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Tips For Declaring Bankruptcy In Arizona In 2025

Despite seeming to pass instantly and last way too long at the same time, 2024 has drawn to a close and the new year is upon us. As every issue that has been plaguing our country for generations comes to a head, Americans also face a cost-of-living crisis that can quickly create serious financial problems. More people than ever live paycheck to paycheck. All it takes is one unexpected medical bill, fender bender, being the victim of a low-level crime, or even simple bad luck for a person to begin accruing debt that becomes almost irreversible. At this point, creditors can take actions that will make it harder and harder for the debtor to regain control of their financial situation. If the creditor pursues a wage garnishment, they can automatically take a quarter of the debtor’s paycheck until the debt is repaid, which can cause them to fall behind on other bills. If the creditor repossesses the debtor’s vehicle, they could lose their job, fail their classes, etc. This is a vulnerable position to be in, and some companies will take advantage of this fact by selling debt relief options that only increase debt when bankruptcy is a more effective option.

Want to pause the clock on creditors and potentially clear debts in one fell swoop? Our Arizona bankruptcy firm offers skilled representation with flexible payment plan options. You can learn more about the process of declaring bankruptcy with our firm with a risk-free phone consultation. Schedule your free consultation today at 480-470-1504.

Understand How Your Bankruptcy Timing Could Affect Your Tax Refund

If your budget is tight, a few hundred or even thousand dollars from a tax refund could be a huge deal for you and your family. Receiving your tax refund could help you afford expenses like vehicle maintenance and repairs, medical checkups and treatments, and other basics necessary for a comfortable standard of living. But you should also be aware of what could happen to your tax refund if you declare bankruptcy.

Arizona does not have an exemption that bankruptcy debtors can specifically use to protect their tax refunds. It also doesn’t offer a wildcard exemption that the debtor can use on any asset of their selection, nor does it allow debtors to use the federal exemptions, which offer a wildcard exemption. The trustee has authority to take a certain percentage of a debtor’s post-bankruptcy tax refund- this is how the trustee gets paid. The amount the trustee can take depends on the month of the year in which the bankruptcy petition was filed. So hypothetically, if a debtor filed their bankruptcy in January, the trustee could take 1/12, but if the debtor filed their case in July, the trustee could take 7/12. A debtor anticipating their tax refund may want to file their case as early as possible to reduce how much can be taken by the trustee. Another option would be to wait until receiving and spending the tax refund (on reasonable purchases) before filing for bankruptcy. For tips on which types of purchases to make to spend your tax refund before filing for bankruptcy in Arizona, call 480-470-1504 for your free consultation with our firm.

Prepare To Lose Your Credit Cards And Avoid Certain Pre-Bankruptcy Credit Card Spending

Many people considering filing for bankruptcy don’t realize that it doesn’t only clear their credit card debts, but the ability to use credit cards in general until the case is complete. A bankruptcy debtor loses all of their credit cards upon filing for bankruptcy, regardless if they were current on their monthly bill. There is no picking and choosing which debts are cleared and which can stay. If you have points and other benefits saved up, you should use them to your benefit as much as possible before filing your petition. You can apply for new credit cards- carefully- after your case has been discharged. This is approximately 3-6 months for chapter 7 debtors, and 3 or 5 years for chapter 13 debtors.

A bankruptcy filing at the start of the year means that your holiday spending might affect the dischargeability of your credit card debts. Your bankruptcy trustee will be reviewing your credit card statements for luxury purchases and cash advances. These are valuable assets not considered necessary to daily living that theoretically could be contributed to pay off your bankruptcy debts. And if your credit card statements reflect recent cash advances, this could create suspicion that you have a stash of cash at home that isn’t protected by exemptions. Avoid cash advances of more than $1,100 in the 70-day period before filing your bankruptcy petition. You should also avoid luxury purchases exceeding $850 in the 90-day period before your filing. Luxury purchases are those not necessary to maintain a reasonable standard of living, which can sometimes mean choosing designer brands over generic for items that are otherwise necessary. Surpassing these restrictions can result in you remaining liable for these debts after your bankruptcy discharge. It can also draw stricter scrutiny to other issues in your bankruptcy petition. Learn more about credit card spending while preparing for bankruptcy by scheduling your free consultation with our firm- call 480-470-1504 to get started.

Don’t Make Preferential Payments And Transfers

If you believe that you will be filing for bankruptcy in the new year, now is not the time to repay friends and family in favor of your other creditors or transfer valuable assets to them that could be lost if you file. Sometimes, potential bankruptcy filers come to us with the idea of transferring a second vehicle that isn’t protected by Arizona’s bankruptcy exemption to a sibling or friend. Lawmakers didn’t miss these types of potential loopholes when writing the Bankruptcy Code. The trustee assigned to your case will be reviewing your financial information to make sure that you didn’t make any such transfers in preparation for your bankruptcy filing. If the trustee catches these kinds of transfers, they have the authority to “claw back” payments and transfers, or you could be left to compensate your bankruptcy estate for that amount. This can be embarrassing and awkward at a minimum, or even be fatal to your bankruptcy case. If you have concerns about transfers and preferential payments before an Arizona bankruptcy filing, call 480-470-1504 for your free consultation.

Prepare For A 2025 Bankruptcy Filing With Our Arizona Bankruptcy Team

Many people already view the new year as a fresh start, and this will only become more true if you discharge your debts through bankruptcy. You should always take advantage of time to prepare if you foresee a legal matter on your horizon. Although special filings are available for emergencies, thoroughly planning your bankruptcy is the best way to avoid issues throughout your case. Get the most out of your bankruptcy filing and make 2025 the year of your best financial decisions yet. Want to learn more about Arizona bankruptcy law, changes coming in 2025, and everything else you need to know to make your case run smoothly? Learn more about your Arizona bankruptcy options with your free consultation with your free consultation at 480-470-1504.

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