DoorDash & Klarna Partner For Takeout Installment Plans, Stoking Worries About Debt

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Despite the increase in grocery prices, home cooking will almost always be the cheaper option than restaurant dining. But every now and then, it’s nice to enjoy someone else’s cooking and avoid the hassle of dirty dishes. Meal delivery apps make it easier than ever to have your favorite restaurant dishes brought straight to your door. Services like DoorDash, Uber Eats, and GrubHub vie for the same customers and have to get creative when thinking of new ways to stand out from the competition. DoorDash has offered a new payment option to make takeout more accessible for its customers, but it’s raising some eyebrows. Klarna is a payment service that allows shoppers to spread out their purchases over four installments. Usually reserved for significant purchases like furniture and appliances, or even larger clothing hauls, this type of option is this generation’s version of the layaway plan. But is an individual takeout meal a purchase that is smart to pay in installments, or a dismal sign of what’s to come for our country’s economy? Read on for more information about high food prices, installation payment apps, and the possibility of discharging debt in bankruptcy. To schedule your free consultation with one of our experienced Arizona bankruptcy lawyers, call 480-833-8000.

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How Klarna & Similar Apps Lead To Debt

Klarna is just one of the options shoppers have to finance their payments and spread them out into four installments instead of one. Affirm, Shopify, Afterpay, and countless other financial services make it possible to spread out big-ticket purchases without interest. Of course, that’s assuming you can make your payments in full and in a timely manner. This isn’t true for everyone who is using financing services to pay for a takeout meal.

Some argue that “microfinancing” can be a smart option because money is worth less in the future without interest added. This may be true for someone who is financially stable and was going to purchase whatever they microfinanced regardless, but the effects will still be very small. For someone who might see those extra funds in their account and be encouraged to make purchases they might not have otherwise, microfinancing can become costly quickly. Stacking too many of these purchases may become unaffordable and lead to interest and other financial penalties that create a compounding debt problem.

Rising Food Costs & Declining Profits For Restaurants

It’s no secret that food costs have been skyrocketing. At first, eggs were the main grocery item making headlines for legendary price increases. But President Trump’s tariffs, including his threats of tariffs, are causing a wide variety of groceries to increase in price as well. Mexico and Canada both supply produce, meats, grains, and other products essential to American diets. Trump’s latest threats were against anyone who buys oil from Venezuela, which could mean just about any product on American shelves could be about to jump in price.

The cost of food, labor, rent, utilities, and other essentials to running a restaurant have upticked sharply since the pandemic. This has resulted in restaurants increasing their menu prices, and sometimes charging hidden surcharges that are unpopular with customers. And since inflation has hit customers as well, many have responded by reducing how frequently they go out to eat. They also prioritize reasonably-priced treats and special occasion splurges over fast casual dining experiences. Some of the restaurants that have declared bankruptcy due to declining revenue recently include:

  • Red Lobster
  • Rubio’s Coastal Grill
  • TGI Friday’s
  • Tijuana Flats
  • Sticky’s Finger Joint
  • Miracle Restaurant Group (Arby’s franchise)
  • River Sub (Subway franchise)
  • ASAP (food delivery app formerly known as Waitr)

Can I Discharge Afterpay Debt In Bankruptcy?

While shoppers may opt for afterpay apps over credit cards because of interest rates, credit cards are one of the most straightforward debts to clear in bankruptcy. There are only some limits on luxury spending and cash advances leading up to bankruptcy that can lead to some credit card debts being excluded from a bankruptcy discharge. Other than that, credit card debt is wiped out by chapter 7 and the lowest priority of debt paid off in a chapter 13 bankruptcy payment plan. But secured debt, or debt that has collateral attached, is not so simple to clear in bankruptcy. It is the second of four categories paid in a chapter 13 plan, and is not cleared by a chapter 7 filing. Without signing a new agreement with your lender, you could be at risk of your secured assets being repossessed after bankruptcy.

Afterpay debt is considered an executory contract, which should be listed in Schedule G. Repaid loans to Klarna, Shopify, and similar apps do not need to be listed in a bankruptcy petition. A bankruptcy debtor should also declare what they intend to do with this executory contract in their Statement of Intentions. Debtors have the option of assuming the contract, which will make the payments continue as usual. The debtor can also reject the contract, which would also reject the debtor’s obligation to repay the loan. Here, the lender might be able to send a repo man to recoup the asset. But if the asset was a takeout meal that has already been digested, there is no tangible asset for the creditor to repossess. While accruing DoorDash debt might not be the most responsible thing, it can be cleared fairly simply in a bankruptcy filing, providing valuable debt relief to the debtor.

Chapter 7 bank is the most common type of bankruptcy filing state- and nationwide. Along with afterpay debts and credit cards, it can be used to clear medical bills, personal loans, some taxes, and other financial obligations that are causing a debtor unreasonable strain. It only takes a few months for a debtor to clear all of these debts with chapter 7 bankruptcy. If their case remains in good standing, they will be protected from creditors by the automatic stay until discharge. The debtor can protect a number of assets to maintain a comfortable lifestyle going forward using Arizona’s bankruptcy exemptions. There are only a few limitations, such as restrictions based on income and prior bankruptcy filings, assets left unprotected by bankruptcy exemptions, etc. The best way to know which may be relevant to your situation is by discussing it in depth with a skilled professional. Schedule your free consultation with our Arizona bankruptcy firm today by calling 480-833-8000.

Does The High Cost Of Living Have You Losing Your Fight Against Debt? Bankruptcy Might Be Your Secret Weapon.

Filing for bankruptcy has a negative connotation of being a sign of giving up. Rather, we like to think of it as an opportunity for a fresh start. Bankruptcy provides immense protection from creditors and gives a person struggling with debt the chance to get back on their feet. We know just how stressful it can be to deal with debt, so our staff and attorneys work hard to make the filing process easy. We offer unbeatable Mesa bankruptcy representation with payment plan options that make filing for bankruptcy work with anyone’s budget. See if you’re eligible- and if you qualify for our Zero Down payment option!- by calling 480-833-8000. Don’t hesitate to contact us today!

Chronic Illness & Bankruptcy

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It’s no secret that health care is expensive, even with insurance, across the United States. A medical emergency can send a family’s financial situation into freefall if they are unable to immediately afford hundreds or even thousands in health care bills. If someone has a chronic health condition, these bills will keep piling up continuously. If the balance reaches a point that the debtor will not realistically be able to repay it during their lifetime, it might be time to consider filing for bankruptcy. However, there are special factors that should be considered when a potential bankruptcy debtor has a chronic medical condition. Read on to learn more about them, and for your free consultation with an experienced Arizona bankruptcy lawyer, call 480-833-8000.

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Getting Medical Attention Post-Bankruptcy

If you regularly see doctors and medical specialists due to a chronic illness, you should be aware of how it may affect your treatment before filing a bankruptcy petition. Most personal bankruptcy cases are filed as either chapter 7 or chapter 13, which can have impact on medical treatments going forward. Emergency rooms are required to provide medical care regardless of whether a patient has discharged medical bills in bankruptcy. Read on to learn more about the distinctions between how medical bills are treated in chapter 7 and chapter 13. If you have additional questions that you would like to be answered by an experienced bankruptcy professional in Arizona, call 480-833-8000.

