Written by Canterbury Law Group

Filing for Bankruptcy a Second Time

Filing for bankruptcy a second time, often referred to as a repeat or multiple bankruptcy filing, is possible under certain circumstances, but it comes with additional challenges and considerations compared to a first-time filing. Here’s what you need to know:

Chapter 7 Bankruptcy

Waiting Period:

  • Eight-Year Rule: If you previously filed for Chapter 7 bankruptcy and received a discharge, you must wait eight years from the date of the first filing before you can file for Chapter 7 bankruptcy again and receive another discharge.
  • Chapter 13 to Chapter 7: If you filed for Chapter 13 bankruptcy and want to switch to Chapter 7, you typically must wait six years from the date of filing for Chapter 13.


  • Impact on Discharge: If you file for Chapter 7 bankruptcy before the eight-year waiting period elapses, you won’t receive a discharge of your debts. Instead, your case may be dismissed, and creditors can resume collection efforts.
  • Complexity of Case: The court may scrutinize your second bankruptcy filing more closely, particularly if it’s filed shortly after the first one. You may need to demonstrate a significant change in circumstances to justify the need for another bankruptcy.

Chapter 13 Bankruptcy

Waiting Period:

  • Two-Year Rule: If you previously received a discharge in a Chapter 13 bankruptcy, you must wait two years from the date of the first filing to receive another discharge in Chapter 13.
  • Four-Year Rule: If you previously received a discharge in a Chapter 7 bankruptcy, you must wait four years from the date of the Chapter 7 discharge before filing for Chapter 13 bankruptcy and receiving another discharge.


  • Modification of Repayment Plan: If you filed for Chapter 13 bankruptcy before and are seeking another discharge, the court may scrutinize your repayment plan to ensure that creditors are receiving a fair distribution of payments.
  • Increased Oversight: The court may closely monitor your compliance with the repayment plan, particularly if you’ve filed for Chapter 13 bankruptcy multiple times.

Considerations for Multiple Bankruptcy Filings

  1. Financial Management: Before considering a second bankruptcy filing, explore other options for managing your debts, such as debt consolidation, negotiation with creditors, or credit counseling.
  2. Legal Advice: Consult with a qualified bankruptcy attorney to assess your financial situation and explore the best course of action. They can provide guidance on whether bankruptcy is the most suitable option and help you navigate the process.
  3. Long-Term Financial Planning: Consider the long-term impact of a repeat bankruptcy filing on your credit score, financial stability, and ability to obtain credit in the future.
  4. Addressing Underlying Issues: Evaluate the reasons for your financial difficulties and take steps to address any underlying issues, such as overspending, job loss, or medical expenses, to prevent future financial crises.

While it’s possible to file for bankruptcy multiple times, doing so comes with additional challenges and consequences compared to a first-time filing. Before pursuing another bankruptcy, explore alternative solutions and seek professional advice to make an informed decision based on your individual circumstances and long-term financial goals.

Written by Canterbury Law Group

What Are the Chapter 7 Bankruptcy Rules?

The most common form of bankruptcy in the United States is Chapter 7. At Canterbury Law Group, we constantly work with clients to file Chapter 7, which allows individuals to extinguish all debts which are “dischargeable” under the Bankruptcy Code. In a Chapter 7, all of the debtor’s non-exempt assets on the petition date are liquidated through the priorities set forth in the bankruptcy code. At the time of filing, the bankruptcy code establishes the creation of your “debtor’s estate” which includes all “non-exempt assets.” As a Debtor you have various duties and obligations, including significant duties of co-operation, which are owed to the Bankruptcy Trustee. These obligations are designed to assist the Trustee in the administration of your bankruptcy estate.

The Scottsdale bankruptcy lawyers at Canterbury Law Group will counsel you regarding these duties, which if followed, will make your case run smoothly. Unfortunately, many debtors who are not fully informed of these obligations run the risk of not receiving a full discharge of some or all or their debt. If you’re thinking of filing Chapter 7, here are some recommendations from our lawyers:

1. Complete the Mandatory Credit Counseling – Before you can file chapter 7 bankruptcy, it is essential to complete credit counseling. It is a mandatory step before you can file and often requires paying a fee. Otherwise, your filing will not be allowed to continue.

2. File All Chapter 7 Paperwork – Complete and file all necessary paperwork in court. Make sure all of your paperwork is accurate. Determine any fees associated with your filing.

3. Meet With Your Creditors – Approximately one month after filing the petition, you will need to meet with your creditors, an arrangement made by the court. During this important meeting, your creditors will question you regarding your finances and property. Typically this meeting involves only a few people connected with the credit card companies to whom you owe your debt. Your lawyer can certainly be present to aid you through this process.

4. Attend the Personal Financial Management Instruction Course – In addition to your credit counseling course, a personal financial management course generally costs about $30 and is necessary for completing your filing of chapter 7. If you skip the money management course, you risk dismissal of your case.

Although there are a lot of rules, Chapter 7 bankruptcy rules are not as complicated to comprehend as you might think. To guarantee a successful Chapter 7 bankruptcy filing and to gain a basic understanding of the rules, continue reading.

The local court regulations and the bankruptcy laws of the United States are combined to create Chapter 7 bankruptcy rules. The Bankruptcy Code and the Bankruptcy Rules are two distinct categories of US bankruptcy laws.

There are many of them since all bankruptcy cases are covered by these laws. But do not fret! Not all of them need to be learned. It’s a good idea to be somewhat familiar with Chapter 7 bankruptcy rules if you plan to file for Chapter 7 bankruptcy to ensure that a small mistake doesn’t ruin your fresh start.

Unofficial Guideline That All Filers Should Adhere To

Being sincere is the most crucial bankruptcy rule. The bankruptcy laws grant the “honest but unfortunate debtor” a fresh start. Even if they abide by all the other guidelines to the letter, anyone attempting to conceal anything risks punishment. Because of this, it’s crucial that you submit an amendment if you discover that something is missing from your forms.

