Many clients are curious during an initial consultation as to why we ask where they bank, but to an experienced bankruptcy attorney this is a vital question when paired with the question “do you owe them any money?” In the typical timeline leading up to a bankruptcy filing our clients discontinue all payments to unsecured creditors. When a client discontinues payments on credit lines to the bank where their money is kept on deposit, the bank will often make a setoff where they begin taking automatic withdrawals from available funds to cover the missed payments. This is done without notice and often leads to catastrophic overdrafts and returned checks. The client then finds himself in a situation where that “fresh start” just became more difficult to obtain.

We often counsel clients who have their accounts with Wells Fargo to move their accounts to another institution before filing bankruptcy. Wells Fargo has built a reputation for freezing personal and joint bank accounts, even accounts where the joint owner did not file for bankruptcy protection, once they receive notice of a bankruptcy. This causes enormous stress and unnecessary headaches for clients who were only seeking relief from financial burdens that had become out of control.

These are just two example of how receiving advice from an experienced bankruptcy attorney can help you to get the relief that you need.

If you have questions about bankruptcy, we encourage you to attend one of our free seminars or contact us at 800-899-2730 for a free personalized consultation. For more information about our seminars please visit http://www.freearizonabankruptcyseminar.com/.

In order to help determine who was eligible for Chapter 7 and who had to file Chapter 13, an income based test was introduced. (It should be noted that the means test is very complicated and has many nuances so it is best to speak with an attorney about your specific situation.) As a first step, the gross household income and the number of individuals in the household are looked at and compared to “median family income” numbers for the area in which you live. If your household income is below the median income for the same size household, you are generally eligible to file Chapter 7.

One of the things Congress built into the bankruptcy code in 2005 is a periodic update to the “median family income” numbers that your household income will be compared to. As a result of increased and prolonged unemployment, “median family income” in Arizona continues to decline. Therefore, when the numbers update again on November 1, 2011, more families and individuals in need of bankruptcy protection will find themselves above the “median family income”. For example: The following table shows the current numbers and the numbers that will go into effect on November 1, 2011.

Household        Current        Nov. 1, 2011
1                        $42,603         $41,385
2                        $55,404         $53,781
3                        $59,659         $56,508
4                        $67,113         $61,267
5                        $74,613         $68,767
6                        $82,113         $76,267
                       
If you are over these income numbers for your household size, there may be other ways to still qualify you for a Chapter 7 case if that is in your best interest. If you have questions about bankruptcy, we encourage you to attend one of our free seminars or contact us for a free personalized consultation. For more information about our seminars please visit http://www.freearizonabankruptcyseminar.com/.

The automatic stay is one of the fundamental aspects of bankruptcy law. It is codified in 11 U.S.C. § 362(a). In essence, the automatic stay forbids all entities from initiating  or continuing actions to collect from the debtor or take possession of property that is part of the bankruptcy estate. It goes into effect upon the filing of the bankruptcy petition, granting the petitioners immediate relief.

The automatic stay serves two main purposes. First, it provides the “good news” that those who file bankruptcy are seeking. That is to say, the automatic stay stops the harassing phone calls, it stops the pressuring collection agencies, it stops the lawsuits and it stops the foreclosures. In fact, creditors who violate the automatic stay could even be subject to sanctions or have their remedy declared void.

Second, the automatic stay ensures that the bankruptcy estate assets are properly distributed. By preventing all creditors from commencing or completing collection actions, the automatic stay stops the creditors from racing to see who can sue and collect from the Debtor first, a race which would inevitably result in a minority of creditors collecting the majority of the debtor’s non-exempt assets, to the detriment of the other creditors.

The decision to file bankruptcy is often a difficult one. However, learning about the automatic stay is usually the best news that an overwhelmed debtor can hear. If you are in a situation where you need protection from harassing phone calls, lawsuits, or garnishments, and are interested in learning more about the automatic stay, please visit us at www.bankruptcylawyeraz.com or call us at (480) 829-9081 to schedule your free initial consultation with one of the experienced attorneys at McGuire Gardner, PLLC,  so you too can hear more good news about bankruptcy.