Chapter 7

Chapter 7 bankruptcy clears unsecured non-priority debts. Medical debts qualify as unsecured non-priority debts that are erased without repayment in chapter 7 bankruptcy. Some doctors will discontinue treatment with a patient if they discharge their bills in bankruptcy. A debtor doesn’t get to pick and choose which debts are included in chapter 7 bankruptcy, so they can’t elect to retain medical debts to continue medical treatment while clearing other debts like credit cards and personal loans. This can become an issue if the debtor has a rare medical condition that requires specialized treatment, or if they live in a remote area where there isn’t a selection of medical professionals who specialize in the debtor’s medical condition. Here, the debtor can pay their medical bills after their case has been discharged despite not having a legal obligation to do so. Then, the medical professional should resume treatment as their bill has been paid.

Chapter 13

Chapter 13 bankruptcy is a payment plan which lasts 3 or 5 years. The length of the payment plan depends on the debtor’s income level. The debtor’s disposable monthly income will also affect which debts are paid off in the plan. Bankruptcy costs, secured debts, and priority debts must be paid in full in a chapter 13 payment plan. After those debts are paid in full, the payment plan starts paying off unsecured non-priority debts, like medical bills. This category of debt could be paid in full in chapter 13, partially paid, or cleared with zero repayment, which will all depend on if the debtor has sufficient disposable monthly income to repay unsecured non-priority debts in their plan. When a debtor has enough disposable monthly income to pay off medical bills in a chapter 13 plan, there is no reason for a medical provider to stop providing medical treatment. But if the debtor’s unsecured debts are cleared because they don’t have enough disposable monthly income to pay them off in the plan, doctors and medical providers may cease treatment as if the debtor had filed for chapter 7 bankruptcy.

Are There Other Debt Relief Options For People With Chronic Medical Conditions?

Bankruptcy isn’t for everyone. Some might not qualify due to income or previous bankruptcy filings, or they might have valuable assets that would be lost if they filed for bankruptcy. The debtor may only have income that is exempt from debt collection, such as Social Security Income, making bankruptcy more effort than the benefits derived from declaring bankruptcy. The debtor may simply not have enough debt to justify filing for bankruptcy. If you have decided that bankruptcy is not how you want to deal with debts from a chronic medical condition, consider some of the options below. If you need help with the decision between bankruptcy and alternative methods of debt relief, contact our firm for your free consultation at 480-833-8000.

  • Debt negotiation: Here, a person with medical debt will request that the medical creditor accept a lower payment or payment plan instead of the full balance owed. A medical debtor can retain an attorney for debt negotiation or do it on their own. It’s important to be realistic about how much can be paid and when if choosing to go with medical debt negotiation.
  • Hospital debt forgiveness: Most hospitals have programs in place to forgive medical bills for low-income patients. Depending on the patient’s income level, some or all of their hospital bills can be forgiven. However, this strategy is only available for debts arising from hospital visits. Private medical providers might not have these types of programs available.
  • Find a way to pay your medical bills: If you have income that is not immune from collection and have tried the two previous debt-relief methods without success, you will either need to pay off your debts or turn to bankruptcy. You might need to cut back on discretionary spending, sell treasured assets, pick up a side gig or second job, or even cash in retirement savings if you are dead set on not declaring bankruptcy. However, we recommend checking first to see if your assets would be protected in bankruptcy before taking any of these steps.

Timing a Medical Bankruptcy Filing

Unless you are in an emergency debt collection situation, such as a home foreclosure or a wage garnishment, you should take the time to plan a medical bankruptcy and make sure it is filed at the most opportune time. It is usually preferable to wait until medical treatment is completed before filing a medical bankruptcy, but this isn’t always possible, especially if the patient has a chronic health condition. You should discuss your financial situation with your health care providers if you believe you won’t be able to pay your bills without filing for bankruptcy, as they may prefer to offer you an alternative rather than having their whole bill cleared. There are countless factors that can impact when is the best time to declare bankruptcy. To discuss your situation and how these factors will apply, call 480-833-8000 to schedule your free consultation with our firm.

Start Your Search For Quality Arizona Bankruptcy Representation Here

Dealing with a chronic health condition is difficult, but filing for bankruptcy to address the associated debts doesn’t have to be. If you are considering medical bankruptcy due to overwhelming bills from a chronic health condition, you can make the bankruptcy process easier on yourself by retaining a high-quality Mesa bankruptcy attorney to handle your case. Don’t let medical bills continue to damage you and your family’s financial situation. Learn more about the bankruptcy process in Arizona by scheduling your free consultation with our firm- call 480-833-8000 to get started today.

What Are The Most Common Assets Sold At Bankruptcy Auctions In Phoenix, Arizona?

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When a debtor files for bankruptcy, they must use exemptions to keep their assets safe from the trustee and their creditors. Exemptions protect reasonable amounts of equity in possessions that the debtor must have to continue being a contributing member of society. Arizona bankruptcy debtors can protect their homes, vehicles, retirement savings, and more with all of the exemptions that our state has available. Unlike many states, including those that allow debtors to use the federal exemptions, Arizona does not have a wildcard exemption that acts as a catchall for an unprotected asset of the debtor’s choosing. A good bankruptcy attorney will ensure that nothing the debtor holds dear ends up for sale at a bankruptcy auction. If you’re wondering how to get out of debt and want more information as it pertains to your potential case from an experienced professional, our office is ready to help. Schedule your free consultation with Mesa Bankruptcy Lawyers today at (480) 448-9800.

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Arizona’s Bankruptcy Auctions

In Arizona, bankruptcy auctions are held on the last Friday of each month at the Federal Bankruptcy Courthouse. The address for the Federal Bankruptcy Courthouse in Arizona is 230 N 1st Ave #101, Phoenix AZ 85003. The auctions begin at 8:30 AM and are open to the public. The auctions are called in the order they are listed on the calendar. In-person auctions are more common for assets like property and vehicles, which may need to be towed by the purchaser.

Most Common Assets Sold At Bankruptcy Auction In Arizona

If you are shopping Arizona’s bankruptcy auctions, you will find a wide variety of assets for sale. Because Arizona doesn’t have a wildcard exemption, all assets not specifically described in the Arizona Revised Statutes are in danger of the trustee taking them to sell at auction. Some of the assets that trustees commonly sell by auction in Arizona include:

