To file bankruptcy in Arizona or not?
There is not one straight answer on this one, it will depend on the details of your particular case. We will work through some of those possibilities here, and also be sure to speak with a Tucson bankruptcy attorney for your special case. There are many factors to consider before filing bankruptcy. Bankruptcy has numerous advantages, but it also has its disadvantages. Below is a quick overview of some of the main effects that will be felt by the typical bankruptcy debtor, both positively and negatively. However, this list is not by any means exhaustive and can vary greatly from debtor to debtor. It is advisable to consult with a Tucson bankruptcy attorney to get a more accurate picture of how bankruptcy will affect you and your particular financial situation.
- Debt Discharge: Once the bankruptcy process is completed and the discharge order is entered, all creditor claims against those discharged debts are forever barred and those debts disappear. This provides the opportunity for a fresh start.
- Protection from Creditors: Upon filing, an automatic stay is immediately put in place, freezing everything and barring creditors from pursuing their claims outside the bankruptcy process.
- Opportunity to Bring Debts Current: Chapter 13 bankruptcy grants the debtor the right to bring defaulted debts current and retain the property or gain good status on the loan. This right is available even if it isn’t allowed under state law, contract terms, or if the foreclosure process has been started.
- Debt Modification: In certain situations, Chapter 13 bankruptcy can allow the court to modify the existing terms of a contract for debt. This can include either reducing the amount owed or changing the timing or amount of the payments.
- Property Protection from Creditors: Bankruptcy allows for certain “exempt” property for each debtor that cannot be taken from the debtor, nor used to satisfy any creditor claims. It can also remove the liens from exempt property so the debtor owns it free and clear after the bankruptcy is closed.
- Litigation Forum: Bankruptcy provides an accessible forum to present consumer defenses and claims against creditors as allowed under state and federal law.
- Possibility Some Debts will Survive: There are some debts that either cannot be discharged in bankruptcy or are nearly impossible to discharge due to the requirements of dischargeability. Some examples of these types of debts are alimony or child support, most student loans, criminal fines, or certain taxes.
- Potential Property Loss: In situations where the amount of equity or value in certain property is greater than the amount allowed under bankruptcy exemption limitations, liquidation may be required.
- Impact on Credit Rating: A bankruptcy can remain on your credit report for up to ten years after filing. This may lead to difficulty in obtaining future credit, but often is not held against a debtor that has reestablished good credit reputation over the years following the bankruptcy.
- Future Debt: If there is a chance you may come into more substantial debt in the future, you may want to wait to file. Any debts incurred after filing will not be dischargeable in the bankruptcy proceeding. If this happens, the opportunity of a fresh start that bankruptcy was intended to create will be greatly impaired or even lost.
- Alternatives: There are alternatives to filing bankruptcy if any of these disadvantages affect your situation. Alternatives should be addressed with an honest straightforward Tucson bankruptcy attorney who will answer all your questions and inform you of all your options.
Before making any decisions about when you should file, make sure and take advantage of the free consultation from a competent Tucson bankruptcy lawyer.