Guidelines for Chapter 7 Bankruptcy to Adhere to Before Filing

When getting ready to file your case, there are a few easy guidelines to adhere to. To be eligible to file Chapter 7, you must complete an approved credit counseling course, use the official bankruptcy forms from the U.S. Courts, and pass the means test.

A Credit Counseling Appropriate Course Must Be Taken

Everyone is required to enroll in a credit counseling course offered by an authorized credit counseling agency at some point during the six months—180 days, to be exact—before declaring bankruptcy. You cannot file for any kind of bankruptcy without it. You must also have the United States Trustee’s approval for the credit counseling organization you select for this hour-long course.

The Official Bankruptcy Forms Must Be Used

The bankruptcy courts in the United States mandated that all individuals filing for bankruptcy, regardless of location, must utilize identical bankruptcy forms. The U.S. Courts website offers the forms at no cost. The only way to ensure that any bankruptcy forms you download are the official version is to ensure that you are downloading them from website.

Furthermore, your state’s bankruptcy court might have unique local forms. These local bankruptcy forms are not a substitute for the federal ones; they must be filed in addition to them, if necessary. Required local forms can be obtained by speaking with the clerk at your local bankruptcy court or by visiting the website of your bankruptcy district.

The Means Test Must Be Passed

Chapter 7 filing is subject to income restrictions. Using a means test, the court determines whether you are within those bounds. There are mixed feelings when one fails the means test. One the one hand, your high income precludes you from filing for Chapter 7 bankruptcy. Nonetheless, your monthly income is fairly stable, even though it might not be sufficient to meet all of your creditors’ demands for payments each month. Investigate if Chapter 13 bankruptcy would be a better choice for you in this situation.

How Is the Means Test Operational?

In essence, it establishes the income thresholds for Chapter 7 bankruptcy. You pass the means test if your monthly income is currently less than the state median income. You might still pass the means test even if your income is higher than the median. In order to file for Chapter 13 bankruptcy, you must demonstrate that your disposable income (after your living expenses and income tax withholdings are subtracted) is insufficient to pay off at least 25% of your unsecured creditors.

Chapter 7: Bankruptcy Guidelines for Following Case Filing

The automatic stay, which is a feature of the bankruptcy laws, protects you from creditors as soon as your Chapter 7 case is filed. Once a bankruptcy petition is filed, the Bankruptcy Code prohibits any further collection efforts against the debtor or their assets. Wage garnishments must therefore end immediately upon the filing of a bankruptcy case.

That isn’t the only thing that occurs, though. For the individual filing for Chapter 7 bankruptcy, their creditors, and the bankruptcy trustee managing the case, there are extra regulations.

Chapter 7: Guidelines for Bankruptcy Filers

Each individual filing for bankruptcy must fulfill the Bankruptcy Code’s requirements. Following the filing of your Chapter 7 bankruptcy case, you have the following obligations:

Apply for a fee waiver or pay the court filing fee.

Your final federal income tax return should be turned in to their bankruptcy trustee.
Attend the creditors’ meeting.
Finish the second bankruptcy course, also known as financial management or debtor education.

That is, of course, the absolute minimum. Additionally, you must work with your bankruptcy trustee. This usually entails providing them with additional paperwork in advance of the creditors’ meeting, such as bank statements. At times, this entails informing the trustee if, within six months of your filing date, you are qualified to inherit something. It all depends on the circumstances surrounding your case.

Additionally, in the event that your contact information changes, you must make sure to notify the trustee and the bankruptcy court.

What Part Does the Trustee Play in This Whole Thing?

Finding non-exempt assets that can be sold to pay off unsecured creditors is the trustee’s responsibility. This entails going over tax returns, bank account statements, and bankruptcy forms, among other documents. Asset cases remain open for as long as the trustee needs to complete them, and even after the bankruptcy discharge is approved, the filer must keep collaborating with them.

Since most Chapter 7 bankruptcy filers do not possess any nonexempt property, the trustee’s duties are restricted and frequently completed prior to the debts being discharged.

Guidelines for Handling Secured Debts

Secured debts are associated with a particular item of property. One common type of secured debt in Chapter 7 proceedings is auto loans. If you possess this kind of debt, you must file a Statement of Intentions to inform the secured creditor of your plans. That’s not all, though.

There isn’t much more to do if you are returning the car. But the Chapter 7 bankruptcy rules demand that you actually follow through on any plans you may have to redeem the car or reaffirm the loan. That typically entails signing a reaffirmation agreement or submitting a motion to redeem. The automatic stay expires and the bank is free to come pick up the car whenever they choose if you don’t act within 45 days of the date of the creditors’ meeting.

Chapter 7: Rules for Creditors in Bankruptcy

The most significant of these is the previously mentioned automatic stay found in the Bankruptcy Code. In addition, if creditors wish to object to anything in your case, they must submit their objections by a specific date. Unsecured creditors frequently take no action at all in no-asset cases. Credit card debt, personal loans, the majority of tax debt, and student loans are examples of unsecured debt.

Having a trusted legal team on your side is critical during bankruptcy. Call Canterbury Law Group today to schedule your consultation. 480-744-7711.

Written by Canterbury Law Group

What Is A Secured Debt?

Learn about secured debts and how to recover them from creditors.

A “secured debt” is a loan you owe that is backed by property that your creditors could get back in the event of a default. (“Default” refers to noncompliance with the terms of the contract, such as failure to make the required payments.)

Liens are used to produce secured debt. Liens may be willingly or unwillingly taken. Car loans and home mortgages are two instances of secured obligations that you actively take on. Contrarily, real property tax liens are unintentional liens.

A Voluntary Lien: What Is It?