  • Oil and Gas Mineral Rights: An individual can own the right to oil and minerals from a property without owning the land itself, or surface rights. Some states sever mineral and surface rights, and not all states require property owners to disclose mineral rights in a sale. Mineral rights are most valuable when the price of oil is high. Many bankruptcy debtors forget they even own mineral rights until they are preparing their bankruptcy petitions. Additionally, because so many people acquire their mineral rights through inheritance, it is common for Arizona bankruptcy debtors to own mineral rights in different states.
  • Timeshares: Timeshares are better known for their manipulative sales pitches than their monetary value to frequent travelers. Even if they do offer savings, a bankruptcy debtor shouldn’t be prioritizing their funds toward vacation anyway. Timeshares usually have annual fees in addition to the costs associated with traveling, and some bankruptcy debtors are actually eager to shed this asset and responsibility.
  • Vacant land: It isn’t uncommon for bankruptcy debtors to own land in addition to their primary residence due to plans to build a new home. Any delays and unexpected issues in these plans can be extremely costly, and possibly even be the root of the bankruptcy filing. If land is vacant and only accruing property tax, bankruptcy debtors often don’t want to use their homestead exemption and would rather let vacant land go to the trustee.
  • Judgment debts: This may seem counterintuitive, but you can often find debt for sale at bankruptcy auctions. A bankruptcy debtor could have a judgment against a different debtor and not yet collected upon the judgment. Once purchased at auction, it becomes the buyer’s responsibility to garnish the judgment debtor’s wages, place a lien on their property, etc., to collect.
  • Vehicles: Arizona’s bankruptcy exemptions only protect one modest vehicle per bankruptcy debtor. This leaves many households that file for bankruptcy with at least one vehicle that is unprotected. Sometimes this isn’t the world, like if the vehicle needs expensive repairs to be road-ready, or the family’s lifestyle has changed so that type of vehicle is no longer appropriate or useful.
  • Electronics: Arizona’s bankruptcy exemptions only protect a limited amount of household electronics, and nowadays, most people own several different devices. This can leave old phones, tablets, laptops, and more at the mercy of the bankruptcy trustee.

Tips For Shopping At Bankruptcy Auctions

If you have some spare cash and are on the hunt for a great deal, you might want to try shopping at a bankruptcy auction. Shopping at a bankruptcy auction isn’t like walking into a regular store, choosing an item, and bringing it to the cashier to purchase. Below are some tips for shopping at a bankruptcy auction if you are considering trying it for the first time.

Make sure you have the purchase funds available before the auction begins. You may be required to have cash for the full sum or a similar form of payment if you win the bankruptcy auction. You will likely not be able to use credit cards for the purchase.

Research the items in advance, if possible. Many bankruptcy auctions will have the items available for sale online before the sale begins. This gives you an opportunity to research each item and determine its market value, as well as what it’s worth to you. You can also set a budget for how much you are willing to spend on an item and avoid hastily making a bid that you later regret.

Inspect items you wish to buy whenever you are given the opportunity. You may have the chance to inspect items for sale by auction before placing your bid. You can bring a flashlight and other objects to make sure you are able to conduct a thorough inspection.

Be aware of any extra fees that may apply. There are sometimes extra fees associated with bankruptcy sales, like handling fees, a buyer’s premium, and more. This can significantly increase how much money you need to have with you to successfully purchase your item.

If you are facing bankruptcy or need legal guidance, Phoenix Bankruptcy Lawyers can assist you in understanding your options and navigating the process effectively.

Want To Learn More About The Bankruptcy Process In Phoenix? Schedule Your Free Consultation With Our Arizona Bankruptcy Team Today.

Bankruptcy auctions provide the public with a peek behind the curtain of the process of clearing debts and fending off creditors with a chapter 7 or chapter 13 bankruptcy filing. Most debtors can avoid bankruptcy auctions altogether by applying the correct exemptions to all of the assets they own. But navigating exemptions, along with the rest of the rules and procedures surrounding an Arizona bankruptcy filing, can be complex and stressful without a legal background. Your assets being taken and sold at bankruptcy auction isn’t the only way a case can backfire. Delays and dismissals present obstacles to your original intent for declaring bankruptcy. Reduce these worries by retaining skilled Mesa Bankruptcy Lawyers to manage your chapter 7 or chapter 13 bankruptcy case. Our firm’s dedicated staff and attorneys put our expertise to work to discharge debts for residents of Phoenix and Tucson without the hassle. Eligible clients can file and pay for their bankruptcy in affordable installments with our Zero Down payment plan option. See if you qualify and learn more today with your free consultation at (480) 448-9800.

Who Is The Trustee In An Arizona Bankruptcy Case?

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The trustee plays a very important role in a consumer bankruptcy filing. The trustee could cause a bankruptcy case to face delays or dismissal, or can push it in the direction towards discharge. The trustee is different from a judge, who will also be assigned to every bankruptcy case. Creditors may also be heavily involved in a debtor’s bankruptcy. Making sure that the trustee’s requirements can guarantee a debtor the best possible results out of their bankruptcy case. Finding a skilled bankruptcy lawyer will simplify every step of the bankruptcy process, including fulfilling trustee requests. While many firms make it expensive to retain quality representation, our firm offers affordable payment options that allow you to file your case with no money down. To schedule your free phone consultation with Mesa Bankruptcy Lawyers, call 480-833-8000.

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The Essential Functions Of a Bankruptcy Trustee In Arizona

A bankruptcy trustee is an attorney appointed by the government to your bankruptcy case. However, the bankruptcy is not working as your attorney like a court-appointed attorney for a criminal case might. The trustee doesn’t work as the affected creditors’ attorney, either. Instead, the trustee works with the court to make sure that a bankruptcy case is executed in accordance with United States Bankruptcy Code. The trustee’s responsibilities vary based on the type of case that the debtor files- Chapter 7, Chapter 13, or Chapter 11.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is filed more than any other type of bankruptcy. Chapter 7 bankruptcy can be used by consumers, or individuals, and businesses alike. Chapter 7 is regarded as a liquidation bankruptcy because the debtor must surrender all of their non-exempt assets to pay off debts. The trustee will review the debtor’s petition, which should include a schedule of their assets. The trustee will review this schedule to make sure that the correct exemptions are applied to each asset, and that the assets are worth what the petitioner says they are. The trustee will also make sure that the petitioner hasn’t transferred any assets to friends or family in recent history. This is important because without this precaution, a bankruptcy debtor could theoretically transfer a valuable asset that wouldn’t be protected by an exemption to a relative. This would result in an unfair distribution of assets to the creditors and an unfair benefit to the debtor.

Another big concern for Chapter 7 bankruptcy cases is credit card debt. Credit card debt is unsecured and non-priority, making it among the debts that can be wiped away by a Chapter 7 bankruptcy filing. This also creates a huge potential for abuse of the bankruptcy system. An unscrupulous debtor who intends to file for bankruptcy could open up as many credit cards for which they could obtain approval and spend them to the limits. The debtor would have no true intention of paying back these debts knowing that Chapter 7 bankruptcy was on the horizon. Therefore, there are limits on credit card spending in the time period before declaring Chapter 7 bankruptcy. The debtor is limited to $800 on luxury purchases in the 90 days before bankruptcy. Additionally, the debtor can’t make cash advances in excess of $1,100 in the 70 days before bankruptcy. If the trustee finds credit card spending that exceeds either of these limits, those debts may be excluded from discharge. The trustee will use their discretion to determine what is luxury spending versus ordinary necessities. The creditor can also raise the issue at the debtor’s 341 Meeting of Creditors.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is called the wage earner’s bankruptcy because it uses the debtor’s income to formulate a plan that will reorganize and pay off debts. The trustee will need to review the debtor’s petition for unprotected assets like in a Chapter 7 bankruptcy. Chapter 13 bankruptcy lasts either 3 or 5 years, and the debtor will need approval from the trustee before acquiring or removing significant assets from the bankruptcy estate. The trustee will be at the debtor’s 341 Meeting of Creditors like in a Chapter 7 bankruptcy, but there is another hearing mandatory for Chapter 13 filers. During the plan confirmation hearing, the trustee will make sure that the debtor has sufficient disposable monthly income to pay the debts that must be paid off in Chapter 13 bankruptcy. Bankruptcy fees, secured debts, and priority debts usually must be paid in full in a Chapter 13 payment plan.
Unsecured non-priority debts may be discharged without full repayment if the debtor completes the rest of the plan as intended.

