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Written by Canterbury Law Group

Medical Bankruptcy

You can file for bankruptcy on medical bills. Medical debt is considered an unsecured debt, which means it is not tied to any specific property or collateral (like a mortgage or car loan). As an unsecured debt, medical bills can be included in both Chapter 7 and Chapter 13 bankruptcy filings.

Filing for Bankruptcy on Medical Bills:

  1. Chapter 7 Bankruptcy:
    • Discharge of Medical Debt: In Chapter 7 bankruptcy, most unsecured debts, including medical bills, can be discharged (eliminated) after the bankruptcy process is complete. This means you will no longer be legally obligated to pay those bills.
    • Eligibility: To qualify for Chapter 7, you must pass the means test, which examines your income, expenses, and family size to determine if you have the ability to pay back a significant portion of your debts. If you qualify, Chapter 7 can provide a quick way to discharge medical debt, often within 3 to 6 months.
    • Impact on Property: Chapter 7 is a liquidation bankruptcy, meaning that non-exempt assets (property or valuable items) might be sold to pay creditors. However, if you don’t have significant assets or they are protected by exemptions, you may be able to keep your property while discharging your medical bills.
  2. Chapter 13 Bankruptcy:
    • Repayment Plan for Medical Bills: In Chapter 13 bankruptcy, instead of discharging your debts right away, you will propose a repayment plan to pay back part of your debts over 3 to 5 years. The amount you pay will depend on your income, expenses, and other debts. Medical bills are included in this repayment plan.
    • Catch-Up on Medical Debt: If you are behind on medical payments or have accrued a significant amount of medical debt, Chapter 13 can help you catch up by consolidating your medical bills along with other debts into a single monthly payment.
    • Protection from Creditors: Filing for Chapter 13 will stop collection efforts, including harassment, lawsuits, or wage garnishment related to your medical debt.

Benefits of Filing for Bankruptcy on Medical Bills:

  • Discharge of Debt: Bankruptcy allows you to eliminate medical bills that are overwhelming your finances, giving you a fresh start.
  • Protection from Creditors: Filing for bankruptcy triggers an automatic stay, which immediately halts collection actions like calls, letters, lawsuits, and wage garnishment.
  • No Tax Liability on Discharged Medical Debt: Unlike some other types of debt, discharged medical debt is generally not considered taxable income, so you don’t have to pay taxes on the amount forgiven.

When to File for Bankruptcy on Medical Bills:

  • You have a significant amount of medical debt that you cannot afford to pay, and it’s affecting your financial stability.
  • You’re unable to make payments on medical bills due to high interest or accumulating fees, and creditors are threatening or pursuing legal actions.
  • You have other debts (e.g., credit card bills, personal loans) in addition to medical debt that you can’t manage and would benefit from bankruptcy protection.

Considerations Before Filing for Bankruptcy:

  • Effect on Credit Score: Bankruptcy will significantly impact your credit score, and the bankruptcy will stay on your credit report for 7 to 10 years, depending on the type (Chapter 7 or Chapter 13). This can make it more challenging to secure loans or credit in the future.
  • Exemptions and Property: If you file for Chapter 7, you may lose non-exempt assets if they can be liquidated to pay creditors. In Chapter 13, you must have a steady income to afford the repayment plan.
  • Medical Debt Alone May Not Be Enough for Chapter 7: If you only have medical debt and no other financial hardship, you might need to demonstrate that you meet the income and asset criteria for Chapter 7.

Alternatives to Bankruptcy for Medical Bills:

If bankruptcy doesn’t seem like the best option for you, there are other potential solutions for managing medical debt:

  • Negotiating with Healthcare Providers: Some providers may be willing to settle your debt for a lower amount or allow you to pay in installments.
  • Debt Consolidation or Credit Counseling: A credit counselor may be able to help you consolidate your medical bills into one payment or find other ways to manage debt without resorting to bankruptcy.
  • Debt Settlement: This involves negotiating with creditors to reduce the amount owed, typically for a lump-sum payment less than the total debt.