You typically consent voluntarily to granting a creditor a security interest in your possessions. For instance, a lender may need you to sign a mortgage (or, in some states, a deed of trust) before approving a house loan. An agreement that gives a lender a security interest, or lien, on real property is known as a mortgage or deed of trust. If the homeowner falls behind on the monthly payment, the lien enables a foreclosure auction.

In addition, you can give a lender a lien against any personal property you own or have a stake in that isn’t real estate (real property). Vehicles, furnishings, tools, inventories, stock shares, other forms of investment interests, and even cash are considered to be personal property.

A security agreement is typically used to grant a lien against personal property. For instance, a lender can ask you to sign a security agreement giving it a lien on the automobile you’re buying before extending a new car loan. If you don’t make the agreed-upon payments, the lender may reclaim your car thanks to the voluntary lien.

An Involuntary Lien: What Is It?

Involuntary liens are security interests put on your property through a court order, a state or federal statute, or another legal process. There is no agreement in play. Among involuntary liens are:

Liens on real estate or income taxes
Engineer’s liens
judgment liens as well as landlord liens (in some areas).
How an Obligor “Perfects” a Lien
Perfecting a lien is one of the procedures a secured creditor must take to safeguard its ability to collect. The legal word “perfection” describes the procedure necessary to notify other creditors and other interested parties of a lien or security interest. Depending on the type of property and the relevant state law, a certain step is necessary to perfect a lien. For instance:

Real Estate

Most states require that the lender record all mortgages and trust deeds in the county where the property is situated in order to perfect its lien.

Vehicles Usually, a file with the state motor vehicle department and a notation on the certificate of title are sufficient for lenders to perfect liens against automobiles, motorbikes, and trucks.

Personal Tangible Property

Financing statements are filed in order to perfect security interests in the majority of tangible personal property, such as furniture, tools, items, and supplies. For a secured debt, the borrower, lender, and collateral are all listed in a financing statement.

Financing statements, unlike security agreements, do not require signatures to be in force. As long as you have acknowledged signing the security agreement for the collateral it is intended to protect, the creditor may file a financing statement. Financing statements are often submitted to the secretary of state.

For any creditor, perfecting a lien is a crucial step. Sometimes, borrowers give many creditors liens against the same asset, such as your home. Consider a home equity line of credit, which is often subordinate to the mortgage you obtained to purchase your property. In the event that the owner of the first mortgage is unable to perfect their claim, a junior lien, such as a home equity line of credit, may in fact advance in precedence.

The repercussions of a lender failing to perfect a lien might be significantly more severe in bankruptcy. If you file for bankruptcy, the court has the authority to invalidate any unperfected liens. The lender becomes an unsecured creditor when a lien is put aside because it is handled as if it never existed.

Written by Canterbury Law Group

Does Chapter 7 Bankruptcy Fall Off A Credit Report?

Find out how long Chapter 7 and Chapter 13 bankruptcy will be reported on your credit record.

Most people commence a bankruptcy case when they need to start over and get their finances under control. Improved credit scores are frequently a part of that fresh start, and filers can take proactive measures by making on-time payments and maintaining modest credit balances. Nevertheless, depending on the bankruptcy chapter you file, it may take up to ten years for the bankruptcy to disappear from your credit report.

What is included in your credit report?

The quantity of personal information in your report may surprise you. You’ll notice three different types of information in particular:

identifiable information, such as your name, address history (including accounts marked paid as agreed or charged off), employer information, credit card information, payment history, and public records like court decisions, tax liens, and bankruptcies.

Reporting of Bankruptcy on a Credit Report

After seven years, the majority of bad entries, such as late payments and charge-offs, will be removed from your report. For bankruptcy filings, it operates somewhat differently and is dependent on the specific chapter.

Chapter 7 insolvency. Your Chapter 7 bankruptcy filing will be noted on your credit report for a maximum of ten years. The credit bureaus should stop recording the bankruptcy after ten years.
Chapter 13 insolvency. The filer contributes to a repayment plan in this chapter for a period of three to five years. Only two years longer than the longest repayment plan, seven years from the filing date, the Chapter 13 bankruptcy filing is visible on a credit record. This benefit encourages filers to select the repayment option and to gradually pay back creditors.
Whether you have a high or low initial score will determine the immediate impact of bankruptcy on your credit score, and in most circumstances, a higher initial score will suffer more damage. Because scoring businesses keep the formulae used to generate scores relatively hidden, it is difficult to predict the exact outcome. But if you work hard, it’s not impossible for you to raise your credit score to the extremely high 700s in as little as two or three years after filing for Chapter 7.

Checking the Accuracy of a Credit Report

Even if you aren’t thinking about declaring bankruptcy, it’s a good idea to periodically evaluate your credit report. One way to verify is to use the free copy you’re entitled to once a year from each of the three major credit bureaus—Experian, TransUnion, and Equifax. Visit to purchase your credit reports.

Because not all creditors submit reports to all three agencies, it is crucial to carefully analyze all three. Each of your creditors should note that the account was included in bankruptcy a few months after you filed for bankruptcy. If not, it would be wise to have that fixed since any line item that shows as open but unpaid could give the impression that you are still liable for that obligation to a potential lender.

The status of your Chapter 7 bankruptcy case—whether it was dismissed or your qualifying debts were erased—should also be noted on your credit report. An effective bankruptcy that results in a discharge affects a prospective lender’s choice to extend credit differently than if the bankruptcy had been unsuccessful, leaving your account liability unaffected.

It’s a good idea to fix any mistakes you see as quickly as you can. You can do this by immediately mailing a letter to the credit bureau or by disputing the item on the credit bureau’s website.

