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Written by Canterbury Law Group

What Is a Priority Claim in Bankruptcy?

What Is a Priority Claim in Bankruptcy?

It’s a common misconception that when a debtor files for bankruptcy, all of their creditors are left in the dark, but this isn’t always the case. Money is readily available to pay creditors in almost all Chapter 13 cases and some Chapter 7 cases.

However, debtors are not automatically reimbursed. A creditor must use an official proof of claim form to submit a “proof of claim” to the court before they can get paid. Additionally, not all debts owed to creditors are handled equally.

Priority claims are obligations that are eligible for special consideration and will be paid before nonpriority claims. The creditor certifies whether a priority status exists by checking the box next to it in box 12 on the proof of claim form.

All claims submitted will be evaluated by the bankruptcy trustee, who has been appointed by the court to manage the case. The trustee will distribute money to priority creditors following the resolution of objections and confirmation of the plan in Chapter 13 bankruptcy. The trustee will pay claims without regard to priority if there is money left over.

Here are some typical priority claim examples:

  • administration fees for the bankruptcy (such as accounting or legal fees)
  • obligations for child and spousal support
  • 180 days prior to bankruptcy, compensation of up to $15,150 was earned (wages, commissions, and other compensation)
  • contributions to an employee benefit plan of up to $15,150
  • deposits made by the filer to secure future personal goods, services, or housing are allowed up to $3,350.
  • a fisherman may receive up to $7,475 for unpaid fish sold to a storage or processing facility.
  • the government’s unpaid taxes, and
  • Injury or fatality claims resulting from drunk driving-related car or boat accidents.

These numbers are valid as of April 1, 2022, and they continue to be so until March 31, 2025.

In a Chapter 13 case, each creditor requesting payment is required to submit a claim. If it appears that a Chapter 7 case is a “asset case,” meaning that funds will be available for distribution, the court will order creditors to submit claims. In contrast, in a “no-asset case,” creditors won’t submit claims.

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Best Effort Requirement in Chapter 13 Bankruptcy

Best Effort Requirement in Chapter 13 Bankruptcy

What is the Best Effort Requirement of Chapter 13?

The bankruptcy trustee is appointed following the filing of the repayment plan. The trustee and your creditors will review your proposed repayment plan to ensure that it satisfies all bankruptcy requirements. Before being finalized, your repayment plan must also be approved (confirmed) by the court.

Paying your disposable income to nonpriority unsecured creditors (such as credit card companies) in your repayment plan will demonstrate that you are making every effort to repay your debts. After deducting allowed living expenses and mandatory payments, such as secured and priority debt payments, your disposable income is the amount remaining. (Secured debts are backed by collateral, such as a mortgage or an automobile loan. Priority debts are those that warrant advancement to the front of the payment queue. Examples include domestic support obligations and tax debt.)

You will apply your discretionary income to your remaining debt (nonpriority unsecured debt, like credit card balances and medical bills).

What Will I Pay Unsecured Nonpriority Creditors?

  • Using the Chapter 13 Calculation of Your Disposable Income form, you will subtract the following from your income to determine your disposable income:
  • Expenses for living based on national and regional norms, as well as some actual amounts
  • secured payments, such as mortgage or auto loan payments (and any delinquent payments), and
  • Priority debts include arrears on child support and certain tax debts.
  • Over the course of five years, you will be required to pay a minimum of your monthly disposable income to your non-priority unsecured creditors.

Why Will I Be Charged More If I Own a Large Property?

The analysis continues further. In determining whether to confirm your repayment plan, the judge will also consider whether your creditors will receive the same amount through your Chapter 13 plan as they would if you filed for Chapter 7 bankruptcy.

Here is why this is important:

In Chapter 7 bankruptcy, the trustee sells all nonexempt assets (those that are not protected by exemptions). The funds are allocated first to the priority creditors, and then, if anything remains, to the non-priority unsecured creditors.

  • Chapter 13 bankruptcy, on the other hand, allows you to keep non-exempt property. However, your creditors will not permit you to receive a windfall. To ensure that your creditors receive the same amount as they would under Chapter 7, you must pay the greater of:
  • the sum of your total priority debt and your disposable income, or
  • the market value of your taxable property.

Except: If You Were Eligible for Chapter 7

If you qualify for Chapter 7 but file for Chapter 13 for another reason, such as to save your home, you will not be required to calculate a monthly disposable income figure. Your plan payment will be based on your financial situation. The bankruptcy court will typically approve your Chapter 13 plan even if you’re paying non-priority unsecured creditors little or nothing. Additionally, the duration of your plan is reduced from five to three years.