Common examples of adversary proceedings brought by specific creditors include cases where a particular creditor does not believe that the debt owed to it should be discharged in the bankruptcy. The bankruptcy code contains exceptions to the discharge of certain debts. For example, debts in the nature of spousal maintenance or child support are not dischargeable. However, it is sometimes unclear whether a particular obligation in a divorce is in the nature of support or whether it is a property settlement (which may be dischargeable in Chapter 13 cases.) The debtor, or creditor, might ask the bankruptcy judge to resolve the issue through an adversary proceeding. Other times, a creditor might allege that the debt owed to it was procured through fraudulent means making the debt non-dischargeable. There are other circumstances where non-dischargeable debts might be alleged and it may make sense for the debtor or the creditor to get a court order making certain the debt is or is not dischargeable.

Other times, the debtor may wish to discharge debts that otherwise are not dischargeable. For example, student loans are dischargeable only in limited circumstances. Those circumstances must be proven by bringing an adversary proceeding against the lender. A debtor may also bring an adversary proceeding against a creditor who has violated the automatic stay or discharge injunction.

Finally, the case trustee may bring an adversary proceeding against the debtor or even against a creditor in some cases. For example, if the debtor was not honest in listing all of their debts and assets the trustee may ask the judge to deny the debtor’s discharge entirely. A trustee may sue a creditor to undo a transfer or payment made to that creditor shortly before the case was filed. The United States trustee may bring an adversary proceeding if a case was filed in bad faith, or is an abuse of the bankruptcy code.

Adversary proceedings are rare. Particularly if a debtor is honest and discloses fully their financial circumstances. If you have questions about adversary proceedings, or one has been filed against you in your bankruptcy, you should contact a qualified bankruptcy attorney. 

Please contact McGuire Gardner, PLLC for further information regarding your bankruptcy case by visiting our website at www.mcguiregardner.com, or by calling (480) 829-9081.

The most frequently utilized exception to the discharge of credit card debt is found in 11 U.S.C. § 523(a)(2)(A):

A discharge under [a Chapter 7 general discharge], [Chapter 11 general discharge], [Chapter 12 general discharge], [Chapter 12 hardship discharge], or [Chapter 13 hardship discharge] … does not discharge an individual debtor from any debt–…for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by–false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.

While it is true that subsection (C) of 11 U.S.C. §523(a)(2) provides for a presumption of non-dischargeability arising when credit card purchases for luxury goods or services are made within ninety (90) days of filing bankruptcy and cash advances drawn within seventy (70) days of filing bankruptcy, some individuals believe that credit card debts will be discharged if they simply wait more than ninety (90) days from the date of incurring the debt to file their bankruptcy. This is not the case. Avoiding the presumption is only part of the battle.

Over the years, bankruptcy courts have recognized that revolving open credit accounts (i.e. credit cards) are different from other accounts when it comes to determining whether a charge to the account is to be construed as credit obtained by false pretenses, false representations, or actual fraud. While many honest debtors use credit cards and find themselves in financial trouble, some dishonest debtors run up credit balances with no intention of ever paying the debt.

If you or a loved one is in financial trouble, it is important to immediately stop incurring additional debt. This is true even if you are living on credit. Contact the qualified professionals at McGuire Gardner, PLLC to assist you in managing your financial situation. Many heartaches can be avoided with the help of competent professionals if you address your financial circumstances rather than allow them to compound.

First, from the point of view of the debtor or person filing bankruptcy in which case the debtor is obligated to pay child support or spousal support: bankruptcy will not discharge an obligation to pay child support or spousal maintenance. Bankruptcy can, in certain cases, discharge or eliminate other types of debts to a spouse or former spouse. However, child support and spousal support will need to be modified or terminated through the family law courts. If you have other debts to a spouse or former spouse which you want to eliminate in bankruptcy, you will need to hire an attorney that can answer your questions and help you through this difficult process.

