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Phoenix Bankruptcy Lawyer Hollis Joslin Answers Frequently asked Questions about Bankruptcy

Frequently asked questions about bankruptcy

answers to questions about bankruptcy by Arizona bankruptcy lawyer Hollis Joslin
questions about bankruptcy

What is Bankruptcy?

What are the different kinds of Bankruptcy?

What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?

Who should file Bankruptcy? 

Does filing bankruptcy stop harassing calls from creditors?

Does filing bankruptcy stop foreclosures or repossessions?

Does filing bankruptcy stop lawsuits?

Are student loans dischargeable in bankruptcy?

Are medical bills dischargeable in bankruptcy?

What other types of debts are dischargeable in Bankruptcy?

What types of debts are not dischargeable in bankruptcy? 

Will I lose my home if I file bankruptcy or can I keep my house in bankruptcy?

Will I lose my car if I file bankruptcy or can I keep my car in bankruptcy? 

Will bankruptcy get rid of all of my debts?

Is there a certain amount of debt required to file bankruptcy?

Is there an income requirement to file bankruptcy? 

Should I file bankruptcy if I'm retired?

Can I file bankruptcy on my own or do I need a lawyer to file bankruptcy? 

Will everyone know if I file bankruptcy? 

How do I go about filing bankruptcy?

Does filing bankruptcy eliminate liens on my property? 

If I'm married and I file bankruptcy, does my spouse have to file bankruptcy too? 

What factors should I consider in choosing a bankruptcy lawyer? 

What are good alternatives to get rid of debt without filing bankruptcy?

Bankruptcy lawyer Hollis Joslin answers bankruptcy questions
answers to questions about bankruptcy by phoenix bankruptcy lawyer Hollis Joslin

What is Bankruptcy?

Bankruptcy is a federal law, the Bankruptcy Code (11 U.S.C. §§ 101-1330) which in conjunction with state law allows debtors to eliminate some or all debts, depending on the type of debts and the circumstances of the debtor so that people suffering under burdensome debt that they cannot afford to repay can get a fresh start on their finances. The US Supreme Court put it this way, bankruptcy gives "the honest but unfortunate debtor … a new opportunity in life and a clear field for the future, unhampered by the pressure and discouragement of preexisting debt." (Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)).

What are the different kinds of Bankruptcy?

The Bankruptcy Code provides a number of different types of bankruptcy; among them, chapter 7 bankruptcy, chapter 9 bankruptcy, chapter 11 bankruptcy, chapter 12 bankruptcy, chapter 13 bankruptcy, and chapter 15 bankruptcy. Each of the chapters of bankruptcy provides relief in whole or in part from certain types of debts. In many bankruptcy cases, all debts are discharged but that determination is made based on the debtor's particular circumstances, the nature and type of the debts, and the bankruptcy chapter under which the bankruptcy is filed. The most common chapters individual debtors and small business people file under are chapter 7 bankruptcy and chapter 13 bankruptcy. Larger businesses and unusually high income earning individuals may file bankruptcy under Chapter 11. The following is a brief list and explanation of the chapters of bankruptcy: 

1. Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a liquidation bankruptcy, the type of bankruptcy where the debtor's non-exempt assets (if any) are liquidated to satisfy some portion of the debts. Certain assets, like a home, a car, and other personal property may be exempt from bankruptcy (see my link for bankruptcy exemptions for details). The chapter 7 bankruptcy trustee conducts a sale of the debtor's non-exempt assets (if there are any) and distributes the proceeds to creditors. In many chapter t bankruptcy cases, all or most of the debtor's assets are exempt so that no sale is conducted. Individuals as well as businesses may file for bankruptcy under Chapter 7. This chapter of bankruptcy and chapter 13 bankruptcy are by far the most commonly filed chapters of bankrupty by individuals.  

2. Chapter 9 bankruptcy: 

Chapter 9 bankruptcy is filed for the reorganization of municipalities such as cities, towns, villages, taxing districts, municipal utilities, and school districts.

3. Chapter 11 bankruptcy:

Chapter 11 bankruptcy is most commonly filed by partnerships, corporations, and other business entities for the purpose business reorganization. This chapter of bankruptcy lets the debtor maintain the business while implementing a payment plan through the bankruptcy court for repayment of some or all of the debts.

4. Chapter 12 bankruptcy:

Chapter 12 bankruptcy is a type of bankruptcy formulated for the unique circumstances of family farmers and fishermen.

5. Chapter 13 bankruptcy:

Chapter 13 bankruptcy is a type of bankruptcy that an individual with a regular income may use to set up a payment plan through the bankruptcy court to repay all or a portion of the debts through a 36-60 month payment plan.

6. Chapter 15 bankruptcy:

Chapter 15 bankruptcy is filed for cross-border bankruptcies. It adopts and implements the United Nations' Model Law on Cross Border Insolvency. 