Besides reviewing the petition and all of the debtor’s available financial information, it will be the trustee’s job in a Chapter 13 to collect and distribute the debtor’s payments among the creditors. The trustee may find it necessary to change the plan throughout its 3-to-5-year- course.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy isn’t used regularly by consumers to discharge debts, but is available as an option. Chapter 11 bankruptcy allows business debtors to continue operating where a Chapter 7 bankruptcy would require shutting down operations. A key factor in Chapter 11 bankruptcy is that the debtor’s top creditors will join to form a committee that has authority on important decisions until the bankruptcy is complete. A trustee might not even be necessary in a Chapter 11 bankruptcy case. However, a trustee may be brought in to manage the debtor’s assets and affairs while the bankruptcy is pending. The trustee can also assist in the formation of the creditor committee.

What To Do When You Receive a Letter From The Trustee

Debtors who file for bankruptcy in Arizona will receive a letter from the trustee assigned to their cases shortly after filing. The trustee should provide the debtor with the date and time of their 341 Meeting of Creditors. The 341 Meeting of Creditors is generally held about 30-45 days after the petition is filed. If the hearing is remote, the debtor should make sure their software is up-to-date and they have a clean, quiet area to conduct the hearing before it begins. If the hearing is in person, the debtor should make sure they know how to get to the courthouse and where to park in advance.

The trustee may have issues they want the debtor to clear up before the 341 Meeting of Creditors. The trustee might request that the debtor provide financial documentation such as their most recent tax returns or pay stubs. If the debtor is unable to mail the trustee copies of these documents before the 341 Meeting of Creditors, they should be brought to the hearing. If you have additional questions about what to do when you receive a letter from your bankruptcy trustee, you should review the letter with your bankruptcy attorney.

Curious About Bankruptcy? Learn More From Our Experienced Arizona Bankruptcy Team

Bankruptcy could be a great way to get your finances back on track, or there may be a more effective method of debt relief available. There are many moving parts to a bankruptcy, and complying with trustee requests is just one of them. You have the right to hire a knowledgeable bankruptcy attorney who will simplify the process and make sure your debts are discharged efficiently. To schedule your free consultation with an experienced member of our bankruptcy team, contact us today at Mesa Bankruptcy Lawyers or call 480-833-8000.

 

Mesa Bankruptcy Attorneys

1731 West Baseline Rd., Suite #101
Mesa, AZ 85202
Office: (480) 448-9800

Additional Information at:

Phoenix Bankruptcy Lawyer

Mesa Bankruptcy Lawyers

Phoenix DUI Lawyer

Chandler Bankruptcy Lawyer

Tempe Bankruptcy Lawyers

Vegas Zero Down Bankruptcy Attorney

Gilbert Bankruptcy Lawyers

Tucson Bankruptcy Lawyer

Arizona Zero Down DUI

Las Vegas Bankruptcy Lawyers

AZ Bankruptcy Lawyer

 

Things To Spend Money On Before Bankruptcy

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Why You Should Spend Money Before Declaring Chapter 7 Bankruptcy

Our Mesa Chapter 7 bankruptcy attorneys take a look at the proper things that you should spend your money on when preparing to file for chapter 7 bankruptcy protection in Arizona. Frequently, mistakes are made by people in Arizona who are preparing to file for bankruptcy. These mistakes can be costly. Seek the assistance of an experienced debt relief attorney who can easily guide you with your bankruptcy preparing.

Maybe you just received your tax refund, an inheritance, settlement, or otherwise have money in your bank account that won’t be exempt in a Chapter 7 bankruptcy. Often, this puts you in a unique position where you actually need to spend a significant amount of money before filing your bankruptcy petition. Otherwise, it could be taken by your bankruptcy trustee to pay your creditors. But that doesn’t mean that you can, or should, spend these funds on luxury vacations and designer clothes. If you’re looking to deplete your bank account before declaring Chapter 7 bankruptcy.

Why You Should Spend Money Before Declaring Chapter 7 Bankruptcy In Mesa, AZ

 Some Reasonable Expenditures That Won’t Cause Issues With Your Bankruptcy Trustee

  • Clothing and school supplies for your children: If you have kids, you know how easy it can be to spend a tax refund or other payment while shopping for them. Purchases like notebooks, school uniforms, etc. are almost always deemed reasonable in a bankruptcy court. Keep your receipts for these kinds of items in case your trustee has questions about purchases at stores that also sell discretionary items.
  • Funeral and burial expenses: Arizona has an exemption of $1,000 that can be used for a burial plot. While thinking about your own death can be morbid, it can reduce the amount your children have to spend when you pass away.
  • Household goods: Almost everyone can go through their kitchen, laundry, or garage and find items that need to be purchased, repaired, or replaced. The exemption for this category of possessions in Arizona is $6,000. If you’ve been wanting to replace an old mattress, stock up on cleaning supplies, or buy any other reasonable household expense, now is your opportunity. Be careful with gift cards, as these can be treated as cash by the bankruptcy trustee. You should keep receipts for these kinds of purchases, so the trustee can make sure funds at certain stores weren’t spent on anything trivial.
  • Dental and health care: If you’ve been putting off dental work or health care when juggling debt payments, now may be the time to finally get it done. Regular checkups are also a reasonable expenditure before bankruptcy. So if you’ve been putting off a root canal, septoplasty, or any other reasonably necessary medical or dental procedure, this could be a good opportunity to finally get this work done. However, the bankruptcy trustee won’t approve of elective or cosmetic procedures.
  • Prepaid rent: If you rent your residence, it’s probably one of your largest recurring expenses. Unfortunately, Arizona’s bankruptcy exemptions haven’t quite kept up with Arizona’s skyrocketing rental prices, reducing how many months’ rent you can prepay as bankruptcy spending. The exemption for prepaid rent in Arizona is currently $2,000.
  • Car maintenance and repairs: If you’ve got a chunk of change you need to spend before filing bankruptcy, the mechanic can be a good place to spend it. You might just need an oil change and to replace your filters, or there could be more serious- and more expensive- issues with your vehicle. Bankruptcy trustees understand that having access to a vehicle can be crucial for employment and childcare, so car repairs before bankruptcy will usually be interpreted as reasonable spending. However, the trustee is less likely to approve of cosmetic car work like rims or a new stereo system.
  • Bankruptcy attorney’s fees: While it seems counterintuitive, filing for bankruptcy comes with significant costs. If you’ve got cash to spend before bankruptcy, you should consult with bankruptcy attorneys to learn about their payment options before spending it. A big factor will be whether you are going to file Chapter 7 bankruptcy or Chapter 13 bankruptcy. The total attorney’s fees for a Chapter 7 bankruptcy are typically lower than a Chapter 13 bankruptcy, but Chapter 7 attorneys will typically require more payment up front. This is because attorney’s fees can be worked into a Chapter 13 payment plan, allowing bankruptcy attorneys to charge a reasonable retainer and receive full payment as the case proceeds. Attorney’s fees are an unsecured debt, meaning they are wiped out in a Chapter 7 bankruptcy filing. That’s why most Chapter 7 bankruptcy attorneys require full payment before your case can be filed.