Second, still from the point of view of the debtor or person filing bankruptcy, but this time the debtor is receiving child support or spousal support: Your right to collect child support and spousal maintenance is not an asset that can be taken from you in bankruptcy. The income that you receive from actual payment of support will affect your bankruptcy, as more income may make it difficult to qualify to file for certain types of bankruptcy. You will need to ensure that your bankruptcy attorney is aware of any income you are receiving. You should also make sure that your divorce or family law attorney is aware of the status of any bankruptcy or of the potential that you will file for bankruptcy.

Third, from the point of view of the spouse or ex-spouse of a debtor, in which case the debtor is obligated to pay child support or spousal support to that spouse or ex-spouse: there is little to worry about a spouse or ex-spouse filing for bankruptcy as it pertains to child support and spousal support. These debts are not dischargeable in bankruptcy, meaning the debts will continue to be owed even after your spouse or ex-spouse completes bankruptcy. It may even be beneficial, as your spouse or ex-spouse will eliminate other debts and have more funds available to meet his or her obligations to you. Bankruptcy also gives child support and spousal maintenance a “priority,” meaning they will get paid before most other debts will get paid. However, if your spouse or ex-spouse owes you other money for property issues, or is obligated to pay debts that your name is also on, you will need to contact a bankruptcy attorney that is also familiar with divorce and family law issues to ensure that your rights are protected.

Finally, from the point of view of the spouse or ex-spouse of a debtor, and the spouse or ex-spouse is obligated to pay child support or spousal maintenance to the debtor: your spouse or ex-spouse’s decision to file for bankruptcy does not eliminate your ongoing obligation to pay support. The payments will continue to go to your spouse or ex-spouse, and will not be taken by the bankruptcy court or the bankruptcy trustee. If you need to modify or reduce your child support or spousal support, you will need to contact a family law attorney to assist you.

If you have any questions regarding bankruptcy or family law issues, please contact McGuire Gardner, PLLC by calling (480) 829-9081, or check us out on the web at www.mcguiregardner.com.

However, because of 11 USC 109(e), people sometimes do not qualify for Chapter 13 either. 109(e) contains limits on the type and amount of debt you can have and still be eligible for Chapter 13. As of this article, the current limits are $360,475 of unsecured debt and $1,081,400 of secured debt (you do not have to count debts that are contingent or unliquidated in this calculation). Many of the same clients who make too much money to qualify for Chapter 7, are also the ones who were able to borrow in excess of these limits. The result? Often these individuals have to consider a more complicated and costly Chapter 11 case as an individual.

These clients have to play by many of the same rules that Borders will be playing by in its Chapter 11 case. In our practice we have seen a steady increase in the number of individual Chapter 11 cases that are being filed. If you have substantial debt, you should speak to a knowledgeable bankruptcy attorney about your options. Please visit us at www.bankruptcylawyeraz.com to learn more.

If a person has a foreclosure on their record, the news is not nearly as good, at least for a conventional loan, which can require a seven year waiting period from the date of the foreclosure. If a person qualifies for a FHA loan, the waiting period is only three years.

Of course, a person also has to demonstrate that they otherwise qualify for a home loan by showing a sufficient down payment and proof of income. But, there is hope for those who have lost their home to again one day enjoy the American dream.

Please click here for the detailed list of qualifications: Foreclosure chart

 You can read a summary of the article here:  http://www.msnbc.msn.com/id/41188877/ns/business-the_new_york_times/.  The bankruptcy code currently provides the option for cities to seek bankruptcy protection, but does not provide that option for States. 

 The impact of such a move would be felt by a multitude of businesses and individuals, not the least of which would probably be those who are retired state employees.  Many states have constitutional provisions preventing reduction in vested retirement benefits.  As a result, any provision of the new federal law would likely be challenged on constitutional grounds.  In addition, individuals and businesses holding municipal bonds would likely be severely impacted as that debt might be restructured.  The idea is such an issue, that the mere suggestion or mention of such a law might have adverse impact on already struggling States.  It may become more difficult to borrow money if the investors believe that bankruptcy is a possibility for a State: something they have not had to consider previously.  This additional risk, however remote, is sure to increase the cost of acquiring credit.

 It is early on in the process and premature to speculate whether such a law would see the light of day.  It is, however, suggestive of the overall state of our nations economy that such a thing is even being considered.