FAQ (Frequently Asked Bankruptcy Questions)

FAQ -Our Mesa Bankruptcy Lawyers offer answers to your bankruptcy questions.


What are the different chapters of bankruptcy?

Chapter 7 Bankruptcy:  One of the most common FAQ.  Also, Chapter 7 Bankruptcy is the most common chapter of bankruptcy filed in Arizona.  Chapter 7 refers to the chapter of the Bankruptcy Code providing for liquidation or the sale of a debtor’s nonexempt property with the proceeds being distributed to the creditors.  The bankruptcy court and laws will evaluate the debtor’s income and expenses to determine if the debtor may proceed in declaring chapter 7 bankruptcy.

Chapter 11 Bankruptcy:  Chapter 11 Bankruptcy usually deals with partnerships or corporations.  It allows the business to re-organize their debt and stay in business.  In a chapter 11 the debtor works out a plan with the bankruptcy trustee to pay.  A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and payback it’s creditors over time.

Chapter 13 Bankruptcy:  Chapter 13 Bankruptcy is better know as a reorganization bankruptcy as it allows provides for the adjustment of debtors to keep many of their possessions and only pay a portion of their debt back to their creditors over a payment plan of 3 to 5 years.

Will Bankruptcy Wipe Out All My Debts?

A standard bankruptcy will wipe out debt, with a few exceptions:  A bankruptcy will not eliminate the following debt:

  • Child support or alimony debt
  • Debt/fines/penalties owed to a government agency
  • Student loans (“undue hardship” cases, if proved to the court, may be an exception)
  • Debt as the result of “malicious or willful” harm
  • Taxes and debts incurred to pay taxes
  • Debt resulting from a DUI charge
  • Mortgages and other liens which are not paid in the bankruptcy case (NOTE: a bankruptcy will erase your obligation to pay any additional money if the property is sold by the creditor).
  • Debt not listed on the bankruptcy petition
  • Debt as a result of loans received by knowingly giving false information to a creditor

What Property Can I Keep?

In a chapter 7 bankruptcy case, all property which the law deems “exempt” from the claims of creditors.  Because these exemptions vary from state to state, you will want to be informed  of the federal bankruptcy exemptions: it is important to review with an attorney familiar with Arizona bankruptcy laws.

Can Bankruptcy Help Me Get My Vehicle Back After it has been Repossessed?

This answer is a little bit convoluted.  It depends on when the vehicle has already been repossessed and if you are planning on filing for Chapter 7 or Chapter 13 bankruptcy protection.  Ask an experienced Mesa Bankruptcy Lawyer to find out which chapter of bankruptcy best suits you.

Additionally, time is of the essence.  Once your car is repossessed you only have a short time (usually less than 2 weeks) before the lender sells it to someone else.  Keep in mind, once the vehicle is sold and title passes to a third party, you normally cannot get the car back.  However, if the vehicle has not been sold, you still have a chance to get your vehicle back because the automatic stay from filing bankruptcy will stop the sale and prevent the repossession of your vehicle.

Do I really need an attorney? Can’t I just file bankruptcy myself?

It is possible, but not recommended.  Do you need legal representation from someone who is an expert in Arizona Bankruptcy Law?  Yes.  If you want to take full advantage of your rights ad opportunities concerning bankruptcy.  Unless you understand thoroughly the Arizona Bankruptcy Law, leave it to an expert who will represent your best interests and who has helped clients achieve a successful outcome. The cost of retaining an Arizona Bankruptcy Lawyer is the cost of knowing that you are following all legal procedures — it could be advantageous to your case to have an attorney who is familiar with the Arizona court system.

Can I Own Anything After Bankruptcy?

Yes, you can.  Not being able to own anything for a given time period after filing bankruptcy is a myth.  You can keep your exempt property or anything you obtain after the bankruptcy is filed.  If you receive an inheritance, however, or life insurance benefit or a property settlement within 180 days of filing, this money or property may have to be paid to creditors if it is not exempt.

Can I Erase My Student Loan Debt in a Bankruptcy? 

It is not impossible, but very difficult to discharge student loans in a bankruptcy. are difficult, but not impossible.  Furthermore, our firm has accomplished this before, and we help our clients find options and creative alternative solutions to deal with the debt.  This is a popular FAQ with several people.  Student loans debt is now higher than credit card debt in this country.

What is Bankruptcy? 

Bankruptcy is the legal way to stop collection actions such as lawsuits, foreclosures, repossessions, and garnishments.  Filing Chapter 7 Bankruptcy in Mesa wipes out most debts.  A Mesa Chapter 13 Bankruptcy repays creditors and helps you keep assets.  Therefore, call and set up a free consultation with our low cost Mesa bankruptcy attorneys now.  Find out if a bankruptcy can help you get out of debt and start living again!  Call us now at (480) 833-8000. Contact us now!

