Rosenstein Law Group

When a Phoenix bankruptcy attorney represents the high-income client, financial disclosures are likely to be more complex than for, say, the debtor who has been underemployed or unemployed for an extended period. But the complexity of the debtor’s income stream and the scope of his or her financial obligations does not mean that the debtor cannot file for Chapter 7 Liquidation relief. A Phoenix bankruptcy attorney may still offer up a liquidation bankruptcy as a viable option for certain high income individuals.

Disclosing Income from All Sources and Deducting Expenses

First of all, there is no income cap that, when exceeded, would disqualify a high income earner from filing for federal debt relief under Chapter 7.

A Phoenix bankruptcy attorney will apply the Means Test, which allows for consideration of certain expenses that the debtor regularly incurs. The Means Test is used as a threshold income examination to determine one’s Chapter 7 eligibility. When the debtor’s income exceeds the state’s median income, then the Phoenix bankruptcy attorney will establish whether the debtor’s expenses are sufficient to overcome the presumption of Chapter 7 abuse. Overcoming the presumption of abuse is possible when high expenses and certain circumstances justify reducing the debtor’s disposable income. The Phoenix bankruptcy attorney will know from the Means Test whether the debtor’s disposable income will permit a Chapter 7 filing.

Passing the Chapter 7 Means Test with High Income

A Phoenix bankruptcy attorney will administer the Means Test to the high income client so that appropriate debt relief options can be ascertained. That is, whether this debtor may file under Chapter 7 of the U.S. Bankruptcy Code, or whether filing a Chapter 13 Wage Earner Plan will be necessary.

For high income earners particularly, there are certain expenses that will reduce the debtor’s disposable income, including:

•  The debtor has a large non-dischargeable income tax liability.

•  The debtor has high lease payments on more than one car or makes high loan payments on more than one car (or a combination of both).

•  The debtor’s monthly mortgage payment is high.

•  The debtor has a large family.

•  The debtor’s child care costs are high.

•  Elderly and dependent family members also reside with the debtor.

•  The debtor’s health insurance and life insurance premiums are high.

For the high earner client, passing the Means Test requires that the Phoenix bankruptcy attorney validate large expenses to deduct against income. The greater the deductions from income, the lower the debtor’s disposable income, and the more likely a Chapter 7 filing is possible.

Applying the Means Test to determine Chapter 7 eligibility for high income debtors is not an impossible task, but it does require knowledge and experience. A Phoenix bankruptcy attorney at the Rosenstein Law Group will make that eligibility determination for you, so you’ll know exactly what your filing options are before you commit to federal debt relief under any chapter.

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Unpaid student loans are nondischargeable in Chapter 7, Chapter 11, and Chapter 13, requiring special handling from Arizona bankruptcy attorneys. Under 11 U.S.C. § 523(a)(8) of the U.S. Bankruptcy Code, student loans are nondischargeable obligations unless the debtor can prove that repayment of the loan would impose an undue hardship.

The harsh reality of student loans, or education loans, is that they are not normally discharged in bankruptcy. There is one very important exception to the non-dischargeability of student loans, however. Your Arizona bankruptcy attorneys may be able to establish that your education loans are causing an “undue hardship” on you or your family.

How Arizona Bankruptcy Attorneys Establish Undue Hardship

If the debtor is physically incapable of working and earning an income, then an undue hardship may exist. If your Arizona bankruptcy attorneys believe that you do indeed have an undue hardship, then they will file a lawsuit called an adversary proceeding with the bankruptcy court and present evidence to support that claim.

In a Chapter 13 Wage Earner plan, the debtor’s student loans can only be discharged if the Court finds that repayment of the loan would impose an undue hardship on the debtor. Under Rule 7001(6) of the Federal Rules of Bankruptcy Procedure, the dichargeability of student loans must be established through an adversarial proceeding. The debtor’s Arizona bankruptcy attorneys must file a complaint and serve the lender (the defendant) with both a summons and the complaint so that the creditor may fairly appear and defend the non-dischargeability of the loans. The adversary proceeding, then, determines the dischargeability of the student loan. The same applies to a Chapter 7 Liquidation and Chapter 11 Reorganization.