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Community Property

Community property issues can arise during divorce proceedings and after a spouse's death. When spouses divorce or pass away, they are frequently left with the arduous task of dividing property and proceeds acquired during the marriage. This may include tangible assets (such as stocks, bonds, and legal title), as well as intangible assets (such as automobiles, furniture, paintings, and family homes) and debt. In some states, property acquired during the marriage is considered "community" property and is frequently divided 50/50 in the event of a divorce. The manner in which states treat "community property," also known as "marital property," will determine what happens to debt or assets upon divorce. Common Property Statutes State laws govern community property, and not all states have such laws on the books. Community property laws in nine states (and Puerto Rico) govern the division of debt and property in a divorce. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are included in this group. In such states, property is typically divided equally, whereas in all other states, distribution is determined by a judge based on what is equitable or fair. Alaska is distinctive in that divorcing couples have options. Despite the fact that each state determines how property is divided upon divorce, the laws may vary slightly. For instance, some states, such as California, divide debts and assets "equally" (50/50), while others, such as Texas, divide them "equitably." Even in community property states, courts in jurisdictions that apply the equitable distribution doctrine consider numerous factors, some of which justify unequal distribution of property or debt. Because these laws affect property and other valuable assets, they can have a profound impact on the future of a spouse who is forced to share a portion of an asset that was previously considered separate property. In the absence of a prenuptial agreement between the parties, property distribution will be governed by the law of the state in which the couple was married. Compared to separate property, community property In most cases, property acquired during a marriage belongs to both partners. This is particularly true in states where community property laws exist. Despite the fact that not all states have such laws, property acquired during the duration of a marriage is distributed equally upon divorce. The following are examples of community property: Earnings of each spouse during the marriage Home and furnishings acquired with marital funds during the marriage (reword) Investments and operations of a company generate interest income. The mortgage and family home Separate property, on the other hand, is that which was owned prior to the marriage, was inherited or received as a gift during the marriage, or was earned after the date of separation by either spouse. These are examples of separate property: Bank accounts that are held independently Separately held inheritances acquired during a marriage presents to either partner Personal injury compensation Any property acquired after the dissolution of a marriage is considered separate property. Courts have also categorized certain properties as "partially" or "quasi" community property. This includes assets that would have been considered separate property at the beginning or during the marriage, but have become marital property as a result of co-mingling or other circumstances. Considerations a Judge Might Employ to Determine Property Division A judge may consider several factors when determining how to divide property acquired during the marriage. A judge will consider 1) the earning capacity of each spouse, 2) which parent is the legal custodian of the children (if any), and 3) the existence of fault grounds such as adultery or cruelty. Consequently, even in states with community property, property may not always be divided 50/50. Instead, courts will consider the following factors to determine whether an unequal property division is necessary: One spouse may receive a larger share of the marital assets if fault-based grounds for divorce exist (such as adultery, cruelty, etc.). Loss of Continuing Benefit: Whether one spouse will incur the loss of compensation they would have received had the marriage continued. Disparity of Earning Capabilities: Whether disparities exist between incomes, earning capacities, and business opportunities that may impact property division. Health and Physical Conditions: Whether the physical health or condition of the spouses may impact the property division. Age Disparities: Whether there is a disparity between the ages of the spouses that could affect one's ability to work or receive retirement benefits. The size of the estate can have an impact on the distribution of property. The larger the estate, the more likely the court is to favor a 50/50 split. The likelihood that one of the spouses will receive a substantial inheritance. Gifts to a Spouse: After a divorce, gifts are typically converted to separate property. A spouse who obtains primary custody of children under the age of 18 may affect the division of property. Consult with a Divorce Lawyer Concerning Community Property Legal issues surrounding a divorce can be overwhelming in number. Property matters, alimony, child custody, child support, division of retirement benefits accrued during the marriage, visitation rights, and other legal matters must all be handled with care. Finding the appropriate divorce attorney is crucial. Contact a local divorce attorney with experience in your area today.

Community property issues can arise during divorce proceedings and after a spouse’s death. When spouses divorce or pass away, they are frequently left with the arduous task of dividing property and proceeds acquired during the marriage. This may include tangible assets (such as stocks, bonds, and legal title), as well as intangible assets (such as automobiles, furniture, paintings, and family homes) and debt.

In some states, property acquired during the marriage is considered “community” property and is frequently divided 50/50 in the event of a divorce. The manner in which states treat “community property,” also known as “marital property,” will determine what happens to debt or assets upon divorce.

Common Property Statutes

State laws govern community property, and not all states have such laws on the books. Community property laws in nine states (and Puerto Rico) govern the division of debt and property in a divorce. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are included in this group. In such states, property is typically divided equally, whereas in all other states, distribution is determined by a judge based on what is equitable or fair.

Alaska is distinctive in that divorcing couples have options.

Despite the fact that each state determines how property is divided upon divorce, the laws may vary slightly. For instance, some states, such as California, divide debts and assets “equally” (50/50), while others, such as Texas, divide them “equitably.” Even in community property states, courts in jurisdictions that apply the equitable distribution doctrine consider numerous factors, some of which justify unequal distribution of property or debt.

Because these laws affect property and other valuable assets, they can have a profound impact on the future of a spouse who is forced to share a portion of an asset that was previously considered separate property. In the absence of a prenuptial agreement between the parties, property distribution will be governed by the law of the state in which the couple was married.

In most cases, property acquired during a marriage belongs to both partners. This is particularly true in states where community property laws exist. Despite the fact that not all states have such laws, property acquired during the duration of a marriage is distributed equally upon divorce.

The following are examples of community property:

Earnings of each spouse during the marriage

Home and furnishings acquired with marital funds during the marriage (reword)

Investments and operations of a company generate interest income.

The mortgage and family home

Separate property, on the other hand, is that which was owned prior to the marriage, was inherited or received as a gift during the marriage, or was earned after the date of separation by either spouse.

These are examples of separate property:

  • Bank accounts that are held independently
  • Separately held inheritances acquired during a marriage
  • presents to either partner
  • Personal injury compensation
  • Any property acquired after the dissolution of a marriage is considered separate property

Courts have also categorized certain properties as “partially” or “quasi” community property. This includes assets that would have been considered separate property at the beginning or during the marriage, but have become marital property as a result of co-mingling or other circumstances.

Considerations a Judge Might Employ to Determine Property Division

A judge may consider several factors when determining how to divide property acquired during the marriage. A judge will consider 1) the earning capacity of each spouse, 2) which parent is the legal custodian of the children (if any), and 3) the existence of fault grounds such as adultery or cruelty.