Does filing a Chapter 13 mean I will have to pay back all of my debts?

A great FAQ.  No.  People do not realize that they can get the similar results in both Chapter 7 and Chapter 13 bankruptcy.  In a Chapter 13, a client files a payment plan outlining how to pay back a portion of the debt (typically over three to five years).  The specifics of the plan will depend on the debt burden, income. Having an attorney knowledgable and experienced in Arizona bankruptcy law is crucial. 

Will I take on my ex-spouse’s debt? 

A common asked FAQ by couples struggling with a relationship.  If I divorce my spouse, will I be required to take on his or her debt?  Depending on the type of debts and when or how they were acquired, the debts may belong to both spouses or just one.  Make certain your divorce attorney is experienced and expert in Arizona bankruptcy law.  Divorce and bankruptcy are very much interconnected:  My AZ Lawyers help our clients determine what is most advantageous for your particular situation, and we can provide alternatives to bankruptcy before or after a split.

What are my options besides bankruptcy?

Our firm can help you to find an effective alternative to bankruptcy.  Take advantage of our FREE, no obligation CONSULTATION and you can discuss options with an experienced Arizona attorney.  Some of our successful strategies include:  we help clients restructure mortgages, complete deeds in lieu of foreclosure, negotiate favorable debt settlements, we can recommend property liquidation, and we can suggest payment plans outside of bankruptcy.

What will my life be like after bankruptcy?  Is there life after bankruptcy?

Absolutely!  Our firm is dedicated to seeing you through the entire bankruptcy process, including “post-bankruptcy”.  We can also help you rebuild your credit immediately after receiving a bankruptcy discharge.  There is no doubt your credit will take a hit, but that is where taking the right steps can lead to a promising financial future.  In addition, our firm allows time for consultation to give tips to restore  credit after bankruptcy, making the most of a fresh financial start.  This is a common FAQ that many of our Mesa bankruptcy clients wonder.

Will I have to appear in court?

A common FAQ.  You will have to attend a “meeting of creditors” proceeding in most bankruptcy cases.  At this appearance, you will meet with the bankruptcy trustee and any creditor who chooses to attend. At this meeting, which is a short and simple procedure most of the time, you will be asked several questions about your bankruptcy forms and about your financial situation.  Furthermore, some clients occasionally have to appear at a hearing if complications arise in their case, or if the client chooses to dispute a debt.  If filing a chapter 13, you may have to appear in court when the judge decides whether to approve your payment plan.  At any time you are required to go to court, you will receive notice of the date and time from the court and from your attorney.

Before you have to attend a hearing, our attorney will answer any questions you have and prepare you for everything you can expect to see and hear.

How do I know if I can file bankruptcy?  Who can file bankruptcy?

Any individual person or business that owes money to a creditor can file a bankruptcy petition.

I Have Decided To File For Bankruptcy.  What do I do now?  How do I get started?

You will need to start by compiling a list of debts — past and present — as well a list of assets and liabilities.  If you don’t know what these are, exactly, contact an experienced Arizona Bankruptcy Law attorney.  Also, My AZ Lawyers offers a FREE no obligation consultation to get you started and to give you information.  You will also need a statement of financial affairs (this will need to be filed with the bankruptcy court) and a filing fee.

Can a co-signer on a loan be responsible for a debt if the other person declares bankruptcy?

Yes.  The co-signer may be required by the lender to make payments on a loan once the principal signer has declared bankruptcy.  Obviously, this is why it is important to really consider co-signing a loan: a co-signer must be ready and able, to pay the loan in the event that the principal signor cannot.  Have an FAQ?  By all means, contact our Mesa bankruptcy lawyers right away.

Will I get back the money that was garnished from my paychecks after I file for bankruptcy?

Declaring bankruptcy stops wage garnishments from creditors where they are in the process.  However, you won’t necessarily get any of the money back that has already been taken from you through the garnishment.  The idea is to stop a garnishment before your creditors take action against you.  That is the best way to assure that you won’t lose any of your hard-earned money in a garnishment.
A bankruptcy filing will stop any future pay checks from being garnished. Any funds that had been taken prior to the filing of your bankruptcy petition will not be returned. Your bankruptcy trustee may be able to recoup any funds taken up to 90 days prior to your filing.  However, those funds are considered those a preferential payment to a particular creditor.  The bankruptcy trustee takes that money and uses it in your bankruptcy estate to be distributed evenly among all of your creditors.
However, sometimes a garnishment will continue to be taken after the filing of your bankruptcy petition if proper notification is not given and those funds are able to be returned. Seeking the assistance of our Mesa bankruptcy attorneys is the best way to assure that your wages aren’t garnished any further.