Conclusion:

Yes, you can file for bankruptcy on medical bills. Whether you file for Chapter 7 (which discharges the debt) or Chapter 13 (which reorganizes the debt into a manageable repayment plan) depends on your specific financial situation. Both options can provide relief from overwhelming medical debt, though there are potential impacts on your credit and assets. Consulting with a bankruptcy attorney can help you determine the best approach based on your individual circumstances.

bankruptcy, bankruptcy attorneys, Chapter 11, Chapter 11 Bankruptcy, Chapter 13, Chapter 13 Bankruptcy, Chapter 5, Chapter 5 claims, Chapter 7, Chapter 7 Bankruptcy, Filing Bankruptcy in Scottsdale, personal bankruptcy attorneys, Scottsdale Attorneys, Scottsdale Legal Help
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Should I File for Chapter 7 or Chapter 13 If I Want to Keep My Home?

Choosing between Chapter 7 and Chapter 13 bankruptcy depends on your financial situation and specific goals, including whether you want to keep your home. Each type of bankruptcy offers different benefits and consequences regarding property and debts.

Here’s a breakdown of both options to help you decide which might be better suited for you if your goal is to keep your home:

Chapter 7 Bankruptcy:

  • Liquidation bankruptcy: Chapter 7 is primarily a liquidation bankruptcy, where non-exempt assets may be sold to pay off creditors. It’s typically the faster of the two types of bankruptcy, often completing in about 3 to 6 months.
  • Eligibility: You must pass the means test to qualify for Chapter 7, which ensures your income is low enough to file for this type of bankruptcy.
  • How It Affects Your Home:
    • Exemption: In Chapter 7, you can keep your home if you are current on your mortgage payments and if your home is exempt under your state’s homestead exemption laws.
    • If your home has equity (the value of the home exceeds the amount owed on the mortgage), the bankruptcy trustee may sell it to pay creditors, unless the home equity is protected by the homestead exemption.
    • If you’re behind on mortgage payments, the lender may still proceed with foreclosure unless you catch up on payments through other means.
  • Debt Discharge: Chapter 7 eliminates most unsecured debts like credit cards, medical bills, and personal loans. However, it does not discharge secured debts like mortgages or car loans, so you must continue making payments on your home if you want to keep it.

Chapter 13 Bankruptcy:

  • Reorganization bankruptcy: Chapter 13 involves reorganizing your debt and setting up a repayment plan to pay back a portion of your debt over 3 to 5 years, based on your income, assets, and debt.
  • Eligibility: You must have a regular income and your unsecured debts must be less than $419,275, and secured debts must be less than $1,257,850 (as of 2023).
  • How It Affects Your Home:
    • Foreclosure Protection: Chapter 13 stops foreclosure proceedings and gives you an opportunity to catch up on past-due mortgage payments over time. You can keep your home if you can make the mortgage payments and any arrears as part of your repayment plan.
    • Retention of Property: You can usually keep your home even if you’re behind on payments, as long as you can afford to repay the arrears over the life of the repayment plan.
    • Revised Repayment Terms: If you owe a significant amount on your mortgage or other secured debts, you may be able to reduce the overall debt through the plan, although this can vary based on your specific situation.
    • Debt Discharge: At the end of the plan, any remaining unsecured debt that has not been repaid is discharged.

When to Choose Chapter 7:

  • You are current on your mortgage payments and don’t have a significant amount of home equity.
  • You are looking to eliminate unsecured debts quickly and start fresh, while being able to keep your home.
  • You don’t have significant assets to protect and don’t mind the potential risks of liquidation if there’s home equity that isn’t fully protected by the homestead exemption.
  • You don’t mind losing your home if it’s at risk due to unpaid mortgage arrears or foreclosure.

When to Choose Chapter 13:

  • You are behind on mortgage payments and want to avoid foreclosure. Chapter 13 gives you a chance to catch up on missed payments over a 3-5 year period, making it a good option for those at risk of losing their home.
  • You have significant home equity that would not be protected by Chapter 7 exemptions, or if you own other valuable assets you want to keep.
  • You want to restructure your debts, including mortgage arrears, and create a manageable repayment plan that allows you to retain your property.
  • You have regular income and can afford a structured payment plan over time.

Key Takeaways:

  • If keeping your home is a primary concern and you’re behind on your mortgage, Chapter 13 is generally the better option, as it allows you to reorganize your debts and catch up on overdue payments while preventing foreclosure.
  • If you’re current on your mortgage and have minimal home equity or don’t mind potentially losing your home (due to non-exempt equity), Chapter 7 may be an option to quickly discharge unsecured debts and keep your home.

