Debt Relief – Zero Down Gilbert Bankruptcy Lawyers – Bankruptcy Attorneys in Gilbert, Arizona
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CHAPTER 7 BANKRUPTCY FAQs
Frequently Asked Questions About Chapter 7 Bankruptcy
Our Gilbert Chapter 7 Bankruptcy Lawyers answer frequently asked questions regarding Chapter 7 bankruptcy, filing for bankruptcy protection in Gilbert, Arizona, and seeking debt relief assistance in Gilbert.
As the coronavirus pandemic continues to impact people in Gilbert, Maricopa County, and throughout Arizona; with no end in sight, more and more people rely on credit cards and other forms of personal debt to make ends meet. Unemployment rates in Arizona have reached rates unseen since the Great Depression. Therefore, with millions of American families relying on unemployment assistance and stimulus checks provided by the CARES Act. Some of these people may have not previously qualified for Chapter 7 bankruptcy, but now do due to a sharp decrease in income. Once CARES Act benefits, as well as eviction moratoriums, and other protections meant to mitigate the pandemic’s effects, expire, bankruptcy may be a viable option for people in Gilbert and throughout Arizona. For additional information, call our Gilbert bankruptcy office today at (602) 598-5099.
It is a common misconception that anyone who has a job only has Chapter 13, also known as a wage earner’s bankruptcy, available to them. However, there are two methods to qualify for Chapter 7 based on income: through the state median income level, and through the Means Test.
As of 2020, the median household income for a family of one in Arizona is $52,319. That amount increases to $65,713 for a family of two, $71,704 for a family of three, $86,950 for a family of four, and so on. Only spouses and children under 18 are included for purposes of family size. If you and your spouse’s combined income is lower than the corresponding median income, you will qualify for Chapter 7.
The first step of the Means Test is to calculate your (and your spouse’s, if applicable) average income in the six months before your bankruptcy is filed. You will then deduct certain mandatory expenses from your averaged income. If that number is negative, or below a certain threshold based on your family size, you pass the means test and are income-eligible for Chapter 7.
Unemployment benefits count as income for the purpose of determining your income eligibility for Chapter 7, but your unemployment benefits may not be taken from you by your bankruptcy trustee. For additional information call our Gilbert bankruptcy office today at (602) 598-5099.
Social security benefits are exempt from Chapter 7 bankruptcy in Gilbert and aren’t included for the purposes of calculating income. A bank account that is only funded by social security benefits is also exempt in bankruptcy.
Many of our married clients contemplate whether or not they should file a joint petition with their spouses, or proceed with an individual Chapter 7 bankruptcy. You should consult with a bankruptcy attorney before making this decision, especially if you and your spouse have ever resided in a community property state. Your spouse could be held liable for debts that you acquired during the marriage, even if they were in your name alone. If the debts are only discharged as to your name, these creditors could pursue your spouse if you ever were to divorce.
In some situations, you may have the option to file either Chapter 7 or Chapter 13. Chapter 13 may be advantageous if you are behind on payments that are either non-dischargeable or for an asset you wish to keep. For example, child support arrearages aren’t dischargeable in bankruptcy. If you are behind on payments, filing a Chapter 13 bankruptcy in Gilbert may provide a more feasible path to become current while protecting you from collection by your creditors. Or, you may be facing foreclosure on a home your family wishes to keep.
Conversely, a Chapter 7 bankruptcy will only pause a home foreclosure for the few months that the bankruptcy is active, and will resume once your case is discharged if you haven’t become current. Your past-due balance will be spread out in monthly payments over 3-5 years if you choose to resolve it through Chapter 13.
Everyone who files Chapter 7 bankruptcy in Gilbert must attend a hearing known as a 341 Meeting of Creditors. Therefore, your trustee will be there to ask you questions about your petition, and your creditors have the option to attend and ask questions as well. Also, these 341 hearings are typically quite brief- five or six people may be scheduled within a 30 minute period on each Bankruptcy Trustee’s docket.
Most Chapter 7 bankruptcy petitioners are able to complete their case within 4-6 months. Your 341 Meeting of Creditors is typically held 30-45 days after your petition is filed, and your case will be eligible for discharge 60 days after that hearing. However, your Gilbert bankruptcy case could take longer if you fail to comply with trustee requests or you miss your 341 Meeting of Creditors. Thus, the process can also be slowed down by external factors, such as upended court procedures due to a pandemic.
You will be required to take two credit counseling courses as a part of Chapter 7 bankruptcy- one before you file, and one after your 341 Meeting of Creditors. Plus, the credit courses can be taken online, and generally include a brief phone call with a counselor at the end. You will have 60 days after your 341 Meeting of Creditors to take your second course. Each course will cost you around $15-30, and should take you about an hour to complete.
Your credit cards will be frozen during your bankruptcy by the Automatic Stay. You will likely begin receiving offers for new credit cards once your case has been discharged. Chances are better than not that your current credit cards will close your accounts. However, there are many credit card companies out there that will be eager to work with you after your bankruptcy filing. Additionally, our experienced Gilbert Bankruptcy Attorneys will be ready and willing to assist you with credit questions after filing for bankruptcy.
The Automatic Stay is a legal provision that goes into effect once your bankruptcy petition is filed. Keep in mind, the Automatic Stay does more than just freeze your credit cards- it also stops your creditors from repossessing your house and vehicle, and from garnishing your wages and bank accounts.
Plus, the Automatic Stay can also prevent evictions and utility shutoffs. The Stay remains effective until your case is either discharged or dismissed. However, your creditors can file a Motion for Relief from the Automatic Stay to request court permission to proceed with collection in spite of your active bankruptcy. It is also vital that your creditor mailing matrix is accurate so that all of your creditors are notified that the Automatic Stay is in place.
Many forms of property have corresponding exemptions, or asset equity limits for people who file Chapter 7 bankruptcy. Retirement accounts such as 401(k)’s and IRA’s are usually exempt in Chapter 7 bankruptcy. The homestead exemption in Arizona is $150,000. A single filer in Gilbert, Arizona may have a vehicle with up to $6,000 equity, and married filers may either have one car with $12,000 equity or two vehicles with up to $6,000 equity each.
To learn more about the exemptions that an Arizona Chapter 7 Bankruptcy provides, call our Gilbert bankruptcy office today at(602) 598-5099.
If you see headlines of a company declaring bankruptcy, chances are that they used Chapter 11. There are special provisions for small businesses in Chapter 11, but Chapter 7 may be a better option for some small business owners. Your unsecured debts will be discharged, but the business must cease operations permanently. You can, however, start a business under a new name after your case is discharged. This works best when the business is small, doesn’t heavily rely on its exact name, and the equipment required for its operation is inexpensive.
Filing Chapter 11 without an attorney is basically unheard of, and less than one percent of Chapter 13 bankruptcies that are filed pro se, or self-represented, are successfully discharged. However, approximately two thirds of Chapter 7 bankruptcies filed without an attorney are discharged. If you are willing to take on that significant risk, your case is simple, and you have a legal background, you may be able to get by self-represented or with the assistance of a document preparer. Otherwise, a qualified bankruptcy attorney can make sure your case runs quickly and smoothly, and that all your assets are protected.
Many bankruptcy attorneys require you pay both their legal fees and your court filing fees in full before your case is filed. For those struggling with debt, and especially those with a wage garnishment, this can be simply impossible. That’s why our Gilbert bankruptcy attorneys offer Zero Down Payment Plans for our qualified Chapter 7 bankruptcy clients. To learn more about the process and what your payments would be, call today for your free co