Purchases To Spend Money On To Avoid Before Filing Bankruptcy

While it’s best to stick to the list above when spending before bankruptcy, your case probably won’t be dismissed for a night out to dinner or a new pair of shoes. However, there are some expenditures that will immediately get your bankruptcy trustee’s attention.

Let’s say your parents loaned you a few hundred dollars for a repair or other expenses around the house. You also have significant credit card debts, and a few other miscellaneous unsecured debts. You secure the funds to repay your parents, and a few weeks later, declare bankruptcy. This is an example of a preferential payment. Here, you would be giving preference to your parents over your credit card companies and other creditors. The bankruptcy trustee will most likely ask your parents to return the funds so that they can be distributed more fairly among your creditors. Or, the trustee may require that you repay the funds yourself to the bankruptcy estate before your case can proceed.

While it probably sounds obvious, you should avoid spending on luxury items while preparing to file bankruptcy. You can’t game the system by maxing out your credit cards just to discharge them with a bankruptcy filing. The trustee will review your credit card transactions to make sure you aren’t abusing the bankruptcy system. You may not spend more than $725 on luxury purchases on your credit cards in the 90 days before your filing. You also may not use your credit cards for cash advances of more than $1,000 in the 70 days before you file.

Call Today To See If You Qualify For Our Zero Down Chapter 7 Payment Plan

Let’s face it- paying for a bankruptcy attorney up front isn’t ideal, even if you have money you need to spend before you can file. For example, if you’ve got the money for car maintenance or your attorney’s fees, you could be put in a bad position later on if your car breaks down after paying for your Arizona Chapter 7 attorney up front. Our bankruptcy attorneys have several years of experience and know just what our clients need. That’s why we implemented our Zero Down Chapter 7 bankruptcy payment plan program.

Eligible clients can use our zero down program to set up a payment plan that can last up to 12 months after your date of filing. Your payment plan includes a zero percent interest rate and credit reporting, which can help improve your credit score after your bankruptcy discharge. We make this possible by filing a skeleton petition before your full petition. Work completed before the skeleton petition is pro bono, and you can begin accruing debt again after the skeleton petition is filed. The work completed on your case after that point will be financed into an affordable payment plan.

Find Out The Difference Our Mesa Zero Down Bankruptcy Firm Can Make

See the difference our affordable, experienced Arizona bankruptcy attorneys offer for yourself by calling 602-609-7000 or filing out our online form to schedule your free consultation. Our AZ Bankruptcy Attorneys offer a Zero Down Bankruptcy option. If you have the need for an emergency bankruptcy filing, our Mesa Bankruptcy Lawyers can file your case in the same day, if necessary. As one of Arizona’s top bankruptcy filers, our bankruptcy team is very seasoned. Contact us today for a free consultation and debt evaluation with one of our experienced Phoenix bankruptcy attorneys.

 

Mesa Bankruptcy Attorneys

1731 West Baseline Rd., Suite #101
Mesa, AZ 85202
Office: (480) 448-9800

Additional Information at:

Phoenix Bankruptcy Lawyer

Mesa Bankruptcy Lawyers

Phoenix DUI Lawyer

Chandler Bankruptcy Lawyer

Tempe Bankruptcy Lawyers

Vegas Zero Down Bankruptcy Attorney

Gilbert Bankruptcy Lawyers

Tucson Bankruptcy Lawyer

Arizona Zero Down DUI

Las Vegas Bankruptcy Lawyers

AZ Bankruptcy Lawyer

 

Can Filing Bankruptcy In Arizona Help After a Repossession?

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How Can Bankruptcy Help You After a Vehicle Repossession

Our Chapter 7 bankruptcy attorneys and Chapter 13 bankruptcy attorneys take a look at repossession in Arizona. We also look at how a bankruptcy may be able to assist you when dealing with a repossession of a vehicle. Time is of the essence. Contact an experienced Arizona bankruptcy attorney right away. It may not be too late to save your vehicle from repossession.

After missing too many payments on your auto loan, you should be concerned about your lender repossessing your vehicle. This is a way for your creditor to recoup on an unpaid loan, selling your car at auction, likely for less than its full value. A repossession will have several types of negative effects on your life. First of all, you will need to figure out how you will get to work, school, and the rest of your responsibilities without your vehicle. You may have a co-signer on your loan who will now be liable for the balance of your loan. A repossession will also damage your credit, making it harder for you to get a replacement vehicle. Depending on your specific situation, bankruptcy may be able to help you after a vehicle repossession has already occurred.

How Can Bankruptcy Help You After a Vehicle Repossession In Mesa, AZ.

You May Still Have a Balance On Your Auto Loan

It may seem counterintuitive that you would still owe your loan if your lender takes back the vehicle, but this is common in repossessions and is referred to as a repossession deficiency. Whether you have a repossession deficiency will depend on the balance of your loan at the time of the repossession (as well as any additional charges or legal fees for the repossession), and the amount your car sells for at auction. If you still owe money on the vehicle after the sale, your lender will file a lawsuit to collect the balance. If you have a co-signer and are unable to pay the deficiency balance, your co-signer will be responsible for the repossession deficiency. Either way, the creditor will keep looking for ways to collect the deficiency judgment eventually. Oftentimes, your creditors will use a judgment to obtain a garnishment on your wages. This judgment is an unsecured debt that can be discharged in an Arizona Chapter 7 bankruptcy. Depending on your disposable monthly income, it can be paid or discharged in a Chapter 13 bankruptcy payment plan.

Is It Possible To Get My Repossessed Car Back With Bankruptcy?

Depending on when your car was repossessed, you may be able to use bankruptcy to get it back- but not Chapter 7. Instead, you will need to file Chapter 13 bankruptcy within 10 days of your vehicle being repossessed. Your lender will be legally required to wait that 10 days to sell your car at auction. Once the car has been sold, a bankruptcy filing can’t do anything to get it back.

Chapter 13 bankruptcy can be complex before adding a recent repossession to overturn as a complicating factor. Chapter 13 bankruptcy is a reorganization payment plan meant to help those with steady income and struggles with debt. It is often used by people who are facing an imminent repossession or foreclosure because it provides the opportunity to catch up on payments and save the asset in the long run. A Mesa Chapter 13 bankruptcy payment plan lasts 3 years for someone whose income falls below the state median income, and 5 years for someone who makes more than that amount. Debts will be paid in order of four categories: legal fees, secured debts, unsecured priority debts, and unsecured nonpriority debts. The vehicle in question will be in the second category- it is a secured debt because the vehicle is collateral for the loan. To keep a secured asset in Chapter 13 bankruptcy, you generally must pay the full balance of your loan in your payment plan. However, there is an exception for home mortgages. The debtor can typically pay their usual monthly mortgage into their plan if they are current on payments.

Unsecured priority debts must also be paid in full in your plan. The last category, unsecured nonpriority debts, are those typically dischargeable in Chapter 7 bankruptcy and will only be paid to the extent that you can afford in a Chapter 13 payment plan. Chapter 13 can be especially useful in a repossession situation because your past-due payments will be spread out over the course of 3-5 years. The amount you pay for ongoing payments could be reduced or increased based on your balance and current loan terms.