However, the best choice depends on the specifics of your financial situation, such as the amount of mortgage arrears, home equity, income, and other debts. Consulting with a bankruptcy attorney can help you evaluate your situation and determine the most appropriate course of action based on your goals of keeping your home.

Carefully consider the advantages and disadvantages given above before discussing your bankruptcy with an attorney.  For more email the firm at [email protected] or call 480-744-7711.

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Can You File Bankruptcy For Medical Bills

You can file for bankruptcy to discharge or manage medical bills. Medical debt is considered unsecured debt, meaning it’s not tied to any specific asset, and it can be included in bankruptcy filings. There are two primary types of bankruptcy that individuals often file in the U.S. to manage medical debt:

1. Chapter 7 Bankruptcy (Liquidation Bankruptcy):

  • How it works: In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay off creditors, but most people who file do not have significant assets that can be liquidated. After the process, most unsecured debts, including medical bills, can be discharged (eliminated).
  • Impact on medical bills: Medical bills are typically fully discharged in Chapter 7, meaning you are no longer legally obligated to pay them.
  • Eligibility: To qualify for Chapter 7, you must pass a “means test,” which examines your income, expenses, and ability to pay back debts. If your income is below the median for your state, you likely qualify.

2. Chapter 13 Bankruptcy (Reorganization Bankruptcy):

  • How it works: In a Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over a three to five-year period. Unsecured debts like medical bills are included in the repayment plan, but after the repayment period, any remaining unsecured debts may be discharged.
  • Impact on medical bills: Medical bills are part of the debts that can be reorganized and partially repaid under this plan. Any remaining amount after the plan period may be discharged.
  • Eligibility: Chapter 13 is an option for individuals who do not qualify for Chapter 7 or who want to keep certain assets (such as a home or car) that they might lose under Chapter 7. It also requires a regular income.

Considerations:

  • Credit score: Filing for bankruptcy will negatively impact your credit score for several years (up to 10 years for Chapter 7 and 7 years for Chapter 13).
  • Consult an attorney: Bankruptcy laws can be complex, and consulting with a bankruptcy attorney can help you determine which type of bankruptcy is best for your situation.

Overall, bankruptcy is a legal way to manage overwhelming medical debt and can provide relief for individuals facing financial hardship due to medical expenses.

Can You Negotiate Medical Bills?

Yes, you can file for bankruptcy to discharge or manage medical bills. Medical debt is considered unsecured debt, meaning it’s not tied to any specific asset, and it can be included in bankruptcy filings. There are two primary types of bankruptcy that individuals often file in the U.S. to manage medical debt:

1. Chapter 7 Bankruptcy (Liquidation Bankruptcy):

  • How it works: In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay off creditors, but most people who file do not have significant assets that can be liquidated. After the process, most unsecured debts, including medical bills, can be discharged (eliminated).
  • Impact on medical bills: Medical bills are typically fully discharged in Chapter 7, meaning you are no longer legally obligated to pay them.
  • Eligibility: To qualify for Chapter 7, you must pass a “means test,” which examines your income, expenses, and ability to pay back debts. If your income is below the median for your state, you likely qualify.

2. Chapter 13 Bankruptcy (Reorganization Bankruptcy):

  • How it works: In a Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over a three to five-year period. Unsecured debts like medical bills are included in the repayment plan, but after the repayment period, any remaining unsecured debts may be discharged.
  • Impact on medical bills: Medical bills are part of the debts that can be reorganized and partially repaid under this plan. Any remaining amount after the plan period may be discharged.
  • Eligibility: Chapter 13 is an option for individuals who do not qualify for Chapter 7 or who want to keep certain assets (such as a home or car) that they might lose under Chapter 7. It also requires a regular income.

Considerations:

  • Credit score: Filing for bankruptcy will negatively impact your credit score for several years (up to 10 years for Chapter 7 and 7 years for Chapter 13).
  • Consult an attorney: Bankruptcy laws can be complex, and consulting with a bankruptcy attorney can help you determine which type of bankruptcy is best for your situation.