Written by Canterbury Law Group

Ideas When Filing Chapter 7 Bankruptcy

The most common form of bankruptcy in the United States is Chapter 7. At Canterbury Law Group, we constantly work with clients to file Chapter 7, which allows individuals to extinguish all debts which are “dischargeable” under the Bankruptcy Code. In a Chapter 7, all of the debtor’s non-exempt assets on the petition date are liquidated through the priorities set forth in the bankruptcy code. At the time of filing, the bankruptcy code establishes the creation of your “debtor’s estate” which includes all “non-exempt assets.” As a Debtor you have various duties and obligations, including significant duties of co-operation, which are owed to the Bankruptcy Trustee. These obligations are designed to assist the Trustee in the administration of your bankruptcy estate.

The Scottsdale bankruptcy lawyers at Canterbury Law Group will counsel you regarding these duties, which if followed, will make your case run smoothly. Unfortunately, many debtors who are not fully informed of these obligations run the risk of not receiving a full discharge of some or all or their debt. If you’re thinking of filing Chapter 7, here are some recommendations from our lawyers:

1. Complete the Mandatory Credit Counseling – Before you can file chapter 7 bankruptcy, it is essential to complete credit counseling. It is a mandatory step before you can file and often requires paying a fee. Otherwise, your filing will not be allowed to continue.

2. File All Chapter 7 Paperwork – Complete and file all necessary paperwork in court. Make sure all of your paperwork is accurate. Determine any fees associated with your filing.

3. Meet With Your Creditors – Approximately one month after filing the petition, you will need to meet with your creditors, an arrangement made by the court. During this important meeting, your creditors will question you regarding your finances and property. Typically this meeting involves only a few people connected with the credit card companies to whom you owe your debt. Your lawyer can certainly be present to aid you through this process.

4. Attend the Personal Financial Management Instruction Course – In addition to your credit counseling course, a personal financial management course generally costs about $30 and is necessary for completing your filing of chapter 7. If you skip the money management course, you risk dismissal of your case.

Having a trusted legal team on your side is critical during bankruptcy. Call Canterbury Law Group today to schedule your consultation. 480-744-7711.

Written by Canterbury Law Group

Will a Pending Lawsuit Go Away If I File for Bankruptcy?

Many people apply for bankruptcy after receiving legal notice of a lawsuit, and for good cause. A bankruptcy will effectively halt numerous legal actions. However, filing for bankruptcy won’t stop all of the actions you might encounter.

You should move swiftly if you are facing eviction. Start by reading more on bankruptcy’s automatic stay and evictions.

How Can Bankruptcy Prevent a Civil Case?

An order known as the automatic stay prohibits creditors from continuing any collection activity after a “debtor,” or the individual owing money, files a bankruptcy case. This prohibition extends to attempts to obtain a monetary judgment in a civil litigation.

The stay prevents creditors from receiving a disproportionate amount of the debtor’s available funds. The court has time to organize the available assets and fairly distribute them among all creditors by stopping the collection process.

Which Claims Are Not Stopped by Bankruptcy Filing?

People cannot completely dodge legal action by declaring bankruptcy. The following issues will persist even if a bankruptcy case is filed:

Felony cases, divorce and dissolution proceedings, child custody and support disputes, and the majority of evictions following a state court’s possession order (see below for an exception).
Most other lawsuits will be halted by the automatic stay.

Which Civil Lawsuits Will Bankruptcy Prevent?

Your debts and assets are impacted by bankruptcy. Therefore, any matter in which it is claimed that you owe money due to either your failure to make a payment on a debt or the injury you caused to someone else, the bankruptcy court will have jurisdiction over (the power to determine).

Several instances include the following:

a credit card balance, money sought for a contract breach, a financial disagreement between business partners, compensation for a negligence-related (accidental) personal injury case, like a car accident, a home foreclosure, the collection of a deficiency balance (the amount still owing after a property auction), or an eviction, if the state court has not yet issued the order for possession (see below for an explanation of the unique rules that govern eviction)

In nearly every one of these circumstances, the bankruptcy “discharge” decision that discharges qualified debt also discharges the underlying obligation, ending the legal dispute. Although not always. The creditor may occasionally pursue an action with the court’s approval.

Obtaining Approval to Continue the Lawsuit

In any case, the creditor has the right to request that the bankruptcy judge lift the automatic stay so that the state lawsuit can go forward. Such motions are frequently granted by bankruptcy courts in the following circumstances:

the lawsuit will decide a matter that must be resolved in the bankruptcy case (for example, it would be necessary to resolve an allegation of fraud to determine whether a debt will be wiped out, or “discharged,” in the bankruptcy), and it will be expensive to ask the court to make a decision. the outcome won’t affect the bankruptcy case, and the creditor faces financial harm (for example, a home lender stands to lose more money the longer it must wait to foreclose on a home that
In some circumstances, the party who filed the lawsuit may be entitled to continue it, but they must first obtain the court’s approval. An example would be a government agency pursuing an enforcement action, such as the cleanup of a toxic site, delaying the case and, out of an abundance of caution, filing an application to lift the automatic stay before proceeding with the prosecution.

After losing a lawsuit, declaring bankruptcy

It is always preferable to file for bankruptcy prior to the conclusion of the lawsuit. For instance, you might desire to do it for the reasons listed below:

to avoid the creditor placing a judgment lien on your property or obtaining a fraud judgment against you, which would make it extremely difficult to discharge the debt in a bankruptcy proceeding.
However, you are still permitted to file for bankruptcy even if you lose the lawsuit. Most attempts by creditors to recover money judgements will be halted by the automatic stay. This is accurate even if your wages or bank account are being garnished.

Additionally, filing for bankruptcy will momentarily halt a creditor’s attempt to liquidate your belongings in order to pay off a debt. To stop the judgment lien from being collected after the bankruptcy case, you must address it in bankruptcy.

Additionally, declaring bankruptcy will prevent the government from trying to suspend your occupational or driver’s license as a result of unpaid fines or traffic tickets. See Lawsuits You Can’t Stop By Filing for Bankruptcy for more information.

