simply to fill out a bankruptcy questionnaire that provides us with the necessary information to complete your bankruptcy schedules and statements. We will take the information you provide and prepare your documents in the format the Court requires. We will also be able to discuss with you anything that we believe may complicate your bankruptcy, before your case is filed.
STEP FOUR: FILING YOUR BANKRUPTCY CASE WITH THE ARIZONA BANKRUPTCY COURT
Once you have completed your bankruptcy schedules and statements, they must be filed with the Arizona Bankruptcy Court. For Chapter 7, the Bankruptcy Court requires a $299.00 filing fee. For Chapter 13, the Bankruptcy Court requires a $274.00 filing fee. In some rare circumstances, individuals who cannot afford the filing fee can apply for a waiver or permission to pay this fee in installments.
Once your case is filed with the Arizona Bankruptcy Court, you will be given a case number. This number is very important because it is the number that you can provide your creditors to stop harassing you.
The moment you file your case, an invisible shield surrounds you. This invisible shield is called the “automatic stay.” This shield prevents your creditors from attempting to collect on your debts. This means your creditors cannot call you, write to you, garnish your wages, repossess your vehicles or furniture, or foreclose on your home without violating the law.
STEP FIVE: YOUR BANKRUPTCY HEARING
Once your case is filed, a hearing date is automatically set for your bankruptcy case. You are required to attend this hearing. If you fail to attend, your bankruptcy could be dismissed. This hearing is called the Section 341 Meeting of Creditors. It gets this name based upon the section of the Bankruptcy code that requires it. These hearings are held at several locations around Arizona, depending on which county you live in.
Every bankruptcy case is assigned a Bankruptcy Trustee. These individuals are responsible for shepherding your case through the Bankruptcy Court, and making sure that your creditors are treated fairly.
The bankruptcy trustee in Arizona handles your hearing. There is no judge present. The trustee will ask you a set of 10 to 15 questions regarding the documents you filed with the court. These questions are usually fairly simple.
Generally, most of our clients are pleasantly surprised at how quick and stress-free this hearing is.
STEP SIX: WAIT
Once your 341 hearing is completed, you must then wait to see if your creditors will object to your bankruptcy filing, or if the bankruptcy trustee in Arizona has any other questions about your assets.
Most individuals who file an Arizona bankruptcy case never meet the Judge responsible for their case. However, there are some instances where a person may have to appear before the judge. These include issues related to your income, and whether you are eligible for a Chapter 7 or a Chapter 13. A creditor may object to your right to file a Chapter 7, or your ability to eliminate their debt in an Arizona Bankruptcy.
In most cases, people who file Chapter 7 Bankruptcy generally wait 60-90 days after their hearing date before they get their Discharge from the Arizona Bankruptcy Court. A Chapter 13 Discharge cannot be entered until the end of the 3 to 5 years, after all payments have been made.
STEP SEVEN: DISCHARGE
The ultimate goal of a Chapter 7 bankruptcy in Arizona is to obtain a bankruptcy discharge. This discharge eliminates your financial obligation to pay on most unsecured debt. Debts like credit cards, medical bills, payday loans, charge offs, and collection accounts are generally eliminated in an Arizona bankruptcy case. This provides individuals with a fresh start.
However, there are some debts that cannot be eliminated in a Chapter 7 bankruptcy. These include recent back taxes, child support and alimony, student loans, debts related to personal injuries or death from drunk driving (?), and court imposed fines.
Secured creditors – like your mortgage on your home, or the loan on your car – can either be surrendered or reaffirmed. If you wish to keep your home or car, and do not wish to surrender them back to the creditor, you must sign a reaffirmation agreement.
By reaffirming the debt, you are essentially agreeing to a brand new debt with the creditor that has the same terms as your old debt. This debt will survive the bankruptcy, and you must continue making the payments on the home or the car. If you fail to do so the creditor can foreclose, or repossess the car. You must also be current on the loan to sign a reaffirmation agreement.
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