What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?

There are a number of differences between chapter 7 bankruptcy and chapter 13 bankruptcy but of primary concern are eligibility requirements, the amount of debt that can be discharged, property that can be kept, and the timeframe it takes to complete the process. As noted previously, all unsecured debts that do not fall into nondischargeable categories such as student loans, debts incurred by fraud or wilful malicious conduct, certain debts owed to governmental entities, etc. can be discharged in Chapter 7 and all exempt property may be kept in a chapter 7 provided payments on property securing a debt are kept current. However, you will lose nonexempt property in a chapter 7 bankruptcy. In order to file a chapter 7 bankruptcy, you must pass the median income or disposable income test. If your income is too high and your allowable expenses are too low, you will be required to file under chapter 13. Additionally, if you have filed a chapter 7 previously and eight years have not passed since that filing, you will not be eligible to file chapter 7 again yet. A chapter 7 bankruptcy usually proceeds to discharge within six months or less. 

Unlike in a chapter 7 bankruptcy, in a chapter 13 bankruptcy, all or a portion of your unsecured debts may have to be repaid. However, you may be allowed to keep nonexempt property provided you are able and willing to fulfill a 100% repayment plan over 36-60 months, which is the length of time it will take to complete a bankruptcy filed under chapter 13. How much you are required to repay in a chapter 13 will be determined based on a disposable income test. There are four primary reasons people file chapter 13 bankruptcy: (1) because they are ineligible to file a chapter 7 bankruptcy due to income or prior chapter 7 filing; (2) because they want to repay all or a portion of debts that may otherwise be dischargeable; (3) because they wish to retain nonexempt property; (4) because they are in arrearages on exempt property such as a house or vehicle with equity and they want to retain that property and make up the arrearages through the chapter 13 repayment plan. The last issue is probably the most common. The chapter 13 bankruptcy process will take between three and five years to get to discharge.   

Where the debtor is eligible, current on exempt property such as a home, and all or most of the debts are of a dischargeable nature, chapter 7 bankruptcy is usually the most advantageous because it provides for discharge of the greatest amount of debt in the briefest timeframe.

Who should file Bankruptcy?

The conventional wisdom is that bankruptcy should be a last resort and there are reasons to view it as such. However, the primary reason cited is usually that filing bankruptcy has an adverse affect on your credit rating, which is somewhat of a misnomer because in most instances by the time one gets to the point of seriously considering filing bankruptcy, one's credit rating is already in the tank. In these instances, filing bankruptcy may actually improve one's credit rating, although not immediately, or rather make it possible for one to re-establish a good credit rating by giving one enough breathing room that one can once again afford to pay one's obligations timely and, hence, establish a new payment history free of late pays or defaults. Moreover, the immediate impact of filing bankruptcy is that it makes one less of a credit risk to potential lenders because (1) when other debts are discharged, a lender has less competition for those hard-earned dollars and (2) creditors know that one who just filed chapter 7 bankruptcy cannot discharge debts in chapter 7 bankruptcy for at least eight years now, which is ample time for them to pursue their collection remedies should one default on an obligation. Additionally, it is possible to establish a respectable credit score within 24 months or so of filing a chapter 7 bankruptcy if one works at it strategically. Although one will not likely get a prime interest rate for a while after filing, an FHA mortgage may be approved at a prime rate within 24 months provided other qualification requirements are met. That's important because generally, a home is an appreciating asset, the only type of expense that makes good financial sense to use credit for in the first place.      

Having said all of the above, filing bankruptcy should be a last resort if there are workable alternatives that can be advanced expeditiously to get your finances back in order. One should not file for bankruptcy merely because they become stressed by the creditor harassment that may occur regarding minor debts. Although some creditors and collection agencies will file a lawsuit against you to collect minor debts, they usually prefer to settle them in other ways because filing a lawsuit is expensive. The best way to stop this is usually to work out a manageable payment plan. Quite often creditors will reduce the principal and allow you a liberal amount of time to pay the reduced amount if you put forth the effort before they get a judgment against you. If you are unable to accomplish this on your own, a good debt negotiation lawyer like Hollis Joslin can help for a fee typically much lower than the legal fees and court costs for filing bankruptcy. Attorney Hollis Joslin negotiates both large and small debts.

Cases where filing bankruptcy may be a better option include those involving wages garnishments, repossessions, foreclosures, and other actions that may obliterate your ability to function financially. Immediately after filing bankruptcy an automatic stay usually goes into effect, which temporarily prohibits foreclosure, wage garnishment, lawsuits, and other harsh collections activities. This will give you a reprieve but if you lack the ability to bring secured accounts currently quickly, you will have to surrender the secured property in order to discharge those debts or make up the arrearages through a chapter 13 bankruptcy repayment plan. It is best to discuss your circumstances with a qualified bankruptcy attorney in these instances to determine whether bankruptcy is appropriate and of so whether a chapter 7 bankruptcy or chapter 13 bankruptcy is best for your circumstances and goals.  