Overall, bankruptcy is a legal way to manage overwhelming medical debt and can provide relief for individuals facing financial hardship due to medical expenses.

bankruptcy, bankruptcy attorneys, Chapter 11, Chapter 11 Bankruptcy, Chapter 13, Chapter 13 Bankruptcy, Chapter 5, Chapter 5 claims, Chapter 7, Chapter 7 Bankruptcy, Filing Bankruptcy in Scottsdale, personal bankruptcy attorneys, Scottsdale Attorneys, Scottsdale Legal Help
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Chapter 7 Bankruptcy—Who Can’t File

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” allows individuals and businesses to discharge most of their unsecured debts, providing a fresh financial start. However, not everyone is eligible to file for Chapter 7 bankruptcy. Here’s a detailed overview of who cannot file for Chapter 7 bankruptcy:

1. High Income Individuals (Means Test)

  • Means Test Requirement: Individuals whose income exceeds a certain threshold based on the state median income may not qualify for Chapter 7 bankruptcy. The means test evaluates income, expenses, and family size to determine if the individual can afford to repay some debts.
  • Excessive Income: If your average monthly income over the six months preceding the bankruptcy filing is higher than the median income for your household size in your state, you may not qualify for Chapter 7.

2. Prior Bankruptcy Filers

  • Recent Filings: If you have filed for Chapter 7 bankruptcy in the past eight years, you are ineligible to file again for Chapter 7.
  • Chapter 13 Bankruptcy: If you have filed for Chapter 13 bankruptcy and received a discharge in the last six years, you cannot file for Chapter 7 unless you have successfully completed the Chapter 13 plan and obtained a discharge.

3. Fraudulent Filers

  • Fraudulent Behavior: Individuals who have committed bankruptcy fraud, such as providing false information or failing to disclose assets, may be denied the ability to file for Chapter 7.
  • Concealment of Assets: If you have hidden assets or income with the intent to defraud creditors or the bankruptcy court, your filing may be dismissed.

4. Undisclosed Debts

  • Failure to Disclose All Debts: If you do not list all your debts when filing for bankruptcy, the court may deny your request for Chapter 7 protection. Full disclosure of all debts is mandatory.

5. Recent Debt Incurrence

  • Recent Credit Card Purchases: If you incurred significant debt shortly before filing for bankruptcy, especially on luxury items or cash advances, the court may scrutinize your case. This can result in a denial of discharge for those debts, if deemed fraudulent.

6. Current Bankruptcy Cases

  • If you are currently in a bankruptcy case (either Chapter 7 or Chapter 13) that has not been discharged, you cannot file for another Chapter 7 bankruptcy until the first case is resolved.

7. Certain Legal Entities

  • Business Entities: Generally, Chapter 7 is designed for individuals and certain types of partnerships. Corporations and limited liability companies (LLCs) file for bankruptcy under different chapters, such as Chapter 11 or Chapter 13.

8. Certain Taxes and Debts

  • Non-Dischargeable Debts: Even if you qualify for Chapter 7, some debts cannot be discharged in bankruptcy. This includes certain taxes, student loans, child support, and alimony.

Conclusion

While Chapter 7 bankruptcy can provide a fresh start for many individuals, several restrictions exist regarding eligibility. Individuals with high incomes, prior bankruptcy filings, fraudulent behavior, or certain legal obligations may find themselves unable to file for Chapter 7. Consulting with a bankruptcy attorney is advisable to navigate the complexities of bankruptcy laws and assess your eligibility based on your unique financial situation.

Carefully consider the advantages and disadvantages given above before discussing your bankruptcy with an attorney.  For more email the firm at [email protected] or call 480-744-7711.

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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 a.gov 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.

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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.

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Dealing With the Emotions of Bankruptcy

For many, accepting the fact that their finances are beyond their control and that bankruptcy is the only option is challenging. The thing is, though, bankruptcy should not be looked at as the end of the world.

Filing for bankruptcy is a way of admitting that you need help with your finances, and are willing to put in the work to regain control. However, the word bankruptcy still has a negative connotation to it. With that can come the stress on your mental and emotional well-being.

When going through bankruptcy, it is important that you remain as strong as you can. That is why we have the following six tips to help you deal with your emotions while going through bankruptcy.

Realize You Are Not the Only One

Filing for bankruptcy can be a blow to the ego. Your debt got out of hand to the point that there was nothing more you could do to control it. It can negatively affect your mental well being. The last thing you need, though, is for you to be hard on yourself which will only make you suffer even more.

Understand that you are not alone. Many people go through a bankruptcy claim, and many of them come out better after it’s all said and done. Look at a bankruptcy claim as a step you’ve taken to regain control of your finances, and not that you’ve given up. The truth is, you haven’t given up by taking this path because it’s only the first step of many that you’ll be taking to get out of debt.