When Can an Eviction Be Stopped by Bankruptcy?

Landlords typically find it simple to move forward with eviction once a tenant filed for bankruptcy. However, landlords must still follow by laws that protect the rights of tenants.

If you’re in this scenario as a landlord or tenant, it’s essential to speak with an experienced attorney because the windows for action are limited and the regulations are difficult to apply.

Before the eviction court renders a judgment of removal

The automatic stay kicks in to stop the eviction if you file for bankruptcy before the eviction court rules in the landlord’s favor by issuing an order for possession or eviction judgment. However, if you have bankruptcy cases outstanding in the previous year, you might need to ask the court to impose the automatic stay.

If you are accused of threatening the property or using illicit narcotics, however, the automatic stay will expire quickly. In that situation, the landlord may proceed with the eviction by submitting a certification to the court. You can contest the certification, but you’ll need to appear in court and persuade the bankruptcy judge that the landlord is mistaken in order to do so.

After the eviction court renders a judgment of eviction

If the landlord has already received a possession order or eviction judgment from the state court, declaring bankruptcy won’t prevent an eviction. Nevertheless, after the eviction court issues the order for possession, several states permit you to make up lost rent or “reinstate” it.

But you need to move rapidly. The rent that is due in 30 days must be deposited with the bankruptcy court. You’ll have 30 days to prove to the landlord that you paid the overdue rent. Learn more about bankruptcy-related evictions and how the automatic stay might facilitate or complicate them.

Written by Canterbury Law Group

When Is a Bankruptcy Claim Contingent, Unliquidated, or Disputed?

When Is a Bankruptcy Claim Contingent, Unliquidated, or Disputed? (SEO Title, Title, URL)

Learn what it means for a bankruptcy claim to be contingent, unliquidated, or disputed.

Identifying your debts or “claims” as contingent, unliquidated, or disputed is essential to the bankruptcy process. When filling out numerous bankruptcy forms, you’ll need to understand these terms to list and categorize your debts properly

You Must List All Debts or “Claims” in Bankruptcy

On your bankruptcy forms, you explain your financial situation to the court, trustee, and creditors. Your disclosures will include how much you earn, the debts or “claims” you owe, your real estate and personal property, your monthly budget, and recent property transactions.

You’ll disclose each creditor’s name, address, and amount owed in your paperwork when listing claims. Learn about completing bankruptcy forms.

Not All Bankruptcy Debts Are Contingent, Unliquidated, or Disputed

Most debts won’t need a contingent, unliquidated, or disputed label because the label is only required if it isn’t clear that you owe the debt. In most cases, there will be no question that you owe the money. When you don’t have an issue to raise to get out of paying the debt, you won’t need to label the claim contingent, unliquidated, or disputed.

For instance, suppose you’re behind on your car loan. In that case, the claim would be for the outstanding balance. The same would apply to other everyday obligations, such as credit card debt.

When You’ll Have a Contingent, Unliquidated, or Disputed Debt

Sometimes the amount you owe to a creditor isn’t easy to figure out. Each label—contingent, unliquidated, and disputed—identifies a particular issue that needs resolving before paying the claim.

Perhaps the amount you owe could depend on what someone else does or might not be determined. Or, you and the creditor might disagree on how much you owe.

If a problem exists, you’ll indicate it when listing that claim on your bankruptcy papers under the appropriate label of contingent, unliquidated, or disputed claim (the form has checkboxes).

What Is a Contingent Claim?

Payment of the claim depends on some event that hasn’t yet occurred and might never occur. For instance, if you cosigned a secured loan (such as a car loan or mortgage), you aren’t responsible for paying it unless the other person on the loan doesn’t pay (defaults). Your liability as cosigner is contingent on the default.

What Is an Unliquidated Debt?

Sometimes you owe money, but you don’t know how much yet. The debt might exist, but the exact amount hasn’t been determined. For instance, say you’ve sued someone for injuries you suffered in an auto accident, but the case isn’t over. Your lawyer has taken the case under a contingency fee agreement—the lawyer will get a third of the recovery if you win and nothing if you lose. The debt to the lawyer is unliquidated. You won’t know how much you’ll owe the lawyer until the case settles or gets resolved at trial.

What Is a Disputed Debt?

If you and the creditor don’t agree about the amount you owe, or if you owe anything, you’ll check this box. For instance, suppose the IRS says you owe $10,000 and has put an involuntary tax lien on your property. By contrast, you believe you owe only $500. You’ll list the total amount of the lien, not the amount you think you owe, and indicate that the claim is in dispute (you can explain how much you think you owe in the notes).

You Must List All Claims in Bankruptcy

It’s common for someone to want to omit a claim from the bankruptcy paperwork for one reason or another. You can’t do it. You must list all claims—the claims you think you owe and those others believe you owe.

It’s in your best interest to do so. If you fail to list a claim, the claim might not be erased or “discharged” in your case, even if it would ordinarily qualify as a dischargeable debt.

Paying Claims in Bankruptcy

If money is available to pay creditors, here’s what will happen next:


The bankruptcy trustee appointed to the case will notify creditors that the case is an “asset case.”

A creditor will file a proof of claim form by a particular date to share in the available proceeds.

The trustee will review the claims and pay them according to the priority payment system in bankruptcy law.

Keep in mind, however, that each situation is unique. If you aren’t clear about what will happen to claims in your bankruptcy case, meet with a knowledgeable bankruptcy lawyer.


Written by Canterbury Law Group

Should I File for Bankruptcy Before or After Taxes?

Making sure your tax returns are current is a smart idea if you’re considering filing for bankruptcy.

Waiting to file your income tax return until after you file for bankruptcy won’t give you any meaningful advantages. You should be current when filing your Chapter 7 or Chapter 13 matter, nevertheless, for a variety of reasons.