Does filing bankruptcy stop harassing calls from creditors?

Filing bankruptcy triggers an automatic stay on all collections activity, including harassing phone calls, provided you have not had a prior bankruptcy filing that implicates a question of bad faith or issues related to multiple filings.  

Does filing bankruptcy stop foreclosures or repossessions?

As above, filing bankruptcy triggers an automatic stay on all collections activity, including foreclosures and repossessions, provided you have not had a prior bankruptcy filing that implicates a question of bad faith or other issues related to multiple filings. However, unless you are filing a chapter 13 in which you propose to make up arrearages on property such as homes or cars used to secure a debt, through the chapter 13 repayment plan, creditors typically respond to this by filing a motion to lift the stay so that they may continue to pursue repossession or foreclosure. The bankruptcy court will likely grant this motion in the absence of an affirmative defense, freeing the creditor to move forward with its action against the property. Hence, if one of your objectives is to stop foreclosure or repossession for more than a very brief period of time, you should file a chapter 13 rather than filing a chapter 7. Note that in the case of a vehicle, it may well make more sense to surrender the car in a chapter 7 and get another car, which most with adequate income and job history have little trouble qualifying for immediately after filing, rather than to make the regular payments in addition to arrearage payments through a chapter 13 bankruptcy. The same may be true regarding a home except in circumstances where there is large enough amount of equity to make the math make sense or where a chapter 7 eligibility problem creates a choice between paying arrearages on an asset with value versus making payments on unsecured and otherwise dischargeable debts.   

Does filing bankruptcy stop lawsuits?

Filing bankruptcy triggers an automatic stay on all collections activity, including collections lawsuits in other courts, provided you have not had a prior bankruptcy filing that implicates a question of bad faith or issues related to multiple filings. In rare instances, a creditor may motion the bankruptcy court to lift the stay and allow the lawsuit to proceed. However, this is highly unusual, particularly in the case of unsecured debts and such a motion would not likely be granted absent an allegation of nondischargeability, a question which itself would need to be adjudicated by the bankruptcy court. This is what is known as an adversarial proceeding and should only be filed where the is a legitimate issue of nondischargeability as set forth by the bankruptcy code. If you have any lawsuits pending against you and you are considering bankruptcy, you should provide the lawsuit documents to your bankruptcy attorney and discuss all relevant facts about the lawsuit so your bankruptcy can advise you whether bankruptcy will solve the problem.    

Are student loans dischargeable in bankruptcy?

The general rule is that student loans are not dischargeable. However, there are exceptions. For example.  

 

Are medical bills dischargeable in bankruptcy?

Medical Bills are generally unsecured debts and are dischargeable in bankruptcy. However, many hospitals have relationships with charitable foundations that may assist with medical bills and hospitals will sometimes forgive medical bills where hardship warrants it. For these reasons It's a good idea to check with a patient advocate to see if your medical bills may be forgiven, reduced, or even paid for completely by a foundation before considering bankruptcy to get rid of medical bills. If you are unable to receive help through the hospital or an associated foundation, and your medical bills are substantial, bankruptcy may be an option for you.   

What other types of debts are dischargeable in Bankruptcy?

Most types of debts are dischargeable in bankruptcy

 

What types of debts are not dischargeable in bankruptcy? 

 

Will I lose my home if I file bankruptcy or can I keep my house in bankruptcy?

 

Will I lose my car if I file bankruptcy or can I keep my car in bankruptcy? 

 

Will bankruptcy get rid of all of my debts?

 

Is there a certain amount of debt required to file bankruptcy?

The bankruptcy code does not require any minimum amount of debt to qualify for filing bankruptcy. However, filing bankruptcy does cost money unless you are destitute enough to qualify for pro bono legal representation and a waiver of the filing fee. Even if that is the case, it may still cost you a tax refund or some other obscure nonexempt asset, depending on the jurisdiction you file in. With that in mind, you should carefully weigh the costs and the benefits. Let's say, for example, your attorney fees and court costs for a chapter 7 bankruptcy run you $2800.00, which is fairly typical in an Arizona chapter 7 bankruptcy; and let's say your total unsecured dischargeable debt is $10,000. The net benefit to you would be a little over $7000. Might it make more sense to reach out to the creditors or have your attorney reach out to them for a much smaller fee to see if the creditors are willing to reduce those debts by 50%, for example, and allow you to repay the reduced debts on an installment plan? Let's say the attorney charges $500 for this. In that scenario, you'd be out $5500 total versus $2800 if you'd filed chapter 7 bankruptcy, a difference of only $2700 and you would not have a bankruptcy on your record. Moreover, if a new and more difficult financial problem were to arise in the future, you would still have the bankruptcy option available to you, whereas if you filed chapter 7 bankruptcy now, you could not file chapter 7 again for eight years. On the other end of the spectrum, there is a maximum amount of debt you can have and still qualify to file a Chapter 13 bankruptcy. The maximum amount changes periodically but is currently $1,149,525 in secured debt (such as a home mortgage) and $383,175 in unsecured debt. This is not often an issue but the lower end of the debt spectrum should be given careful consideration. If the debts you owe are under $20,000, it may be a good idea to call attorney Hollis Joslin 602-354-3890 and discuss whether alternatives to bankruptcy may be a better solution.