Evidence Presented By Arizona Bankruptcy Attorneys

Few debtors will see their student loans disappear in complete discharge for reasons of undue hardship, but certainly some will. For Arizona bankruptcy attorneys to succeed in proving undue hardship (should the student loans not be discharged) requires evidence supporting the following:

1. That the debtor is unable to repay the loans while maintaining a minimal standard of living.

2. That the current negative financial circumstances are likely to continue unabated.

3. That the debtor has honestly made every effort to pay off the loans.

Even with such evidence, it is very difficult for Arizona bankruptcy attorneys to prove undue hardship if the debtor is physically able to work or if the disability is temporary in nature and a not permanent condition affecting the debtor’s employability indefinitely.

If student loans make up a significant portion of your debt, then you need the advice and advocacy of the experienced Arizona bankruptcy attorneys at the Rosenstein Law Group.

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Once you’ve decided to seek protection from creditors under the U.S. Bankruptcy Code, the process of filing bankruptcy in Arizona is straightforward with the assistance of an experienced attorney. So you have a better idea of what to expect, we’ve highlighted some of the most important Chapter 7 Liquidation procedures for you below.  

Highlights of Filing Bankruptcy in Arizona – Getting Organized

You need to assemble your documents and records before your attorney can begin preparing your bankruptcy petition. The Chapter 7 petition will easily exceed 50 pages in length when the schedules, statement of financial affairs, and other associated written disclosures are included. To ensure that the bankruptcy petition paints an accurate picture of the debtor’s financial circumstances, all kinds of documents need to be gathered in preparation for the following disclosures:

●  complete list of creditors and a description of their claims

●  list of co-debtors

●  property of all kinds, wherever located, and fair market values

●  information about any lawsuits, garnishments, liens, and repossessions

●  your income from all sources, including wages and investments

●  copies of your tax returns going back at least three years

●  the amount of any anticipated tax refund

●  insurance policies

●  monthly household expenses

●  full disclosure of any business interests

●  bank and investment account details

●  pension and retirement account details

●  description of any property that you hold, but which belongs to another

●  location and contents of any safe deposit box

●  unexpired leases

●  and any other information pertinent to the debtor’s particular financial situation.

Highlights of Filing Bankruptcy in Arizona – Credit Counseling

Within 180 days before filing bankruptcy in Arizona, the debtor must complete a credit counseling course from an approved nonprofit provider. This means you need to plan your counseling ahead of the petition filing, something your bankruptcy attorney will help you with. When you have finished the credit counseling, the provider will issue you an official certificate of completion. Don’t lose your certificate! It must be filed with the bankruptcy court along with the petition. (Note that disabled, incapacitated, or military debtors may be excused from the credit counseling course requirement.)

Highlights of Filing Bankruptcy in Arizona – Means Test

Eligibility to file for debt relief under Chapter 7 requires satisfying the Means Test or, if necessary, overcoming any presumption that filing Chapter 7 would be an abuse of the U.S. Bankruptcy Code. Read more about the Means Test.  

Highlights of Filing Bankruptcy in Arizona — § 341 Meeting of Creditors

When your petition is filed with the bankruptcy court clerk, a § 341 Meeting of Creditors will be scheduled to take place in about 25 to 45 days. You must appear at this meeting and provide limited testimony under oath before the case trustee. Creditors may also question you while you are under oath (although they seldom do) regarding matters relating to your petition. If you miss this hearing, your case may be dismissed.

Highlights of Filing Bankruptcy in Arizona – Financial Education Course

You may believe that, after preparing a full-fledged bankruptcy petition, you’ve had all of the financial education you’ll ever need. That may be true, but after the 2005 BAPCPA amendments to the U.S. Bankruptcy Code, the requirement of a financial education course was added and is mandatory. Similar to the pre-bankruptcy credit counseling, you’ll be issued a certificate of completion by the approved nonprofit provider. That certificate, in turn, must be filed with the bankruptcy court. You have to complete the financial education course within 60 days of the date first set for your § 341 Meeting of Creditors.