Bankruptcy under Chapter 7 and Tax Returns

The trustee in charge of your case will request your most recent tax return when you apply for Chapter 7 bankruptcy. The trustee will need an explanation if that isn’t the most recent return, even if it doesn’t have to be for the most recent tax year.

The trustee will contrast the amount stated in your bankruptcy petition with the income you show on your tax return. The trustee will also want to make sure you have the right to protect (exempt) the refund if you can demonstrate that you are entitled to one and that you have claimed the correct exemption amount. If not, you would have to give the trustee your refund so they could give it to your creditors.

Before filing for the case, many people arrange their bankruptcy so they can use the return for essentials like living expenses. It’s a good idea to maintain track of your expenses if you adopt this strategy.

Bankruptcy under Chapter 13 and tax returns

Before filing a Chapter 13 case, you generally need to have all of your tax returns current, but there are several exceptions to the requirements. Before the 341 meeting of creditors (the hearing that all filers are required to attend), you must give copies of your returns for the four tax years prior to that to the Chapter 13 trustee.

Your trustee may request a letter, an affidavit, or a certification explaining why you are exempt from filing a return if you are. There are situations when district-specific local courts set additional guidelines for papers.

Things could go wrong in your case if you owe the IRS a return but fail to pay it in a timely manner (before to your 341 meeting of creditors).

a movement. You will have only a very short time to submit your returns when the trustee files a motion. If the time passes without being met, the court may automatically dismiss your case, denying you the opportunity to present your case before the judge.
a replacement return. Based on your prior income, the IRS may be required to submit a claim with its best guess as to how much you owe. The issue? IRS projections are typically larger than the amount you would ultimately owe after filing a correct return.

Utilizing Chapter 13 Bankruptcy to Manage Taxes

Once you recognize that filing for Chapter 13 bankruptcy to handle your tax obligation can be a wise choice, filing your tax return might not be as difficult. This is why:

Depending on how much disposable income you have left over after deducting your reasonable and necessary costs from your salary, dischargeable taxes (usually those older than three tax years) may be forgiven without any payment at all.

While you are in Chapter 13 bankruptcy, you won’t be subject to any further interest or penalties on past-due dischargeable taxes (you will, however, be required to pay interest on non-dischargeable taxes).

The Chapter 13 plan can be used to discharge an IRS tax lien.

As long as you include all owed income taxes, file your tax returns on time, and maintain your post-petition tax responsibilities current throughout your Chapter 13 plan, the IRS must abide by the plan.

Keep in mind that any non-dischargeable taxes (usually those incurred during the last three tax years) that cannot be discharged in bankruptcy must be paid in full throughout the three to five-year Chapter 13 plan. You will have paid off the majority or all of your other debts by the time it is finished, along with your taxes.


Written by Canterbury Law Group

Can You File Bankruptcy on a Car Loan and Keep the Car?

If you have a car loan and want to keep the car after filing bankruptcy, you’ll have to pay for it.

Many people are under the mistaken belief that filing bankruptcy allows you to wipe out an auto loan and keep the vehicle free and clear of any payments. It just isn’t true. Bankruptcy will unwind your obligation to pay back the loan. But if you don’t make the payment, you won’t be driving the car for long. So the short answer is no—you won’t get a free car in bankruptcy.

Even so, it isn’t a given that you’ll lose a car with a car loan, either. In this article, you’ll learn:

  • what happens to car loans in bankruptcy
  • how to keep a financed car in Chapters 7 and 13, and
  • “surrendering” a car you want to return to the lender.

We have many more helpful articles that explain what happens to cars in bankruptcy. Look for links to additional resources at the end of this article.

Bankruptcy Erases Car Loans But Not Car Liens

Bankruptcy works by breaking the contract requiring you to repay the lender for the car loan. You can file for bankruptcy, give the car back to the lender, and not pay anything further on the car loan.

However, if you want to keep a car with a car loan, there’s a catch. Filing for bankruptcy doesn’t eliminate the lien giving the bank the right to take back your car if you don’t pay as agreed. The bank can use the lien to repossess the car once the bankruptcy case is over—or sooner with the court’s permission—even though you erased the debt. So if you want to keep the car, you must pay for it.

How you pay your car loan—and whether you can keep a car if you’re behind on the car loan—will depend on whether you file for Chapter 7 or 13.

Understanding Car Loans and Car Liens Before Bankruptcy

Buying a car is costly, and most people can’t afford to pay for one outright. Instead, borrowers finance the purchase by signing a “promissory note” agreeing to pay back the debt with interest in monthly installments.

Because most car loans involve thousands of dollars, banks minimize risk by requiring the buyer to agree to put up the vehicle as collateral. The additional requirement creates a lien on the car that lets the lender repossess the car if the borrower “defaults” by failing to pay.

In bankruptcy, the lien makes the car loan a “secured debt,” unlike a Visa or Mastercard balance, which would be an “unsecured debt.”

What’s the difference? If you don’t pay an unsecured debt, you don’t have to return the property you purchased, such as the tiki torches and inflatables you charged for your annual luau.

Watch out, though—charging furniture, jewelry, mattresses, electronics, and appliances usually creates a secured debt. Check the contract or receipt to find out.

How to Keep a Car in Bankruptcy Chapters 7 and 13

What you’ll need to do to keep a vehicle with a car loan will depend on the bankruptcy chapter you file.

Keeping a Car After Filing Chapter 7 Bankruptcy on a Car Loan

In Chapter 7 bankruptcy, you have two people to please before you can keep your car—the Chapter 7 bankruptcy trustee assigned to your case and the car lender. You’ll need to do different things to satisfy each of them.

The bankruptcy trustee won’t take your car if you can protect all vehicle equity with a bankruptcy exemption. So your first step would be figuring out whether you can protect your car’s equity with a motor vehicle exemption. If the motor vehicle exemption isn’t enough to cover your equity, check for a wildcard exemption—many states let bankruptcy filers use both.