Consequently, even in states with community property, property may not always be divided 50/50. Instead, courts will consider the following factors to determine whether an unequal property division is necessary:

  • One spouse may receive a larger share of the marital assets if fault-based grounds for divorce exist (such as adultery, cruelty, etc.).
  • Loss of Continuing Benefit: Whether one spouse will incur the loss of compensation they would have received had the marriage continued.
  • Disparity of Earning Capabilities: Whether disparities exist between incomes, earning capacities, and business opportunities that may impact property division.
  • Health and Physical Conditions: Whether the physical health or condition of the spouses may impact the property division.
  • Age Disparities: Whether there is a disparity between the ages of the spouses that could affect one’s ability to work or receive retirement benefits.
  • The size of the estate can have an impact on the distribution of property. The larger the estate, the more likely the court is to favor a 50/50 split.
  • The likelihood that one of the spouses will receive a substantial inheritance.
  • Gifts to a Spouse: After a divorce, gifts are typically converted to separate property.
  • A spouse who obtains primary custody of children under the age of 18 may affect the division of property.

Consult with a Divorce Lawyer Concerning Community Property

Legal issues surrounding a divorce can be overwhelming in number. Property matters, alimony, child custody, child support, division of retirement benefits accrued during the marriage, visitation rights, and other legal matters must all be handled with care. Finding the appropriate divorce attorney is crucial. Contact a local divorce attorney with experience in your area today.

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Written by Canterbury Law Group

Creditor Objection to Chapter 13 Plan

Creditor Objection to Chapter 13 Plan

Discover what it means if the bankruptcy trustee objects to your Chapter 13 plan’s confirmation and what you can do.

If you file for Chapter 13 bankruptcy and your proposed repayment plan violates all applicable bankruptcy laws, the bankruptcy trustee may object to your plan’s confirmation (approval). The following sections will discuss why the trustee may object to your Chapter 13 plan and your options if the trustee does object.

The Chapter 13 Plan and Confirmation by the Court

Chapter 13 bankruptcy is frequently referred to as a reorganization bankruptcy due to the fact that you repay some or all of your debts via a repayment plan. When you first file for Chapter 13, you present the trustee, your creditors, and the court with an initial repayment plan. After filing your case, you must immediately begin making plan payments to the trustee (your first payment is typically due within 30 days). However, your plan does not become permanent until it is confirmed by the court (which can take up to several months). (For more information on the Chapter 13 repayment plan, click here.)

Generally, unless the trustee or one of your creditors objects, the court will approve your plan. However, if you fail to submit a workable plan that complies with all applicable bankruptcy laws, the trustee may object to its confirmation.

When a Trustee May Disagree with Your Chapter 13 Plan

Numerous requirements must be met in order for the court to approve your proposed Chapter 13 plan. Generally, the trustee will oppose your plan if:

  • In your plan, you do not pay all of your disposable income to unsecured creditors (learn about how your disposable income affects your Chapter 13 plan)
  • You lack the financial means to make your plan payments.
  • Your plan does not pass the test of being in the best interests of creditors (which states that your plan must pay your unsecured creditors at least an amount equal to what they would have received in Chapter 7 bankruptcy)
  • Your plan excludes certain debts that you are required to repay (learn about debts you must pay back in your Chapter 13 plan)
  • Your plan is either too short or too long in duration (learn about how long your Chapter 13 plan must last)
  • You do not provide the trustee with all of the necessary supporting documents (such as tax returns or pay stubs).
  • you are in arrears with your plan payments, or
  • Otherwise, your proposal is not made in good faith. (Learn about the Chapter 13 good faith requirement.)

What Happens If Your Chapter 13 Plan Is Rejected by the Trustee?

One of the trustee’s primary responsibilities in Chapter 13 bankruptcy is to maximize payment to your unsecured creditors. This means that the trustee will almost always argue that you should be contributing more to your Chapter 13 plan. As a result, trustee objections are extremely prevalent in Chapter 13 bankruptcy. (Learn more about the Chapter 13 trustee’s role.)

If the trustee wishes to object to your plan, he or she will typically file a written objection to confirmation with the court, outlining the reasons why the court should reject your proposed plan. If you do not respond to the trustee’s objection, the plan will most likely be denied confirmation by the court. If you wish for the court to approve your plan following the trustee’s objection, you must file a written opposition explaining why you believe your plan is ready for confirmation.

Your Alternatives If the Trustee Disapproves of Your Plan

In the majority of cases, you can:

  • rectify your errors
  • submit a revised plan, or
  • To resolve the objections, negotiate with the trustee.

However, if you are unable to reach an agreement with the trustee, you must be prepared to argue your case before a judge during the Chapter 13 confirmation hearing (discussed below).

Confirmation Hearing under Chapter 13

Following your Chapter 13 bankruptcy filing, the court will schedule a confirmation hearing to determine whether or not to approve your plan. If no objections are raised by the trustee or your creditors to your proposed plan, the court will confirm it at the hearing. (Learn more about the confirmation hearing for Chapter 13 bankruptcy.)

However, if the trustee files an objection to your plan and you are unable to resolve it prior to the confirmation hearing, you must explain to the judge why you believe your plan should be confirmed. Following your presentation, the trustee will have an opportunity to make an argument.

The judge will decide whether or not to confirm your plan after hearing both sides. If the judge determines that additional evidence is required, he or she may also continue the hearing or remand the case for trial or evidentiary hearing.

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Written by Canterbury Law Group

What Happens If You Don’t Make Your Chapter 13 Plan Payments?

What Happens If You Don't Make Your Chapter 13 Plan Payments?