Is there an income requirement to file bankruptcy? 

 

Should I file bankruptcy if I'm retired?

 

Can I file bankruptcy on my own or do I need a lawyer to file bankruptcy?

You do not have to have a lawyer to file bankruptcy. An individual is not prohibited from filing for bankruptcy without a lawyer. However, the rules and procedures involved in bankruptcy are cumbersome and can be quite complex for folks who do not practice law and even for lawyers who do not specialize in bankruptcy law. The complexity of filing bankruptcy and seeing it through to discharge with the most advantageous outcome has been compounded by the 2005 amendment to the bankruptcy code which throws many additional hurdles in the way of an already tedious process. Highly experienced Phoenix Bankruptcy attorney Hollis Joslin strongly urges you to contact him for a free consultation before considering filing bankruptcy yourself. If after speaking with bankruptcy and debt settlement attorney Hollis Joslin you do decide to file your own bankruptcy, be aware that the bankruptcy court requires even those without a lawyer know the relevant bankruptcy laws and local federal district court procedures. Just because you are not a lawyer does not mean the rules will not apply to you. If you fail to comply with the rules as required, your case may be dismissed. Moreover, even if you do manage to fulfill the legal requirements to the extent that you avoid dismissal, mistakes in strategy, timing, and procedure in dealing with the ins and outs of exemptions, could well cost you considerably more in asset forfeiture than the reasonable fee a good bankruptcy attorney charges. If you have no assets, very little income, and are a stickler for clerical details, it is at least possible you may successfully manage your own chapter 7 bankruptcy case. However, if you have no assets, nothing for creditors to attach, then it is difficult to imagine what benefit you will receive from filing bankruptcy. If your situation is best suited for a Chapter 13 bankruptcy or the bankruptcy rules require you to file under chapter 13, your odds of successfully navigating the bankruptcy process decrease exponentially. It is highly inadvisable to attempt a chapter 13 bankruptcy without an attorney and for a variety of reasons there may be no financial benefit to filing a chapter 13 on your own even if you are one of the rare few laypersons capable of accomplishing it. Call bankruptcy attorney Hollis Joslin for more information about chapter 13 or chapter 7 bankruptcy.   

Will everyone know if I file bankruptcy? 

What happens with Trusts or inheritance in a bankruptcy?

  

How do I go about filing bankruptcy?

 

Does filing bankruptcy eliminate liens on my property? 

 

If I'm married and I file bankruptcy, does my spouse have to file bankruptcy too? 

 

What factors should I consider in choosing a bankruptcy lawyer? 

A Bankruptcy Attorney is a lawyer that specializes in bankruptcy cases, and some of them, such as Bankruptcy Lawyer Hollis Joslin are also well versed in other methods of debt settlement. This is important because the first thing a good bankruptcy lawyer needs to know to determine whether bankruptcy is the best option for your resolving your debts is what ALL the options are! Attorney Hollis Joslin settles many debt cases through negotiation in addition to the bankruptcy cases he handles and that kind of track record is one of the first things to look for in a good bankruptcy lawyer. Attorney Hollis Joslin is not a general practitioner and that is also important in a bankruptcy lawyer but he does practice personal injury law in addition to his debt settlement and bankruptcy practice. This is also beneficial in a bankruptcy lawyer because a pending or potential personal injury claim is an asset and sometimes a very valuable asset that could well become the property of a bankruptcy trustee if not properly managed. The bottom line is you don't want a bankruptcy lawyer who has a varied practice that spreads his knowledge too thin but there is a huge benefit to bankruptcy with a depth of understanding of how the principles of other practice areas interrelate with bankruptcy. Most lawyers won't accept a bankruptcy matter unless they practice bankruptcy law regularly and even if they will, you should not hire them.

Here are some suggestions for finding the best bankruptcy lawyer for your job------------------.

 

What are good alternatives to get rid of debt without filing bankruptcy?

There are a number of alternatives to filing bankruptcy; among the most common are debt consolidation, debt reduction negotiation, and delaying payment until the statute of limitations on debt collection runs out. Which approach to addressing your debt issues makes the most sense depends on your particular goals and circumstances. Let's take a look at each approach: First, debt consolidation.     

 

 

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