If you can protect all of the equity, you can keep the car in Chapter 7 bankruptcy—at least as far as the Chapter 7 bankruptcy trustee is concerned. The car lender and the lien associated with the car loan is another matter.

To steer clear of your car lender in Chapter 7 bankruptcy, you must be current on your car loan when you file and remain current after your Chapter 7 case ends. Otherwise, the lender will use the lien rights to repossess the vehicle.

But there are other things you can do to keep a car in Chapter 7 bankruptcy when you have a car loan, such as “redeeming” the car or paying the lender its actual value. Learn about all of your car options in Chapter 7 Bankruptcy.

Keeping a Car After Filing Chapter 13 Bankruptcy on a Car Loan

If you’re behind on your payments, consider filing for Chapter 13 bankruptcy. You can pay off the vehicle balance over three to five years in a Chapter 13 repayment plan and keep the car.

But if you don’t make the payments, including catching up on any arrearages on the car loan, the lender can repossess your car in Chapter 13 bankruptcy. Learn more about your car in Chapter 13 bankruptcy.

Returning the Vehicle Bankruptcy to Get Out of a Car Loan

Sometimes the best option is returning a vehicle with a car loan to the lender. Then you’ll be out from under the car loan entirely. Many bankruptcy filers will return a fianced car to the lender when they:

  • paid too much for the vehicle
  • can’t afford the monthly payment, or
  • don’t want the vehicle or the car loan associated with it.

If you’re in this situation, you’ll check the box that states that you plan to “surrender the property” when you’re filling out the Statement of Intention for Individuals Filing Under Chapter 7 form. You can also surrender a car with a car loan in Chapter 13 bankruptcy.

Written by Canterbury Law Group

Can I keep My Business If I File Bankruptcy?

Can I keep My Business If I File Bankruptcy?

A struggling small business that files for bankruptcy may be able to thrive. Chapter 7, Chapter 13, or Chapter 11 bankruptcy may help you maintain your business depending on:

  • what the business does
  • the organization of the company
  • assets of the business, and
  • the amount of money that can be used to finance a repayment strategy.

Continue reading to discover more about the criteria used to assess the viability of a business bankruptcy. Additionally, a lot of business owners declare personal bankruptcy. Consider finding out how eliminating personal debt can assist you in maintaining your business.

Considerations for Continuing Your Business

Before continuing or ending your business, you should think about a number of factors. Here are a few important things to keep in mind.

Is the company profitable? You set out to run a successful business. If your company is consistently losing money, shutting down might be the best course of action. But let’s say you run a profitable business that is having trouble right now because of transient factors like the economy. It might make sense in that situation to continue operating despite the storm. Being realistic about preserving openness is crucial, though. Entrepreneurs frequently have an optimistic outlook and invest money in a project long after it’s time to give up.

Do the company’s assets outweigh its liabilities? It should go without saying that your company may be worth saving if its assets outweigh its liabilities and it is still profitable. It might be possible to keep the company afloat by reorganizing debt in bankruptcy (or eliminating it if you’re a sole proprietor). If bankruptcy is the only option, consider closing the company by selling the assets and settling the debt outside of bankruptcy (unless you want the Chapter 7 bankruptcy trustee to handle it for you in a transparent manner, in which case be sure to take into account the potential drawbacks discussed below). Most of the time, you’ll generate more money for your creditors while saving money. On the other hand, you probably already know that it might be time to cut your losses if the business is severely in the red.

Are business debts personally your responsibility? It might be more advantageous to keep your business operating while negotiating with creditors if you are personally responsible for its debts. This would prevent you from taking on additional debt. If the company is forced to close because there aren’t enough assets to cover liabilities, creditors may have no choice but to pursue your personal assets. Another typical strategy is for the business owner to declare bankruptcy under individual Chapter 7 in order to get rid of the personal guarantee.

Which Bankruptcy Type Should You File?

The structure of the business organization and the worth of the company’s assets will be the main determinants of the answer.

Why Businesses Don’t Bankruptcy Under Chapter 7 Often

Chapter 7 bankruptcy filings typically result in the closure of the company. Why? because a corporation or limited liability company, two examples of separate legal entities that own property, cannot be protected (LLC). The trustee merely liquidates the company’s assets, settles its debts, and closes the company.

Chapter 7 bankruptcy isn’t typically used to shut down businesses, though that’s not the only reason. Additional issues that might arise include the following:

The majority of business owners can wind down a company without assistance, saving themselves the extra expense of a bankruptcy attorney and filing fees.

Owners frequently have the ability to negotiate a better price for the assets than the bankruptcy trustee.

The partners’ individual assets are at risk when a partnership declares Chapter 7 bankruptcy.

Creditors have a quick forum to air grievances after filing for bankruptcy. In particular, the filing allows for litigation involving fraud, a partnership dispute, or an attempt to pierce the corporate veil (a lawsuit seeking to hold a shareholder personally responsible for the debts of the company).

Because of all of these factors—the main one being a transparent liquidation of the company’s assets—it is imperative to carefully weigh the risks and benefits of closing the business through bankruptcy.

Chapter 7 bankruptcy and the Sole Proprietor

A Chapter 7 bankruptcy may help you keep your business open if you’re a sole proprietor offering a particular service, despite the fact that it rarely benefits business owners. You might work as an accountant, a freelance writer, or a personal trainer, for example. Because the bankruptcy trustee cannot sell your ability to provide the service, this type of bankruptcy may be successful. This is how it goes.

Both personal and business debts fall under the purview of a sole proprietor. You will include all debt and discharge both types of qualifying debt when you file for Chapter 7 bankruptcy.

The relatively insignificant assets connected with a service-oriented business can also be safeguarded using bankruptcy exemptions. Exemptions, on the other hand, are rarely enough to cover sizable quantities of goods, machinery, or other commercial property. Sole proprietors with little to no business assets may find Chapter 7 to be a desirable option. It will eliminate the company’s debts and enable the owner to carry on with the service, keeping the business afloat.