Defaulting on your Chapter 13 plan (failing to make payments) has a number of unfavorable consequences. This may result in your creditors obtaining court permission to foreclose on your home or repossess your car. Alternatively, the court may dismiss your case or never approve it at all. Discover some of the potential consequences of failing to make a Chapter 13 repayment plan payment, as well as options for resolving your bankruptcy.

After you file for bankruptcy, the bankruptcy court will determine whether your proposed repayment plan is feasible. Even though this “confirmation” (approval) process can take several months, you will begin making payments approximately one month after filing and will maintain current monthly plan payments until confirmation. If you do not keep up with your plan payments, your bankruptcy case will be dismissed.

Confirmations are frequently delayed when a trustee or creditor objects to the proposed Chapter 13 plan at the outset. If the confirmed amount is greater than the agreed-upon three- or five-year repayment period, the plan payment will be adjusted to ensure that you can complete the plan within the agreed-upon three- or five-year repayment period.

Creditors Could Be Exempt From the Automatic Stay

When you file for bankruptcy, an automatic stay is triggered. Except in limited circumstances, the automatic stay prohibits creditors from initiating or continuing collection activities (such as foreclosure or repossession) without first obtaining permission from the bankruptcy court. Due to the fact that the majority of your creditors will be paid through the Chapter 13 plan, they may seek relief from the automatic stay (permission to resume collection activities) if you fall behind on your plan payments. The request is made through the filing of a motion to lift the stay.

You Might Have Your Chapter 13 Bankruptcy Dismissed

Even if the court has already confirmed your case, you run the risk of having your case dismissed if you fall behind on your Chapter 13 payments. The bankruptcy trustee will petition the court to dismiss your case for failure to adhere to repayment plan requirements, and if granted, the court will dismiss your case without granting you a discharge of your debts (qualifying debts will remain unaffected).

What Are Your Chances of Avoiding Bankruptcy?

Financial difficulties during the Chapter 13 process are not uncommon. Even if you fall behind on your Chapter 13 payments, your case will not be automatically dismissed. You will still have options for resolving your bankruptcy and regaining possession of your property.

Eliminate Your Default

Even if the Chapter 13 trustee requests that your case be dismissed, you may still petition the court for additional time to cure (catch up on) your default. This is the simplest option if you missed a few payments due to an emergency but are now back on track and ready to begin repaying your debts. The majority of trustees and judges will grant you additional time if you demonstrate that you are capable of making up for missed payments.

Make Changes to Your Chapter 13 Plan

If your circumstances have changed since you filed bankruptcy (for example, if your income has decreased as a result of a layoff), you may petition the court to modify your plan and lower your monthly payments. This, however, may not be possible if the plan is solely used to pay priority debts and secured debts on property you do not wish to surrender. Due to the fact that these debts must be paid in full, the court will be unable to reduce your Chapter 13 plan payments.

Restore Your Bankruptcy Under Chapter 13

Even if the bankruptcy is dismissed by the court, you may be able to reinstate your case. However, you will typically be required to do so immediately following your dismissal, and you will be required to bring your plan payments current.

Convert to Chapter 7 or Obtain an Accelerated Discharge

Additionally, you may be able to convert your Chapter 13 bankruptcy to a Chapter 7 (in which case you will receive a discharge without making any plan payments). To do so, you must demonstrate that you qualify for a Chapter 7 bankruptcy because you are no longer able to afford a Chapter 13. However, keep in mind that Chapter 7 bankruptcy does not allow you to discharge priority debts or cure arrearages, so converting may not be in your best interest.

Similarly, you may file for a Chapter 13 hardship discharge early. You would, however, be subject to the same restrictions as Chapter 7.

Represent Yourself in a Chapter 13 Bankruptcy

In the majority of cases, you can immediately re-file a Chapter 13 bankruptcy following dismissal. However, you may be prohibited from refiling for six months if you violated court orders or voluntarily dismissed your prior case, particularly if a creditor obtains relief from the stay. These types of filing prohibitions occur when the court “with prejudice” dismisses your case. Additionally, if you file a subsequent bankruptcy within a year of your previous one, the automatic stay will be limited to 30 days, and you will need to petition the court to extend it.

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Written by Canterbury Law Group

The Chapter 13 Confirmation Hearing

Chapter 13 Bankruptcy Confirmation Hearing

You must propose a plan to repay part or all of your debts when filing Chapter 13 bankruptcy. The bankruptcy judge decides whether your plan can be approved at the confirmation hearing. Continue reading to learn more about the confirmation hearing, including when it takes place, who is invited, and what happens if your Chapter 13 plan is not approved.

The Repayment Plan for Chapter 13

In Chapter 13, you propose a three- to five-year payment plan. The month after you file your case, you’ll make your first payment. The funds are held by the Chapter 13 bankruptcy trustee until the judge approves your Chapter 13 plan, after which they are distributed to creditors.

Hearing on Confirmation

The bankruptcy judge must approve (confirm) your Chapter 13 plan. The bankruptcy court judge will use the confirmation hearing to determine the following:

  • whether your plan is feasible and you’ll be able to make the payments on time, and
  • whether you filed your plan in good faith or not, your unsecured creditors will receive the same amount of money or more than they would have received if you had filed for Chapter 7 bankruptcy.

Timing of Confirmation

Within 45 days of the 341 meeting of creditors, the court will schedule the confirmation hearing. The hearing will be announced to your creditors at least 28 days in advance.

Attendance

You are not required to attend the confirmation hearing if you are represented by an attorney, but you may do so if you wish. You must appear if you are not represented by counsel, or your Chapter 13 case will be dismissed.

What Takes Place During the Hearing?