When you file Chapter 13 bankruptcy to get back a repossessed vehicle, you will also deal with your other debts and gain protection from your other creditors. Once your petition is filed, the Automatic Stay goes into effect. Not only does the Automatic Stay stop vehicle repossessions, but home foreclosures, bank levies, wage garnishments, utility shutoffs, lawsuits, and more. Any of your creditors that wish to proceed with these actions during your bankruptcy must petition the court for relief from the Automatic Stay. With limited exceptions, the Automatic Stay will remain in place until your payment plan is completed or your case is dismissed.

Emergency Bankruptcy- The Faster Way To Get Filed

Whether you’re hiding from the repo man or your car was just repossessed, you’ll need to be filed quickly if you want the Automatic Stay to protect your vehicle. A bankruptcy petition is usually 50-70 pages long, requires dozens of documents, and can take far longer than the 10 days you have to get a vehicle back after a repossession. You may find it useful to first file a skeleton petition, also known as an emergency bankruptcy filing.

When you file a skeleton petition, the list of documents you will need is far shorter than when you prepare your full petition. Besides some basic address and contact information, your attorney will only need six months’ worth of pay stubs and to take your online credit counseling course. The Automatic Stay will go into place when the skeleton petition is filed, which can get back your vehicle if you filed Chapter 13 within 10 days of the repossession. You will have two weeks to submit the rest of your bankruptcy petition.

Do I Need a Bankruptcy Attorney?

The success rate for attorney-represented bankruptcy filers is always higher than for self-represented bankruptcy filers. Those in a Chapter 7 bankruptcy fare better, but it’s almost impossible to get a Chapter 13 bankruptcy discharged without attorney representation. When you add in getting your vehicle back after a repossession to your case, and possibly an emergency filing, it’s highly recommended that you seek out an experienced Tucson bankruptcy attorney.

What exactly will a bankruptcy attorney do that makes your case so much more likely to be successful? First, you will discuss your situation in detail during a consultation. Your attorney will spot issues that could arise in your case and help you strategize your filing. Once you retain, your experienced bankruptcy attorney will take all creditor calls and assist you in gathering documents for your petition. Your attorney will prepare your petition, review and sign it with you, and file it in court for you. Your attorney will represent you at all hearings, address issues with the trustee and creditors, and keep you updated throughout the process. But you may be wondering how you could possibly afford a bankruptcy attorney retainer after a vehicle repossession. Also, the good news is that you can work your attorney’s fees for a Chapter 13 bankruptcy into your payment plan. To learn more, call or use our online form to schedule your free consultation with one of our dedicated Mesa bankruptcy attorneys today!

 

Mesa Bankruptcy Attorneys

1731 West Baseline Rd., Suite #101
Mesa, AZ 85202
Office: (480) 448-9800

10 Causes of Bankruptcy in Mesa

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Bankruptcy is an option for many Mesa, Arizona residents with debt. Whatever the reason it accumulated, overwhelming debt affects an individual’s personal, professional, financial, and family life.  The attorneys at Mesa Bankruptcy Lawyers Law firm are dedicated to exceptional legal representation and helping Arizona residents eliminate or reduce debt. Is bankruptcy the right means to eliminate your specific debt / financial situation? Both Chapter 7 and Chapter 13 bankruptcies are viable options to many debt-related financial issues. Consult with an attorney to find out which filing is best for your unique debt case, and to get information on your rights as a debtor as well as debt-relief options.

Mesa bankruptcy lawyer, Mesa bankruptcy attorney, Arizona bankruptcy attorney, bankruptcy attorney in Arizona

Sometimes debt is caused by an unplanned disaster, unforeseen medical expenses, or loss of a job. Other times debt happens because of poor financial planning or overspending. Despite best efforts to make monthly payments and stay ahead of debt, it sometimes becomes too overwhelming. Bankruptcy is an option when you need to take control of debt, and achieve a financial fresh start. Because of an automatic stay, when a bankruptcy petition is filed, it puts a stop to wage garnishments, repossessions, or a  foreclosure.

Steps To Filing Chapter 7 Bankruptcy In Arizona

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Our Mesa Bankruptcy Attorneys Take You Step By Step Through The Process Of Filing a Chapter 7 Bankruptcy In Arizona

No matter how carefully you plan, debt is a problem that can happen to anyone in life. When it does, your creditors will eventually begin pursuing you for your debts. Your creditors may seek repayment through methods like wage garnishments, bank levies, vehicle repossessions, home foreclosures, and more. The good news is that bankruptcy can protect someone in this type of situation from their creditors, and address the underlying debt problem in the meantime. There are several types of bankruptcy, but the most common type of consumer bankruptcy in Arizona is Chapter 7. Read on to learn more about the steps to declare Chapter 7 bankruptcy and clear away debts. If you have additional questions, schedule your free consultation with our Mesa bankruptcy law firm.

Mesa Bankruptcy Attorneys Take You Step By Step Through The Process Of Filing a Chapter 7 Bankruptcy Petition In Arizona

Confirm That You Qualify For Chapter 7 Bankruptcy

Many people are unable to file Chapter 7 bankruptcy because their income is too high. The simplest way to qualify for Chapter 7 is by having less income than the median for your state. In Arizona, the median income for a family of 4 is currently $85,714. A family with a combined income of that amount or less automatically qualifies for Chapter 7. Otherwise, the debtor will need to qualify using the Means Test. This test shows the debtor can’t afford to pay off their debts after deducting mandatory expenses from their income. There are several other factors that could disqualify you from Chapter 7, or make filing it (as opposed to Chapter 13) inconvenient and burdensome. Consult with a Mesa bankruptcy attorney to confirm that chapters of bankruptcy for which you qualify.

Gather Your Documents & Information For Your Bankruptcy Petition

You will need several types of documents in order to draft your bankruptcy petition. These can range from bank account and credit card statements, to paystubs, to insurance policy statements, and more. If you retain a Mesa bankruptcy attorney, they will let you know which documents are necessary for your case. If not, determining which documents will be necessary- and then drafting your petition- will be your own responsibility.

Take Your First Credit Counseling Course

To discharge your debts through consumer bankruptcy, the Bankruptcy Code requires that you complete credit counseling courses. This is to help prevent bankruptcy filers from needing to file again in the future. You will need to complete one of these courses before your case is filed, and submit a course completion certificate with your petition. This course can be taken online, and can typically be completed in about an hour. You will also need to pay a nominal fee for credit counseling.

Sign & File Your Bankruptcy Petition

If you retain a bankruptcy attorney, they will schedule your petition signing once your petition is complete. Your attorney will review your petition with you to make sure everything is correct, and answer any questions you may have about your 341 Meeting of Creditors. If you file self-represented, you will draft, sign, and file your own petition. You may be required to file your petition in person at the courthouse. The filing fee for a Chapter 7 bankruptcy is currently $338. There are fee waivers available to those under financial hardship, but these typically won’t be granted if the filer has retained an attorney.