Additionally, if your business debt exceeds your consumer debt, you can file for business bankruptcy and evade the means test. Therefore, it’s less likely that your new income will prevent you from being eligible for a Chapter 7 discharge if your business closes and you’re earning well working for someone else. However, it is possible, so consult a bankruptcy attorney before making any significant adjustments.

When You’re Compelled to File for Bankruptcy

Bankruptcy is typically a voluntary decision. However, it’s not always the case. In some cases, a debtor will be coerced into declaring bankruptcy by creditors.

Involuntary cases are extremely rare. The process is primarily used by creditors to compel an organization into bankruptcy. Because it’s difficult to meet the requirements to file an involuntary bankruptcy, it’s rarely used as evidence against an individual in consumer bankruptcy. In the majority of cases, several creditors must band together and decide to file a lawsuit against a debtor. If successful, the court names a bankruptcy trustee who will take control of every aspect of the company, sell its assets, and then divide the proceeds among the creditors.

Although it might be beneficial, many creditors would rather start their own collection processes. They maintain their capacity to take a bigger chunk of the company’s assets by doing this. A creditor who files for bankruptcy is more likely to have to split the proceeds with other creditors and receive a smaller payout or, in some cases, nothing at all.

It’s crucial to realize that a creditor might not be able to retain money received just before bankruptcy, particularly if it’s viewed as a preference claim that gives one bankruptcy creditor preference over another. However, a lot of creditors are prepared to assume the risk and, if necessary, return the money.

Similar to a voluntary action, the involuntary process starts with the filing of official bankruptcy forms with the court. Read Involuntary Bankruptcy if you want to learn more.

Chapter 13 Bankruptcy and the Sole Proprietor

A Chapter 13 bankruptcy case can only be filed by an individual. So you cannot file Chapter 13 on behalf of your company if it is a partnership, corporation, or limited liability company.

If you are a sole proprietor, just like with a Chapter 7 bankruptcy, you can include both personal and business debts in your Chapter 13 bankruptcy. If the sole proprietorship generates revenue, a Chapter 13 bankruptcy may be your best option. By making lower payments on nonpriority unsecured personal and business debts like credit card bills, utility bills, and personal loans, you might be able to keep the business operating.

However, if your sole proprietorship requires you to keep a lot of supplies, items, or pricey equipment on hand, you might run into a problem. Even though Chapter 13 bankruptcy permits you to keep your possessions, you must still be able to protect them with a bankruptcy exemption (and the majority of exemptions won’t cover important business assets). If not, you must pay the three- to five-year repayment plan’s value for the nonexempt assets. For instance, you would have to pay your creditors $2,500 per month for five years along with any other necessary sums if you owned $150,000 in nonexempt construction equipment.

Keeping all the property you require may not be possible if you don’t have enough income to cover a sizeable monthly plan payment because many business owners are strapped for cash.

Every Company in Chapter 11 Bankruptcy

In order to reorganize debts and continue operating, partnerships, corporations, and LLCs must file a Chapter 11 bankruptcy as opposed to a Chapter 13 bankruptcy. A Chapter 11 bankruptcy can also be filed by a sole proprietor. A repayment plan is used to pay creditors in Chapter 11 bankruptcy, which is similar to Chapter 13 bankruptcy in that the business keeps its assets. In contrast to a Chapter 13 bankruptcy, a straight Chapter 11 is typically much more difficult because the company must submit ongoing operating reports and the plan must be approved by the creditors. For the majority of small businesses, it is also prohibitively expensive.

Bankruptcy is a dreaded word by not just business owners, but families as well. It is not something that people want to go through, but it is the reality for many. With a business, sometimes you can put in all the hard work in the world but still end up filing for bankruptcy.

When starting a business, 30% will fail during the first two years. That number increases to 50% in the first five years, and 66% in the first 10 years. Only 25% will actually make it to at least 15 years.

With these stark statistics, there’s a likely chance that a new business may end up filing for bankruptcy. If that is the case, can your business survive, and if it does, can you get it back on track?

Getting the top bankruptcy attorneys in Scottsdale is one step to take. After that, consider some of the following points to help you get your business back on track.

Determine Which Type of Bankruptcy You’re Filing For

Depending on which bankruptcy you end up choosing to file, whether it be Chapter 7, Chapter 13, or Chapter 11, the case will significantly impact the outcome for your business.

For Chapter 7, your entire business is liquidated and sold off. You would then have to start over from scratch. In contrast, Chapter 13 bankruptcy will affect your company, but you will still have the debt to deal with. With Chapter 11 though, your business will continue to operate daily as your case pushes through the bankruptcy process and a reorganization plan is approved.

Understand What Went Wrong

One of the most important things to focus on after going through the bankruptcy process is to determine what went wrong. One of failure’s benefits is that it’s an opportunity to learn and grow. Take a look at your prior business plan and make essential notes of which parts went wrong that caused you to go into bankruptcy.

Build Your Credit Back Up

One of the hardest things about bankruptcy is that your credit score takes a significant hit. That number is essential if you need to file for a loan to start your business back up again.

Work towards building your credit back up. Start by paying all of your bills and credit cards on time. The more diligent you are about any remaining debt and paying it off, the more favorable outcome it will have on your credit score.

Find Another Source of Revenue

If your business can continue while you are going through bankruptcy, find additional ways to bring in more money. The reason you went into bankruptcy is that you lacked money. So, if you can find other ways to increase your monthly revenue, you’ll have more money to put towards your debt and to keep your business running.

Don’t look at bankruptcy as the end of an era. Instead, consider it as a second act— the new chance to get your company back up and running smoothly once more. It will take a lot of hard work and dedication, but a business can survive and thrive after filing for bankruptcy.

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