You will report to the assigned judge’s courtroom when you appear for the confirmation hearing. Any plan objections that were not resolved before the hearing will be argued by the trustee or creditor when they are called. The judge will consider the arguments and determine whether your plan meets the requirements for confirmation. Both you and your creditors are bound by the plan once it is confirmed.

Objections at the Confirmation Hearing should be planned ahead of time.

The confirmation of your plan may be challenged by your creditors or the Chapter 13 bankruptcy trustee. Among the most common objections are:

  • The plan does not commit all available funds for the three or five-year plan period, or it does not commit all available funds for the three or five-year plan period.
  • Under the plan, you haven’t adequately provided for creditors.

For example, if you want to keep the property that serves as collateral in Chapter 13, you must pay all past due amounts owed to secured creditors, which are usually the holders of a mortgage or car loan. In addition, you must pay off all of your unsecured debts, such as credit card balances, medical bills, and personal loans, with your disposable income. Furthermore, these creditors cannot receive less than they would have received if you had filed for Chapter 7. The “best interests of creditors” test is what it’s called.

In many cases, an objection can be resolved prior to the hearing. If the trustee or a creditor claims that the expenses listed in Schedule J are excessive, you can resolve the issue by providing proof of your expenses. Similarly, if a creditor claims you aren’t paying enough, you can settle the dispute by changing your payment schedule to increase the amount you pay.

If the Court Approves Your Plan During Your Hearing

Following confirmation, the trustee will use the monthly payments you send in to pay the creditors listed in your Chapter 13 plan. Making timely and regular payments to the trustee is critical to the success of your case. If you are unable to make your Chapter 13 plan payments, contact the trustee’s office right away. They can assist you in modifying your plan payments.

If Your Plan Isn’t Confirmed by the Court

If the court rejects your proposed plan, the trustee will refund your money, minus any adequate protection payments made to ensure that a secured creditor—usually the holder of your car payment—is not financially harmed during the confirmation process (a bankruptcy requirement).

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Written by Canterbury Law Group

Annulment in Arizona

Are you wondering if you are eligible for an annulment? Learn about the grounds for annulment in Arizona and how to obtain one.

Annulment is a frequently misunderstood legal concept, owing to the fact that popular culture and religion have promoted divergent and frequently erroneous views of what an annulment is in family law.

This article discusses “civil annulments,” as opposed to “religious annulments,” which can be granted only by a church or clergy member and have no legal effect on your marital status.

Annulments and divorces are similar in that they both establish marital status. However, the critical distinction between them is that divorce terminates an existing, valid marriage, whereas annulment simply declares that what everyone believed was a marriage was never actually one. An annulled marriage never existed in the eyes of the law.

Arizona’s Grounds for Annulment

There are several circumstances in which you may petition an Arizona court to annul your marriage:

  • One of the parties was married to another individual (bigamy).
  • The parties are blood relatives.
  • At the time of the marriage, one of the parties was a minor and did not obtain the consent of a parent or guardian.
  • One of the parties, or both, lacked the mental capacity to marry.
  • Both parties lacked the physical ability to marry.
  • At the time of the marriage, one or both parties were intoxicated.
  • The parties lacked the intent to enter into a marriage contract, either one of them or both.
  • The parties failed to obtain an official marriage license in a timely manner.
  • Instead of marrying each other in person, the parties used a proxy (substitute).
  • One of the parties committed fraud in order to obtain the consent of the other party to the marriage.
  • The one party used coercion (legally referred to as “duress”) to coerce the other party into agreeing to marry.
  • The parties have not engaged in sexual relations or one of the parties has refused to engage in sexual relations.
  • One of the parties fabricated information about his or her religion.
  • One of the parties omitted information about his or her previous marital status.
  • One of the parties planned to violate a premarital agreement in secret.

How Can I Obtain a Court Order Terminating My Marriage?

Due to the fact that annulment actions are heard in Arizona’s superior (trial) courts, you must file your paperwork at your local courthouse. By court order, an Arizona superior court judge can declare a marriage null and void and annul it. The “plaintiff” (the party seeking annulment) should file an annulment petition, and the defendant should respond. Additional documents may be required, and both parties must adhere to the rules governing service of process. Both will be summoned to appear in court, where the court will hear testimony, consider written submissions and applicable law, and issue an order.

Because annulments have significant financial and custodial consequences, it is critical to consult with a lawyer prior to proceeding.

Certain individuals fear that if their marriage is annulled, the paternity of their children will be questioned. Technically, this is correct. Due to the fact that an annulled marriage is invalid, the children born of the “marriage” are illegitimate, as if they were born to single parents. This, however, is a technical distinction with little practical significance, as Arizona law provides that “every child is the legitimate child of its natural parents and is entitled to support and education in the same manner as if born in lawful wedlock.” Thus, all children in Arizona receive the same level of protection and support regardless of their parents’ marital status, whether they are divorced or never married. While that statute does not affect parental rights, the courts in Arizona have also determined that parents of children born outside of marriage have co-equal custody of their children once paternity is established.

In Arizona, a presumption of paternity is created (a strong legal assumption that the alleged father is the biological father) if any of the following are true:

the father and mother were married within the ten months preceding the child’s birth, or the child is born within the ten months following the marriage’s termination by death, divorce, or annulment.

  • Genetic testing establishes at least a 95% probability of paternity.
  • A birth certificate is signed by both the mother and father of an unmarried child, or
  • Both parents sign a notarized or witnessed statement acknowledging paternity.
  • Thus, the majority of children born out of annulled marriages in Arizona are almost certainly covered by a paternity presumption. If a father wishes to contest this presumption, he must establish his paternity through “clear and convincing” (very strong and substantial) evidence.