Respond To Your Trustee Letter

Approximately 10-15 days after your petition is filed, you will receive a letter from your bankruptcy trustee. The trustee is a court-appointed attorney who will oversee your case. After reviewing your petition, your trustee may have additional questions. You may be required to submit additional documentation to support your petition. This letter should also contain the date for your 341 Meeting of Creditors.

Attend Your 341 Meeting Of Creditors

This hearing is mandatory for those who declare both Chapter 7 and Chapter 13 bankruptcy. Make sure you bring your driver’s license and social security card to this hearing. Your case- and discharge of your debts- could be delayed for a failure to bring proper identification to your 341 Meeting of Creditors. You can bring a passport or other official photo identification in place of your driver’s license. If you don’t have your social security card, you must bring an original W-2 to your hearing. It will be held approximately 30-45 days from when you file your petition.

Your trustee will be at the hearing, and as the name suggests, your creditors may also be in attendance. Both may ask questions about your petition and debts. If you retain a bankruptcy attorney, they will be there with you to help you with your trustee’s and creditors’ questions. Otherwise, you will need to represent yourself at this hearing. However, this hearing is relatively short and simple compared to other court procedures. There may be several other cases on the docket at the same time as yours. If so, you and your attorney will wait for your case to be called during that time frame.

Take Your Second Credit Counseling Course

After your 341 Meeting of Creditors, you must complete a second online credit counseling course. It will take about as long and cost about as much as your first credit counseling course. You (or your attorney) will need to file the second course completion certificate with the court. This must be completed within 60 days of your 341 Meeting of Creditors.

Wait For Debt Discharge, Start Rebuilding Your Credit

If all the previous steps have been completed correctly, you will now wait for the court to discharge your case. Your case is eligible for discharge 60 days after your 341 Meeting of Creditors. It could take a few days or weeks longer than that for the court to process your discharge, depending on how busy the court is.

After you have received your discharge letter from the court, you are no longer liable for the debts in your bankruptcy. Whether or not your credit score increased or decreased (or stayed the same) upon filing, now it’s time to start rebuilding your credit. You will most likely receive new credit line offers in the mail after your case is discharged, but you can also open a secured credit card through your bank. Financing new assets, such as a vehicle, can help improve your score. Other installment payment plans- including our Zero Down Bankruptcy Payment Plan – will help improve your score as well.

Contact Our Mesa Chapter 7 Bankruptcy Attorneys For a Free consult

If you couldn’t already tell, retaining a bankruptcy attorney as early on in the process as possible will make it easier for you. However, the burden of paying for an attorney up front is impossible for some. That’s why our experienced Mesa bankruptcy attorneys offer Zero Down Bankruptcy for qualified Chapter 7 bankruptcy clients. To learn more, call or use our online form to schedule your free consultation today.

 

Mesa Bankruptcy Attorneys

1731 West Baseline Rd., Suite #101
Mesa, AZ 85202
Office: (480) 448-9800

Arizona 2021 Bankruptcy Exemptions

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Our Mesa Bankruptcy Lawyers Discuss The 2021 Exemptions For Bankruptcy Filings In Arizona

Be it, a chapter 7 bankruptcy or a chapter 13 bankruptcy, there are exemptions that are unique to each state. Read on to find out what Arizona’s exemptions are for 2021.

When you file Chapter 7 bankruptcy, any assets that aren’t protected by bankruptcy exemptions can be seized by your trustee and sold to pay your creditors. Bankruptcy exemptions, or the limits on how much equity you can have in certain types of assets, vary by state and are subject to change every year. If you are considering filing bankruptcy in Arizona in 2021, check your assets to make sure they are within the applicable exemption limits.

Some of your assets may have a clear numerical value. Others aren’t so easy to ascertain. Websites like Kelley Blue Book and Zillow may give you a general idea of your property’s value. You may need to hire an appraiser for valuable possessions with unclear values.

If your assets aren’t protected in Chapter 7, you may want to consider filing Chapter 13 instead of giving up bankruptcy altogether. These exemptions don’t apply in a Chapter 13 case because you will repay the value of financed assets in your bankruptcy payment plan. You also may be able to encumber your property with a lien to reduce your equity. You should contact a Mesa bankruptcy attorney if you are unsure whether your assets are protected, or if you want to know about your options with non-exempt assets.

Our Mesa Bankruptcy Lawyers Discuss The 2021 Exemptions For Bankruptcy Filings In Arizona

Arizona Homestead Exemption

The homestead exemption in Arizona for 2021 is $150,000. You can have up to $150,000 equity in your house, condo, townhouse, etc. Your equity is the value of the home minus the balance of your mortgage.

Prepaid Rent

Rent paid in advance, as well as security deposits fall into this category. In Arizona, the exemption value for this category is $2,000.

Arizona Vehicle Exemption

In Arizona, you can have up to $6,000 equity in one vehicle if you are unmarried. If you are married, this limit is raised to $12,000 for one vehicle, or the spouses can have two vehicles with up to $6,000 equity each. The exemption for someone with a disability that requires special vehicle equipment is increased to $25,000.

Bank Account & Cash On Hand

An inconvenient part of filing bankruptcy in Arizona is the low exemption for how much cash you can have in hand and in the bank on the day your petition is filed. This limit is $300 for an unmarried filer, and $600 for a married couple. This probably means you will need to time your bankruptcy filing around your payday. Make sure your Mesa bankruptcy attorney is aware of your pay dates, especially if you file an emergency bankruptcy petition. Arizona doesn’t allow federal exemptions and doesn’t offer a wildcard exemption to use on your bank accounts as an alternative.

Household Goods & Furnishings

This can be anything in your home from your sofa and chairs, to your microwave and refrigerator. The 2021 Arizona bankruptcy exemption for this category is $6,000. You should assess the value of your belongings as their resale or market value, not the price you originally paid.

Engagement &/Or Wedding Rings

The Arizona bankruptcy courts allow you to keep wedding jewelry worth up to $2,000 in a Chapter 7.

Pets & Livestock

This exemption applies both to domestic pets, like dogs and cats, and livestock, like horses and goats. While your purebred pet likely doesn’t have a high enough resale value to be cause for concern, it could become an issue if you breed your pet.

Watch

Arizona allows Chapter 7 bankruptcy filers to have a watch worth up to $150, so don’t wear a Rolex to your 341 Meeting of Creditors.

Clothing

Arizona’s bankruptcy exemption for wearing apparel, regardless of family size, is $500. For the same reason you shouldn’t wear a Rolex in front of your trustee, don’t wear all designer clothing (even if they’re knockoffs) to your 341 Meeting of Creditors.

Food, Fuel, & Provisions

The bankruptcy trustee is highly unlikely to come to your house and raid your pantry and siphon your gas tank, but you can have up to 6 months worth of provisions when your Chapter 7 bankruptcy is filed.

Personal Library

The resale value of your book collection must not exceed $250 in a Chapter 7 bankruptcy. However, these books may be protected by other exemptions if they are used for school or work.

Tools & Other Equipment

This category encompasses many items from saws and drills, to instruments, website domains, and more. Anything the bankruptcy filer uses for their profession has an exemption value of $5,000.

Life Insurance Proceeds

If you receive insurance funds after the death of a spouse, child, or other relative, only $20,000 of this will be protected in Chapter 7 bankruptcy.