Highlights of Filing Bankruptcy in Arizona – Reaffirmation Agreements

If you have a secured creditor and you want to keep the collateral, such as the car you need to drive to work each day, then you may need to enter into a reaffirmation agreement. Any reaffirmation agreement must be approved by the court because the reaffirmed debt will not be discharged and will be enforceable after the bankruptcy is closed. Your bankruptcy attorney will advise you on the pros and cons of reaffirmation.

Highlights of Filing Bankruptcy in Arizona – Discharge Order

You can expect the bankruptcy court to issued your discharge order in approximately 60 to 90 days after your § 341 Meeting of Creditors has passed.

Are you wondering whether filing bankruptcy in Arizona is the right option for you? Contact the Rosenstein Law Group today. We can help you right away by identifying the best possible solutions to your debt problems.

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Arizona bankruptcy law is filled with specialized legal terms. Having a basic understanding of certain concepts can be a great help in any consumer bankruptcy.

A few of these Arizona bankruptcy law concepts will help you work through a Chapter 7 Liquidation or Chapter 13 Wage Earner plan bankruptcy. With that purpose in mind, here are three important legal terms that are integral to every Arizona bankruptcy law case.

A. Understanding the Automatic Stay in Arizona Bankruptcy Law.

The automatic stay is an essential statutory injunction applicable to all cases filed pursuant to Arizona bankruptcy law. When the debtor files a petition for bankruptcy with the court, the automatic stay stops creditors from attempting further collection activities against the debtor. The injunction is across the board, so all creditor collection efforts must cease immediately after the debtor’s petition is filed.

Under Arizona bankruptcy law, the automatic stay stops the garnishment of bank accounts and wages, stops foreclosure actions, stops repossession, stops certain lawsuits, as well as any other collection activities. Any bankruptcy creditor that hopes to reestablish collection on a debt during the bankruptcy must request permission first from the bankruptcy court by filing a motion for relief from the automatic stay. Motions to set aside the automatic stay are typically filed by secured creditors and priority creditors of the debtor. A creditor that attempts to collect on a debt during the pendency of the bankruptcy without a court order faces serious consequences and sanctions for violating the automatic stay.

B. Understanding the Bankruptcy Estate in Arizona Bankruptcy Law.

What is included in the debtor’s bankruptcy estate is very broadly interpreted. Any property of any kind, wherever located, is included in the debtor’s bankruptcy estate under Arizona bankruptcy law. The bankruptcy estate includes any legal or equitable interest that the debtor may have in property. And property includes real property, personal property, tangible property, and intangible property. In other words, if the debtor has an interest in “it,” whatever “it” is, then that thing is within the bankruptcy estate. Comprehending the bankruptcy estate in Arizona bankruptcy law is important for the debtor because he or she is also restricted from transferring property or an interest in property under the automatic stay.

C. Understanding the Credit Counseling Requirements in Arizona Bankruptcy Law.

Under the Bankruptcy Abuse Prevention and Consumer Protect Act (BAPCPA), consumer debtors are required to undergo credit counseling from an approved non-profit provider before filing for bankruptcy. The provider issues a certificate of completion when the debtor has completed the requisite credit counseling. That certificate is then filed with the bankruptcy court along with the bankruptcy petition. A post-petition financial management course is also required of consumer debtors filing under Chapter 7 or Chapter 13. As with the pre-bankruptcy counseling, the provider of the financial management course issues a certificate of completion which is then filed with the bankruptcy court.

Those are only three of the essential Arizona bankruptcy law terms you should understand if you are considering debt relief under the U.S. Bankruptcy Code. Are you wondering if bankruptcy is the best debt relief option for you? Contact the Rosenstein Law Group today to arrange for a confidential consultation with Brian M. Blum, our experienced Arizona bankruptcy law attorney.