Additionally, the Arizona court hearing the annulment case will determine parentage and enter custody and child support orders.

Because an annulled marriage is legally regarded as never having been valid, courts in the majority of states lack the authority to award alimony or divide property or debts. This is because there cannot be a marital estate without a valid marriage. However, Arizona is unique in that it has a more generous statute. According to Arizona law, when a marriage is annulled, the courts must divide the property between the spouses.

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Written by Canterbury Law Group

What Does The Chapter 7 And 13 Bankruptcy Trustee Do?

What Does The Chapter 13 Bankruptcy Trustee Do?

Learn more about Chapter 13 bankruptcy trustees, including what they do, how they are compensated, and how they manage your repayment plan.

When you file for Chapter 13 bankruptcy, the court will appoint a trustee to manage your case. You’ll learn about the Chapter 13 trustee’s responsibilities, how the trustee is compensated, and the role the trustee will play in your case in this article.

The Chapter 13 Bankruptcy Trustee’s Responsibilities

The trustee’s job in a Chapter 13 bankruptcy is to:

  • Make sure your proposed Chapter 13 repayment plan complies with all legal requirements.
  • Before you file, make sure you’ve filed your tax returns for the previous four years.
  • take advantage of the plan’s payments
  • Distribute plan payments to your creditors according to the law.
  • keep track of the required monthly income and expense reports in a Chapter 13 case, and
  • If you owe back child support, you must provide certain information to the payee and your state’s child support enforcement agency.

How are Chapter 13 Trustees compensated?

Trustees in Chapter 13 keep about 7%–10% of the payments they make to creditors. When deciding whether Chapter 13 is right for you, keep this fee in mind.

The Function of the Chapter 13 Trustee in Your Case

Many Chapter 13 trustees are involved in the cases they oversee. This is particularly true in small suburban or rural judicial districts, as well as in districts with a high number of Chapter 13 bankruptcy cases. A trustee might, for example:

  • provide you with financial advice, such as assisting you in the creation of a realistic budget (the trustee cannot, however, give you legal advice)
  • assist you in making any necessary changes to your plan
  • if you miss a payment or two, give you a temporary reprieve or take other steps to help you get back on track, or
  • Participate in any hearing about the value of a piece of property, and consider hiring an appraiser if necessary.
  • Your financial relationship with the trustee has its limits, despite the trustee’s interest in your finances.
  • You will have control over any money or property you obtain after filing, as long as you follow your repayment plan’s instructions and make all regular payments on your secured debts.

However, if your income or property rises during the course of your plan (for example, if you get a big promotion or win the lottery), the trustee can seek to amend your plan to pay your creditors a higher percentage of what you owe them rather than the lower percentage originally specified. If your income drops and you have to convert from Chapter 13 to Chapter 7, the trustee may become involved.

When you file for Chapter 7 bankruptcy, the court appoints a bankruptcy trustee to oversee the administration of your case. You’ll learn about the specific responsibilities of the Chapter 7 bankruptcy trustee in this article, so you’ll know what to expect before, during, and after the 341 meeting of creditors—the mandatory hearing for almost all filers.

What Does a Chapter 7 Trustee Do?

The Chapter 7 trustee examines the debtor’s bankruptcy paperwork and verifies his or her identification. However, these are minor responsibilities. The Chapter 7 trustee’s primary responsibility is to sell any property that the debtor is not entitled to keep and to distribute the proceeds to the debtor’s creditors. Thus, in any Chapter 7 bankruptcy case, the trustee’s primary interest will be in your personal property and any property you claim as exempt (that you have the right to keep).

Certain individuals believe that the trustee’s role is to assist the debtor throughout the process. The trustee’s role is to protect creditors, not debtors—although the trustee will be courteous and assist the case in moving forward. The best way to grasp this dynamic is to understand how the trustee is compensated. Continue reading.

Payment to the Chapter 7 Trustee

A Chapter 7 trustee is compensated a pittance of $65 per case for performing a cursory review of a debtor’s bankruptcy petition (as of August 2020). A Chapter 7 trustee, on the other hand, stands to earn significantly more. The trustee is compensated by the court a percentage of the funds distributed to the debtor’s creditors.

The funds could come from a variety of nonexempt sources (property that the filer cannot protect with a bankruptcy exemption), including money in the debtor’s bank account, nonexempt property that the trustee liquidates (sells), or funds that the debtor agrees to pay in exchange for the right to keep nonexempt property (more below). The trustee receives 25% of the first $5,000, 10% of the next $50,000, and 5% of any additional funds up to $1,000,000.

The Chapter 7 Trustee conducts an examination of the Bankruptcy Petition.

If all of your property is exempt (you get to keep exempt property), your case is considered a “no-asset” case—creditors will receive nothing. The bankruptcy notice sent to creditors will inform them that they are not required to file proof of claim forms because there will be no money available to pay them. However, they will be informed that this may change.

Under the supervision of the United States Trustee, the trustee is required to review your bankruptcy papers for accuracy and indications of possible fraud or abuse of the bankruptcy system. The trustee will review the documentation and look for indications that you are concealing or mischaracterizing assets. The petition and schedules, as well as the 521 documents you submitted prior to the hearing, will be reviewed (bank statements, paycheck stubs, profit and loss statements, tax returns, and the like).

After discovering nothing, the trustee will lose interest in the case. When the trustee has no property to seize and sell in order to pay your unsecured creditors, there is no commission to motivate the trustee.

