Most personal bankruptcies in Arizona are Chapter 7 liquidations and the majority of those are non-asset cases. By filing a Chapter 7 petition, you request debt relief and immediate protection from creditor lawsuits, home foreclosure, garnishment, repossession, and the like. A clean discharge of unsecured debts is the goal of this bankruptcy process. Representing a much-needed fresh start – a new lease on your financial life. Get in touch with our phoenix bankruptcy attorney today.
An Expert Phoenix Chapter 7 Bankruptcy Attorney
If you are looking to develop a plan to repay all or part of their debts, you can get in touch with a Phoenix Chapter 13 bankruptcy lawyer. However, if you are looking for “fresh start”, filing a Chapter 7 bankruptcy is right for you. Filing Chapter 7 could change everything for the better if you are struggling with consumer debt. Protection under federal bankruptcy law prevents bill collectors and creditors of every kind from demanding payment from you directly. How can that be? The moment the voluntary petition is filed with the Clerk of the Bankruptcy Court, the automatic stay injunction stops collections, garnishment, foreclosure, and lawsuits to collect on a debt.
10 Steps to Chapter 7 Bankruptcy
Step 1: Gather Documents, Account Information, and Creditor Details.
Completing the Voluntary Petition for Individuals Filing for Bankruptcy and its attending schedules and statements demands accurate personal and financial details. You will be gathering documents, files, statements, mortgage instruments, account information, deeds, legal notices, contracts, tax returns, student loans, and the like. Do your best to stay organized. Pulling names, addresses, account numbers, and amounts from multiple sources can get confusing. Use this list when ready to get started:
- Obtain your credit report from one of the three credit bureaus (Experian, Equifax, or TransUnion). You are entitled to one free credit report every 12 months.
- Write explanatory notes from memory to the best of your knowledge and belief. Give those to your Bankruptcy lawyer.
- List every single creditor – secured creditors, unsecured creditors, and priority creditors.
- Include any child support, spousal maintenance, or alimony received or paid. Give your Bankruptcy lawyer a copy of the support order, too.
- Include any co-debtors, such as your spouse or other family member.
- Provide proof of your income from every source, even if part-time or seasonal work.
- List all of your assets. Put an actual or fair market value on each item.
- You will also need copies of your income tax returns for the past two years (state and federal).
Better to assemble multiple documents regarding a single creditor than to omit something essential. Pick up a calendar as well. You want to keep close track of deadlines and important dates. To qualify for a Chapter 7 bankruptcy, the person must earn less than the state median income on a monthly basis. If they do, the debtor must submit to a “means test” that takes a look at all of their financial records. That would include all secured and unsecured debts. You could also speak with our Chapter 7 eligibility lawyer to discuss your options.
Step 2: Participate in Credit Counseling.
Credit counseling is more than a good idea, it’s required. You need to complete your credit counseling session with an approved agency sometime within the six-month period (180 days) before filing. The certificate of completion is filed with the petition, but there is an exception for deployed service members, incapacitated petitioners, and some other petitioners.
Step 3: Complete the Petition, Schedules, and Statements.
Completing the voluntary petition along with all the schedules, Statement of Intent, and Statement of Financial Affairs is neither simple nor easy. Rushing through this process will lead to mistakes. Allow yourself time. Be thorough and accurate. Along with filling in the data, you must also establish Chapter 7 eligibility by completing the Means Test.
Step 4: File the Petition.
The Chapter 7 petition is filed with the Clerk of the Bankruptcy Court at one of three locations: Phoenix, Tucson, or Yuma. (Note: Hearings are also held in Bullhead City and Flagstaff.) The filing fee is due at the same time, but you may ask to pay the fee in installments. If money is super tight, you may request a fee waiver. The automatic stay goes into effect upon filing. The court notifies your creditors of the case so each has an opportunity to submit a timely proof of claim. The §341 Meeting of Creditors is also scheduled – be sure to calendar the time and date.
Step 5: Attend the § 341 Meeting of Creditors.
As the petitioner, you must appear at the § 341 Meeting of Creditors. This is not a courtroom hearing and the judge will not be present. The trustee administers the oath to the group of debtors ordered to appear at that time slot. The trustee will ask you a few questions, but nothing surprising. A creditor could also ask you a few questions. Be sure to bring your driver’s license or state-issued I.D. card. Bring the past two years tax returns and any other documents the trustee has specifically requested. The trustee usually announces at the meeting whether you have an “asset” or “no asset” case. This is something your Bankruptcy attorney will already have advised you on.
Step 6: Automatic Stay Lifted for Secured Creditors.
A lender with a security interest or mortgage on your property will have filed a proof of claim followed by a motion requesting the court lift the automatic stay. When a lift stay motion is granted, the secured creditor is permitted to collect the collateral (such as equipment or a car) or foreclose on real estate (such as a home or land), liquidate it, and apply the proceeds to what is owed. Any post-sale balance due is unsecured and, consequently, should be discharged along with other unsecured debts. The secured creditor is only secured as to the value of the collateral or real estate. Once sold, there is no remaining secured property, only unsecured debt.
Step 7: Take the Debtor Education Course.
You must complete the Debtor Education Course before the judge will enter the discharge order. Remember to file your certificate of completion with the Clerk as proof you took the class.
Step 8: Distribution to Creditors.
There may or may not be a distribution to unsecured creditors. With a no asset case, the trustee files a report of no distribution with the court so the case can proceed to discharge.
With an asset case, the trustee liquidates non-exempt assets of value. Paying creditors pennies on the dollar, the proceeds are divided and distributed. The trustee then prepares and files a final accounting.
Step 9: Notice of Discharge.
The Notice of Discharge is sent out. Debts that arose prior to filing a proper Chapter 7 petition are extinguished by the court’s Discharge Order.
Step 10: Final Decree and Notice of Close.
With the Final Decree and Notice of Close, the main case is over and done with. On occasion, a case is reopened for cause. In this event, your Bankruptcy lawyer will explain what needs to be done and why. And guide you through the necessary proceedings.
Freeing the debtor from personal liability for unsecured debts incurred prior to filing – from medical expenses and utility bills to credit card debts and past due rent. Would life be better with the slate wiped clean of those debts? You bet!
Personal bankruptcy has its challenges. But with legal representation even the most complex case can sail through without delay or undue distress. Is bankruptcy right for you? Arrange to meet with a caring, knowledgeable Bankruptcy attorney in Phoenix who can help you decide. Click to Contact Us today!