Wheelchair, Prosthetics, etc.

There is no limit to the value of these types of items in a Chapter 7 bankruptcy. If they are prescribed by a doctor, it isn’t up to the bankruptcy court to decide how much these can be worth. However, you should still apply the exemption to have your bases covered.

Musical Instruments

For someone who plays as a hobby, musical instruments have a bankruptcy exemption of $400. A career musician can use the tools of the trade exemption to protect their musical instruments, which is $5,000.

Computer, Bicycle, Firearm, Burial Plot, Family Bible

This exemption applies to an interesting range of belongings, and is capped at $1,000 in Arizona for 2021.

Domestic Support

Child support and alimony payments are exempt from Chapter 7 bankruptcy, and there is no limit for the domestic support exemption.

Benefits & Public Assistance

Like child and spousal support, these payments are fully exempt from bankruptcy. Unemployment benefits, disability, worker’s compensation, social security income, and more, are safe in Chapter 7 bankruptcy. Consult with a Mesa bankruptcy attorney if you want to make sure your source of income is exempt in Chapter 7 bankruptcy.

Contact Our Mesa Bankruptcy Attorneys

Exemptions are just one of the many parts of a bankruptcy petition that must be completed correctly, or risk negative consequences like losing your assets or your case being dismissed. That’s why you should trust your case with a skilled Mesa bankruptcy attorney. To learn more about how our dedicated staff and attorneys can assist you through the bankruptcy process, call today to schedule your free consultation. You may qualify for a post-filing payment plan starting as low as $0 down bankruptcy, and we have same day consultations available! Call (480) 833-8000 to get started.

 

Mesa Bankruptcy Attorneys

1731 West Baseline Rd., Suite #101
Mesa, AZ 85202
Office: (480) 448-9800

Arizona Bankruptcy:  Redemption in a Bankruptcy in AZ

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Our Mesa Bankruptcy Lawyers discuss bankruptcy in Arizona. Moreover, we dive into redemptions in a bankruptcy. Our AZ BK Attorneys discuss the advantages and disadvantages of redemptions as well as the process of redemptions. Also, we will look at items that are financed for more than their value and how to get redemption on said items.

Arizona debt relief blogIf you are considering bankruptcy or some other form of Mesa debt relief, please give out Mesa Debt Relief team a call. Our consultations are free of charge and 100% confidential.

If you are considering bankruptcy, you might be wondering what effect filing will have on personal property you have financed. You may be making monthly payments, on your vehicle, furniture, appliances, and even your cell phone. If you declare Chapter 7 bankruptcy, you will be presented with two options of how to keep these assets: redemption and reaffirmation. Otherwise, you will have the option to surrender them as part of your bankruptcy.

What is the Redemption Option in a Chapter 7 Bankruptcy in Arizona?

If you owe more on your financed property than it is worth, you may want to consider redeeming it in Chapter 7 bankruptcy. In Chapter 7 bankruptcy, redemption allows you to pay the current value for your financed property, as opposed to what you owe on the loan.

You will have redemption available as an option for items financed for more than they’re worth if they meet the following criteria:

(1) The property is secured to a debt as collateral;

(2) It is tangible personal property, not real estate;

(3) Your trustee abandons it;

(4) It is a consumer debt, not business;

(5) You can pay the amount in one lump sum. 

The Advantages and Disadvantages of Redemption in a Bankruptcy in Mesa, Arizona

The most obvious benefit of redemption is that you will get to keep your property, and pay its actual value instead of your inflated loan amount. If you are able to take advantage of this option, you could potentially save thousands of dollars. If you are able to come up with the funds, the creditor may not object to your redemption. You may be able to find a lender to finance your redemption. However, there are limitations to the benefits of redemption. You can’t redeem real estate or business property. Redemption may not be available as an option for you, or the trustee may choose not to abandon it. You also may not be able to make the lump sum payment, or find redemption financing without an astronomical interest rate.

What is the difference between Redemption and Reaffirmation in a bankruptcy?

In a redemption, you will pay the financed asset’s actual market value in one lump sum payment, while in a reaffirmation, you will retain the debt through your bankruptcy and continue your usual monthly payments for the term of the loan.

You will likely need to sign a reaffirmation agreement with your lender to retain your loan through bankruptcy. Your lender may allow you to simply continue your payments as usual after your bankruptcy, without an official reaffirmation agreement. However, your lender can opt to repossess the vehicle, and will act more quickly if you are late on payments than before your bankruptcy. The bankruptcy court will also need to approve your reaffirmation, which will be addressed in a hearing that is separate from your 341 Meeting of Creditors.

How to Keep your Car while Lowering Your Payments in a Bankruptcy

Most reaffirmation agreements keep all the same terms of the original agreement, but you may be able to negotiate a new lower interest rate or principal balance. The bankruptcy court likely won’t sign off on an obviously unfair agreement, so it may be in your lender’s best interests to cut you a small break from your original agreement so that the court will approve the reaffirmation. Having a bankruptcy attorney as your representative may help you be more successful in negotiating a favorable reaffirmation agreement.

Reaffirmations are most likely to be approved when you owe less or close to the actual market value of the asset. Since courts are unlikely to reaffirm an agreement where the debtor will pay far more than the asset’s value over time, you should pursue redemption if your loan amount exceeds your asset’s value.

Just because you want to seek the advantages of a redemption through bankruptcy doesn’t mean you won’t be able to pay your vehicle or other financed asset off in monthly installments as opposed to a lump sum payment. You may be fortunate enough to have friends or relatives who can pay off your lump sum payment for you and accept monthly installments after your bankruptcy. Otherwise, some financial institutions specialize in offering loans to bankruptcy filers. These lenders pay the full balance of your vehicle or other property, and you pay back that lender in monthly installments instead of your original lender. Because you will file a motion with the court to proceed with the redemption, this debt won’t be discharged along with your other debts in your bankruptcy.

How to Redeem Your Property in a Bankruptcy in Mesa, Arizona

The first step to redeeming your property in bankruptcy is determining the asset’s correct value. The courts will generally approve a value that is somewhere between its purchase price and its market value. Some items may have a generally approved appraisal method, such as Kelley Blue Book for motor vehicles.

Next, you or your attorney should stipulate this value with your redemption lender. The lender may not agree with your initial proposal, so you may need to negotiate for a different term, principal balance, or interest rate.

Then, you or your attorney will need to file a motion in the bankruptcy court. The filing fees for this motion may be included in your redemption loan. You will then continue payments per your agreement until the balance is paid.

Contact Us to Keep Your Car through a Redemption

If you are struggling with debts but want to keep your financed vehicle, or any other financed asset, our dedicated bankruptcy staff and attorneys are here to assist you. Whether you  need help navigating a reaffirmation or a redemption, our bankruptcy lawyers are well-versed in applicable laws, best bankruptcy practices, trustee preferences, and lender negotiation tactics. The best part is that hiring a bankruptcy attorney is probably far more affordable than you think.

Experienced Arizona bankruptcy attorneys at Mesa Bankruptcy Lawyers offer competitive rates and Zero Down payment plans for qualified Chapter 7 bankruptcy clients. Get started towards your financial clean slate, while keeping your car- possibly with lower payments! Our bankruptcy lawyers are standing by and offer free initial consultations.