The 341 Creditors Meeting Is Conducted by the Chapter 7 Trustee

You’ll meet the Chapter 7 bankruptcy trustee at your creditors’ meeting, which you must attend in order to avoid having your bankruptcy dismissed. The trustee will verify your identification, ask the mandatory 341 questions (along with any other issues raised by your paperwork), and allow any creditors who appear to ask questions (they rarely show up).

Generally, if all of your assets are exempt, the trustee will call the meeting to a close and you will not hear from the trustee again. You’ll complete your debtor education course and await the discharge of your debt.

If, however, you are unable to fully respond to the trustee’s questions, the trustee will postpone the creditors’ meeting and request that you submit appropriate documentation in the interim. Occasionally, the trustee may retain an attorney to pursue nonexempt assets you appear to own, or may refer your case to the United States Trustee’s office for further action if it appears as though you engaged in fraudulent activity.

Nonexempt Assets Are Seized by the Chapter 7 Trustee

If the trustee needs to seize and sell nonexempt assets, you must cooperate in delivering them to the trustee for disposition. Additionally, you can “repurchase” nonexempt assets from the trustee at a negotiated price or substitute exempt assets for nonexempt assets. Numerous trustees discount the property’s value by 20% and occasionally grant the debtor a few months to pay.

Search by the Trustee for Non-Exempt Assets

Many people are unsure whether a trustee has the authority to search their homes to ascertain whether they are concealing property. While such searches are unusual, as part of your obligation to cooperate with the trustee, you may be required to give the trustee a guided tour of your home or storage space. And if you refuse to cooperate, the trustee can obtain a court order compelling you to comply.

Abandonment of Non-Exempt Assets by the Trustee

If you own nonexempt property that is not worth much or would be difficult for the trustee to sell, the trustee can — and frequently will — abandon it, allowing you to keep it. For instance, regardless of how much your used furniture is theoretically worth, many trustees will avoid selling it. Arranging for the sale of used furniture is time consuming and rarely results in a significant profit for the creditors.

The Chapter 7 Trustee Issues Notices of Support Arrears

If you owe back child support, the trustee must notify the support claimant and the state child support agency in order to assist them in locating you following your bankruptcy discharge. Specifically, the trustee will inform the payee of his or her bankruptcy-related rights. The trustee will notify the state child support enforcement agency of the back support, the discharge, the debtor’s address and employer information, and the identity of any creditor holding a nondischargeable, reaffirmed, or a claim.

Both the payee and the child support enforcement agency have the right to request your last known address from these creditors. These creditors are permitted by law to release such information without incurring any penalties.

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Written by Canterbury Law Group

What Does The Chapter 13 Bankruptcy Trustee Do?

What Does The Chapter 13 Bankruptcy Trustee Do?

Learn more about Chapter 13 bankruptcy trustees, including what they do, how they are compensated, and how they manage your repayment plan.

When you file for Chapter 13 bankruptcy, the court will appoint a trustee to manage your case. You’ll learn about the Chapter 13 trustee’s responsibilities, how the trustee is compensated, and the role the trustee will play in your case in this article.

The Chapter 13 Bankruptcy Trustee’s Responsibilities

The trustee’s job in a Chapter 13 bankruptcy is to:

  • Make sure your proposed Chapter 13 repayment plan complies with all legal requirements.
  • Before you file, make sure you’ve filed your tax returns for the previous four years.
  • take advantage of the plan’s payments
  • Distribute plan payments to your creditors according to the law.
  • keep track of the required monthly income and expense reports in a Chapter 13 case, and
  • If you owe back child support, you must provide certain information to the payee and your state’s child support enforcement agency.

How are Chapter 13 Trustees compensated?

Trustees in Chapter 13 keep about 7%–10% of the payments they make to creditors. When deciding whether Chapter 13 is right for you, keep this fee in mind.

The Function of the Chapter 13 Trustee in Your Case

Many Chapter 13 trustees are involved in the cases they oversee. This is particularly true in small suburban or rural judicial districts, as well as in districts with a high number of Chapter 13 bankruptcy cases. A trustee might, for example:

  • provide you with financial advice, such as assisting you in the creation of a realistic budget (the trustee cannot, however, give you legal advice)
  • assist you in making any necessary changes to your plan
  • if you miss a payment or two, give you a temporary reprieve or take other steps to help you get back on track, or
  • Participate in any hearing about the value of a piece of property, and consider hiring an appraiser if necessary.
  • Your financial relationship with the trustee has its limits, despite the trustee’s interest in your finances.
  • You will have control over any money or property you obtain after filing, as long as you follow your repayment plan’s instructions and make all regular payments on your secured debts.

However, if your income or property rises during the course of your plan (for example, if you get a big promotion or win the lottery), the trustee can seek to amend your plan to pay your creditors a higher percentage of what you owe them rather than the lower percentage originally specified. If your income drops and you have to convert from Chapter 13 to Chapter 7, the trustee may become involved.

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Written by Canterbury Law Group

Divorce Frequently Asked Questions & When Is The Right Time To File For Divorce

In Arizona, divorce refers to a legal “dissolution” of marriage. You will go through a procedure in court to formally end your marriage. If you are the one who goes to court for a divorce, you will be identified as the “petitioner.” The other spouse will be identified as the “respondent.” Divorce in Arizona is not the same as in other states. Here are some answers to common questions most people have about divorce in Arizona.

Can I File for Divorce Anytime?

Either you or your spouse must have resided in the state for a minimum of 90 days before filing for a divorce at a local Arizona court. That is a legal requirement.  If there are children, they must typically be in the state for 180 days to vest custody jurisdiction, depending on the facts of the case.

Do I Need a Divorce Attorney?

