Filing for Bankruptcy in Arizona
When you file for bankruptcy in Arizona, you are bound by state as well as federal laws. Before you file for bankruptcy, you need to know whether you actually need to. Most people who are deep in debt opt to file for Chapter 7, which provides a certain degree of debt relief, asset protection and management of existing debt. However, Chapter 7 bankruptcy can only be used once every seven years. So, you really need to know whether you want to file for bankruptcy now or seek alternative solutions.
When it comes down to it, it will be up to you to decide whether you should file for any form of bankruptcy. A credit counselor may be able to help you. Before you make up your mind, here are several tips on filing for bankruptcy in Arizona:
Take Advantage of Arizona’s Exemption Laws
Arizona’s Exemption Laws allow a certain degree of protection against repossession of assets by creditors who have provided unsecured debt. For example, if you are neck deep in credit card debt, you don’t need to fear that the credit card company might show up and demand your house or car. Credit card debt is mostly dischargeable under Arizona law. Likewise, if you want unwanted collection calls to stop, you can simply do so by informing the creditor that you have filed for bankruptcy. Consult an attorney in your local area, for example, a bankruptcy attorney in Scottsdale, to know whether you can benefit from exemption laws and avoid filing for bankruptcy, or hastily seek to file.
Income may Only Qualify You for Chapter 13 Bankruptcy
To qualify for a Chapter 7 bankruptcy, your household income must be below the state median income for households of your size. If you fail this “means test,” you may have to file for Chapter 13 bankruptcy. Moreover, a bankruptcy judge can later examine whether your income is sufficient to repay debt under Chapter 13, rather than file under Chapter 7.
Under Chapter 13 bankruptcy, you will have to repay your existing debt in part under a strict household budget. Your finances will be closely watched by a court-appointed Trustee. If you fail to meet any of the court-mandated obligations, then the Chapter 13 filing could later result in sanctions or “conversion” to another type of bankruptcy under the code. Having competent legal counsel at your side at all times is critical.
Moving on with the Proceedings
If you have made up your mind to file for bankruptcy, you will have to go to a court at the zip code you have lived in for at least 91 of the past 180 days. If you haven’t lived at your current address for this amount of time, you should use the court relevant to your old zip code address. Expect most of the proceedings’ paperwork to be distributed through via snail mail. With or without counsel, you will have to go to the bankruptcy court in person at least once. Go online to find information about your court and to download important documentation. Appearing in a federal court house is often easier to digest with a competent licensed attorney by your side.
There are a number of fees associated with filing for bankruptcy in Arizona. In addition to paying for a lawyer, you will have to pay fees for things like mandatory pre-filing credit counseling, filing forms, making copies, and other similar tasks. Fees for different things will vary. For example, getting counseling can cost between $25 and $100. Costs can be as little as $400 for preparing documentation. However, hiring a lawyer may cost as much as $5,000. Every case is different. Be careful agreeing to the “lowest cost” bankruptcy attorney who later calls you demanding thousands more in fees to continue with your case. Like anything in life, lowest price does not mean highest value.
If your income is too low, some of these costs may be waived off or you might only have to pay a portion of the fees. Filing for bankruptcy is not free, so do expect to pay as you go through the federal proceedings.