Speak With Your Attorney

Your bankruptcy attorney is there to answer all of your questions and to guide you through the bankruptcy processes. By going with the top bankruptcy attorney in Scottsdale, they know how difficult a bankruptcy claim can be on someone’s mental well being. A good attorney will be compassionate and understanding, all while not allowing you to give up mentally and emotionally.

Lean on Family and Friends

Even if you want to keep your bankruptcy claim very private, it is still beneficial to have someone you trust to lean on. A close friend or family member will be able to listen to your problems and give you a shoulder to cry on. Take advantage of this as to avoid bottling everything inside.

Educate Yourself on Finances

After filing for bankruptcy, it’s a good idea to start reading up on what you can about finances and recovering from bankruptcy. Financial education will help you through your bankruptcy journey, as well as prevent you from ending up where you were before all of this. 

Seek Counseling

If you find that bankruptcy has taken an extreme toll on your mental health, seeking out counseling services is a good idea. These trained professionals can listen to your problems, and give you advice and coping mechanisms that will help you make it through bankruptcy.

Volunteer

For some, keeping their mind busy will help clear their head and stop thinking about bankruptcy for a moment. Going out and volunteering is an excellent way to do this. Volunteering is a way to lift your spirits by doing something good for someone else.

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Three Tips to Stop Stressing About Money

Although it may seem like the answer to many of your problems, having more money will not magically solve your financial woes. Sure, earning more money can certainly help your situation, but it is not the be all end all. Ultimately, you will experience a degree of stress regardless of how much money you make. While stress may never be eliminated entirely, you can take steps to reduce it as much as possible. Bankruptcy lawyers in Scottsdale recommend using the following three tips to quit stressing.

Find a side gig

Living paycheck-to-paycheck is never easy and the inability to save money can lead to worry and financial stress. In order to avoid this, think about ways to earn extra dollars, such as finding a higher paying job or an awesome side gig. Sustaining multiple sources of income is essentially like an insurance policy; it helps you not only pay the bills but also have reliable income if you lose another job.

Be in the know

Understanding the nature of your finances is critical. Failure to stay up-to-date with your money will exacerbate your financial distress. Thus, opening and addressing mail immediately is important. Not only that, you should maintain a calendar so you know and understand when things are due. If you are having a difficult time paying your bills, find a financial advisor or creditor to help you.

Cut your expenses

There is no doubt that overspending will lead to a diminished savings account and an increased balance on your debts. Not to mention, this all has a significant impact on your level of anxiety. You should take some time to eliminate unnecessary expenses. Consider your mortgage, for example. Ultimately, you should keep your mortgage or rent payment to less than 25% of your gross income.

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Rebuilding Credit After Bankruptcy

Your life doesn’t end when you file for bankruptcy. There are many positives to this, such as having unsecured credit card debt discharged. There are also some negatives, mainly a major blow to your credit score. It’s not impossible to improve a bad credit score once your bankruptcy lawsuit is final.

Here is the good news.  Once your bankruptcy case concludes, you should take a hard look at the current state of your finances. Even if the court discharged some debt, you may have to still repay secured loans under a new payment plan. There may be tax issues to discuss with your bankruptcy lawyer in Scottsdale. More importantly, you should focus on your current credit score. Here are several tips for bringing it back up to what it once was:

Don’t Make the Mistake of Avoiding Credit Cards

Once you have undergone one bankruptcy, it’s easy to think that you will never use another credit card again. But this is usually noted feasible. You will likely need a credit card to improve your credit score. Not having a credit card is similar to having bad credit. A credit score reflects your reliability as a borrower. You can earn it back by proving that you are a responsible borrower to the bank. Therefore, you should keep your credit card or open a new account. However, do make payments on time. Once you keep making payments over time, your credit score would naturally improve.

Focus on Your Credit Utilization Ratio

Credit utilization ratio (CUR) is sometimes called the balance-to-limit ratio. It refers to how much credit you use as opposed to how much is left unused at the end of the month. This little number plays a major role in how fast and effectively your credit score improves. If you have a high utilization rate, this would negatively affect your credit score. If you have a $1,000 limit on your credit card, and if you use all $1,000 to buy things each month, then your CUR would be extremely high, reflected in a bad credit score. Ideally, you should keep your CRU in the 50 to 60 percent range. For the aforementioned credit card, if you were to spend only $500 or $600 a month, you would have a roughly balanced ratio that would work to your advantage.