Technically, you can represent yourself in court. However, it is highly recommended to get your attorney from your local area, like a divorce attorney in Phoenix. If you choose to self-represent, the court will assume that you know all the laws and rules pertaining to your case. You will have to follow court procedures on your own. A judge may disallow you to take certain actions if you do not properly follow court procedure. No one at court will be able to give you legal aid because they are barred by law from doing so.

You can seek legal aid if you cannot afford an attorney for your divorce. You can also petition the court to have the spouse pay for your attorney’s fees if your spouse makes substantially more income than you do.  Every case is unique.  

Do I Need to Give a Reason for Divorce?

Not in Arizona. The state has a so-called “no fault” clause, which means neither party needs to give a reason for the divorce. Moreover, the romantic escapades of Husband or Wife will have no relevance in the underlying dissolution action.  The mere desire to get a divorce is enough. In the court, only one spouse needs to claim that the marriage is “irretrievably broken “to finalize a divorce. The only exception is if the spouses have previously chosen a “covenant marriage”. Then, the petitioning spouse must provide ground or reasons for the divorce under state law.

What are A.R.S. and A.R.F.L.P.?

You will see these acronyms in the papers your divorce lawyer in Scottsdale or elsewhere files. The letters stand for particular legal statutes, or laws, in Arizona. A.R.S. refers to Arizona Revised Statutes, and A.R.F.L.P. refers to Arizona Rules of Family Law Procedure. You can go to the Arizona court or state websites to get access to these legal documents and rules if needed.  Ideally, you simply hire counsel and let them do their job to advocate for your rights in the underlying divorce.

What Do I Do if My Spouse Doesn’t Want a Divorce?

Too bad.  It’s going to happen anyway.  In cases where a spouse is morally against the divorce from advancing, there is little they can do to stop the case.  At best, the objecting spouse can request the court order a mandatory reconciliation counseling session which typically only pauses the case for 30 to 60 days. If at the end of reconciliation session, the spouses have not come to an agreement to postpone the divorce, the proceedings will go forward. Conciliation meetings are free of charge and rarely derail a case.  

If you have children, then your proceedings will be subject to a wide range of family laws in Arizona. The legal aspects you should consider will depend on the type of custody you seek. For more information, you should contact an attorney in your area.  Your children are your most treasured asset and case strategy and approach to maximize your custody is critical and experienced legal counsel even more important in such instances.  

Divorce is frequently a lengthy and costly process. Court proceedings can take months to complete. Simultaneously, the spouses may not get along and may be going through a difficult emotional period.

Additionally, the spouses may be experiencing financial hardship as a result of the household income being split and the need to support two separate homes. Having a plan in place for when to leave a marriage can help a spouse minimize the financial impact of the divorce. The following are some of the financial factors to consider when planning an exit from a marriage:

Market for Real Estate

If the couple owns a home together, one of the most important factors to consider when deciding when to divorce is the state of the real estate market. To afford smaller, separate spaces, the spouses may have to sell the house and split the proceeds. In contrast, the spouses may agree that one of them should continue to live on the property while the other receives other marital assets to compensate for his or her equity share. This step is best taken when the value of the property is high for the spouse who will receive other property. The spouse who will remain in the home, on the other hand, may prefer to divorce when the real estate market is weak so that he or she will not have to give up as many valuables to the other spouse.

It’s All About the Kids

If the couple has minor children or children who will be financially impacted by the divorce, this is an important factor to consider. A divorce involving minor children is significantly more difficult than a divorce involving no minor children. Lawyers devote more time to preparing arguments about child custody. A parent may also be obligated to pay child support for many years to come. Some states allow child support obligations to continue after the child reaches the age of 18 and may even require financial support while the child attends college. However, getting a divorce while your children are older but still dependent has a financial advantage in that they may be eligible for student loans or grants that they would not have been eligible for in an intact family. Many of these programs only consider the income of the custodial parent when determining financial aid eligibility.

Job Situation

The spouses’ employment status is another important financial consideration. In an ideal world, spouses will divorce when they both earn enough money to support themselves. This, however, is not always the case. It’s possible that a spouse’s hours have recently been reduced. A spouse’s job may have been lost. A person’s job may have been lost due to a sudden illness. When a couple is going through financial difficulties, it’s common for them to have problems in their marriage as well. Waiting for both spouses to regain financial stability or realign their careers may be difficult, but it may be preferable, especially if one spouse is required to pay spousal support to an unemployed or underemployed spouse.

Due to the separation of the spouses and their finances, a divorce often necessitates a slew of changes. One or both spouses may need to purchase new homes, vehicles, or change jobs. The economy can have a direct impact on whether these changes are feasible. If a spouse has been out of work for a long time, it may be difficult for him or her to re-enter the workforce during a downturn.

Divorce can have a negative impact on a person’s credit score. After a divorce, if spouses have neglected their credit, it can have a negative impact on their lives. Good credit is frequently required to purchase a home, rent a property, open a credit card in one’s own name, and in some cases, to obtain employment. If the parties are in a happy place in their relationship even as they consider divorce, they may want to wait a year or two so that they can both work on improving their credit scores before adding the financial strains of divorce. Another option is to try to stay in the same house or drive the same car so that the spouse is not forced to rely on good credit right away.

Income and Assets in the Future

Another factor to consider when deciding on the best financial time to divorce is the possibility of future income or asset acquisition. When deciding how to divide assets between spouses, many states do not consider the future. If a bonus, raise, or inheritance is on the horizon, it may be in the best interests of the spouse who will receive these additional funds to have the divorce finalized before receiving these funds. The other spouse may wish to postpone the divorce until these additional funds are received and can be divided.

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