File Your Bankruptcy Prior to Your Payroll Cutoff

It’s important to realize your filing date must be before the end of your pay period, not your pay date.  If your pay period ends before the date of your bankruptcy filing those funds will also be lost.  Time is of the essence when contacting an experienced Mesa bankruptcy lawyer if you are wishing to stop your wages from being garnished.
Hiring an attorney can help make the process of stopping a garnishment run much more smoothly.  Your Mesa garnishment attorney will notify both your payroll department and the creditor who is garnishing your wages regarding you declaring bankruptcy.  The automatic stay of the bankruptcy starts as soon as you file and stops the wage garnishment.
It is also important to realize that there are many signs that a garnishment is pending. Prior to a garnishment being put in place; you will receive: First, a law suit Summons.  Next, you will get a Notice of Default Judgment, and then finally, a Writ of Garnishment. Filing your bankruptcy proactively upon the receipt of the Summons can make sure that the garnishment never starts.
The experienced attorneys at My Arizona Lawyers can provide you with a clear deadline and target date to file to ensure your case is filed before a garnishment stops. It is important to call our Mesa bankruptcy attorneys and schedule your free consultation as soon as you are served with any legal paperwork.  Our Mesa Bankruptcy Team are experienced in stopping wage garnishments.  We’ll work with you to help you keep as much of the monies you have worked so hard to earn.

Will filing a bankruptcy in Arizona stop my utilities from being disconnected? 

Yes, filing for chapter 7 or chapter 13 bankruptcy in Arizona will stop your utilities from being disconnected.  Once you file bankruptcy in Arizona, the bankruptcy automatic stay which goes into place.  The Automatic Stay prevents any creditor from taking further action against you or your property.  This includes utility companies.  Contact our experienced bankruptcy lawyers for more information.  We offer free consultations and low fees.  We look forward to assisting you.

Can Utility bills be discharged if I file for bankruptcy in Arizona? 

Yes, utility bills may be discharged by filing for bankruptcy in Arizona. After you have filed for bankruptcy, some of the cable and utility companies may require a deposit from you the next time you open an account with them.  Comparatively, the amount of the deposit that you may be charged by the utility company will probably be a lot less than the amount of the bill(s) that you are discharging through filing bankruptcy.

What is a preferential payment in a Mesa Bankruptcy?

A preferential payment is any money that the person filing bankruptcy has paid back to a friend, family member, or specific creditor shortly before filing for bankruptcy protection. All creditors are supposed to be treated equally.  Thus, you may not choose to pay one individual while not paying the others. Any payments made to creditors made within 90 days of filing must be listed on your bankruptcy petition.  Preferential payments often are ordered paid back by the bankruptcy trustee.

What Happens if I made a preferential payment right before declaring bankruptcy?

When a preferential payment is made shortly before declaring bankruptcy, the bankruptcy trustee can decide whether or not to go after that money and make it a part of the bankruptcy estate.  The trustee would require that the preferential payment be paid back and then that money will be distributed evenly to all creditors. For example, if you were to pay your parents $2,000 right before filing bankruptcy in Mesa, the bankruptcy trustee could decide to go after your parents to collect that money. Once the money is collected it will be put into the bankruptcy estate so all creditors can make a claim for a portion of those funds.

If I file bankruptcy in Mesa, will I lose my tax refund every year? 

No, you will only lose your refund for the earnings received prior to your bankruptcy filing. For example, if you were to file your bankruptcy in June, you would be half way through the year and would potentially lose half of your tax refund for only that year. It is very important to discuss your tax refund with an experienced Mesa debt relief attorney.  Thus, you know what to expect in regards to how much of your tax return could potentially be taken by the bankruptcy trustee.

What is the homestead exemption in Arizona when filing bankruptcy? 

In Arizona you are able to keep a home with up to $150,000 of equity in a Chapter 7 bankruptcy filing.  To find out your equity and to make sure you aren’t in jeopardy of losing your home.  It is imperative to contact a Mesa bankruptcy lawyer.  Many offer free consultations and can assist you in your pursuit of becoming debt free.

What is equity in regards to an Arizona Bankruptcy?

Equity is the difference between what you owe on a secured debt and how much the collateral is worth. If you owe $5,000 on a car, and the car is worth $10,000, you would have $5,000 in equity.

What is the vehicle exemption in Arizona? 

In Arizona you may have up to $6,000 of equity in one car. This cannot be split between multiple cars. In a joint filing the exemption doubles to $12,000 in two vehicles. There is also an additional exemption if the vehicle is equipped with special equipment for medical reasons.  Please contact an Arizona debt relief expert to make sure you are getting the most of your Arizona vehicle exemption in a bankruptcy.

FAQ | Mesa Bankruptcy Lawyers