Pay Off Majority of Credit Card Balances Each Month

Pay at least 75 percent of credit card balances each month. Ideally, you should repay it all back. Maintain your CUR with payments on time. Keep in mind to never max out the credit limit.

Use a Secured Credit Card

A secured credit card is similar to a regular credit card, but there’s a cash collateral required to obtain one. You will receive one of these after making a security deposit. These cards are designed to help those with bad credit gain positive credit scores. Unlike with regular credit cards, banks typically make payment information about secured credit cards available to credit agencies without delay. Therefore, you can rebuild your credit faster with a secured credit card.

It’s also advisable not to borrow money, such as for a loan, until your credit score is at an ideal level. And don’t rush to increase your credit score either, as it can bac-kfire. Develop an actionable strategy that works best for you to gradually improve your credit score after bankruptcy.

Bankruptcy is a bridge to your new future.  Let Canterbury Law Group take you there and create your future!

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Advantages and Disadvantages of Filing for Chapter 7 or 13 Bankruptcy in Arizona

If you have decided to file for bankruptcy, you may be wondering whether you should file for Chapter 7 or Chapter 13. Chapter 7 bankruptcy is not suitable for all situations. Also, Chapter 13 bankruptcy is usually the more common option for petitioners who are behind on mortgage payments but still want to keep their property. Chapter 13 bankruptcy allows the borrower to agree to pay back overdue charges and settle back on the original mortgage contract. Chapter 7 bankruptcy is the most commonly used option for those who are severely indebted and simply wish to start over.  

You can always consult with a local bankruptcy attorney in Scottsdale or your area to decide which option is best for you. Otherwise, take a look at advantages and disadvantages of both Chapter 7 and Chapter 13 forms of bankruptcy to decide which option is the best for you:

Chapter 7 Bankruptcy in Arizona

Most Arizonans who are in heavy debt choose this option to solve their financial situation. Under Chapter 7 filings, a court will most likely discharge unsecured debts like credit card debt or personal loans. The petitioners will only have to pay back debts secured with assets once the parties have agreed on a “Reaffirmed Agreement.”

Chapter 7 bankruptcy is particularly attractive to many because it offers protection against debt collection efforts like constant calls and holding back wages. If you earn any wages on a property you have bought, the money will belong to you, not the creditor, following the Chapter 7 bankruptcy filing date.

There is also no minimum debt amount needed to file for Chapter 7 bankruptcy. You can expect the proceedings to end within 3 to 6 months from the filing date.

As attractive as it may be, Chapter 7 bankruptcy is not without its setbacks. Mainly, the law does not cover assets given up as collateral for a loan, such as a property or a vehicle. The petitioners could lose non-exempt property, which would later be sold by a court-appointed Trustee. Chapter 7 bankruptcy is not typically suitable if your home is undergoing foreclosure. Filing for bankruptcy will only temporarily halt the proceedings. Co-signers will also be contractually bound unless they separately file for bankruptcy.

Chapter 13 Bankruptcy in Arizona

This option allows petitioners to keep all property, whether exempt or nonexempt, under a court-approved payment plan. If you have many secured loans, then Chapter 13 bankruptcy is the best option for you. Some debts will not be canceled under Chapter 7, but a judge can reduce them. Like with Chapter 7, Chapter 13 filings afford protections against collection calls and similar efforts by the creditor.   When pursuing Chapter 13, you’re most likely going to need experienced legal counsel by your side.  

If you agree on a full payment, co-signers will be protected from creditor’s collection efforts. You can also obtain protection against foreclosure of your home if you completely follow the new payment agreement. You can also get more time to pay off debts under this proceeding, especially ones that are not discharged, like child support or taxes. You can also repeatedly file for Chapter 13 bankruptcy.

The disadvantage is that the payment plan you agree to will be based on your income earned after the filing date. You will have to be frugal until the debts are paid back as per the agreement. These plans can last from 3 to 5 years. As a result, the proceedings can last up to 5 years. Attorney fees for Chapter 13 bankruptcy also tend to be higher.  Some professions, like stockbrokers, cannot file for Chapter 13 bankruptcy in Arizona.

Carefully consider the advantages and disadvantages given above before discussing your bankruptcy with an attorney.  For more email the firm at [email protected] or call 480-744-7711.

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