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As with most legal proceedings, just knowing what is involved can relieve a good deal of stress. When our Scottsdale bankruptcy lawyers consult with a new client, they are able to ease some of that person’s anxiety simply by answering a few questions about the bankruptcy process. So you can better anticipate what is expected in a Chapter 7 Liquidation, our Scottsdale bankruptcy lawyers answer three essential FAQs to help guide you along the way.

1. Ask Scottsdale Bankruptcy Lawyers:  Will Chapter 7 bankruptcy destroy my credit forever?

No. Filing for bankruptcy under Chapter 7 will not destroy your credit forever. Your credit score probably took a substantial hit before you even considered filing for bankruptcy; and your post-bankruptcy credit score will need rehabilitating. As Scottsdale bankruptcy lawyers explain, your credit report will disclose your Chapter 7 bankruptcy discharge for 10 years from the date that your petition was filed. Post-bankruptcy lenders will look beyond the credit report if your present income is reliable and sufficient, however. Lenders will be reasonably cautious in extending credit, of course, but many individuals receive new credit card offers about four months or so after the bankruptcy discharge. Even an FHA home loan may be available to a qualifying borrower two years after the Chapter 7 discharge.

2. Ask Scottsdale Bankruptcy Lawyers:  How long does it take to get a Chapter 7 discharge?

Scottsdale bankruptcy lawyers expect the Chapter 7 discharge order to be issued by the judge within 60 to 90 days following the date first set for the § 341 Meeting of Creditors. (This period gives creditors time to file claims, motions, and objections to the Chapter 7 discharge.) The § 341 Meeting of Creditors is set about 30 days from the filing date and is a form of hearing in which the debtor must appear and testify under oath before the case trustee. The § 341 Meeting of Creditors is required of all Chapter 7 debtors and Scottsdale bankruptcy attorneys representing clients will attend as well. Absent unforeseen circumstances, then, one would expect a Chapter 7 discharge order to be issued three to four months after the date the petition was initially filed.

3. Ask Scottsdale Bankruptcy Lawyers:  Who can file for Chapter 7 bankruptcy relief in Arizona?

There are only a few eligibility requirements, including a residency requirement that establishes Arizona as the proper venue for this debtor’s bankruptcy case. To avoid dismissal, the Chapter 7 petitioner must satisfy the following:

a. Venue: Been domiciled in Arizona, or had a residence, principal place of business, or principal assets here, for 180 days preceding the filing of the Chapter 7 petition. Should you be a recent transplant to Arizona, then you may still file here if you resided in Arizona for the greater part of 180 days preceding the filing – technically speaking, that would be three months and a day.

b. Means Test: The debtor must be financially eligible for Chapter 7, which means he or she satisfies the Means Test. Either there is no presumption of abuse in filing under Chapter 7 of the U.S. Bankruptcy Code, or the presumption was overcome with evidence of special circumstances.

c. Credit Counseling: The debtor must take a credit counseling course from an approved non-profit provider within 180 days before filing his or her Chapter 7 petition. The certificate of course completion is filed with the petition or, when there are extenuating circumstances, within a few days thereafter.

Are you concerned about satisfying the venue requirement? Is the Means Test a possible issue for you? Do you wonder how to enroll in court-approved credit counseling? Are you worried about appearing at the § 341 Meeting of Creditors? Contact the Scottsdale bankruptcy attorneys at the Rosenstein Law Group today. We have answers to your questions, and solutions to your debt problems.

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When Tempe bankruptcy lawyers file your petition with the bankruptcy court, the automatic stay puts a stop to all creditors’ attempts to collect on a debt from you. No lender can repossess your car, no mortgage company can foreclosure on your home, no judgment creditor can garnish your wages, and so on, without a permissive order from the bankruptcy judge. Our Tempe bankruptcy lawyers sometimes describe the automatic stay as a super-injunction over the bankruptcy estate; it keeps everyone in their respective corners while your attorney sorts matters out with the court, the case trustee, and the creditors. One of those creditors may very well be the Internal Revenue Service (IRS), as unpaid back taxes are often included in the consumer debtor’s bankruptcy.

What our Tempe bankruptcy lawyers would like to discuss in this post is the importance of keeping up with IRS tax filings during the bankruptcy proceedings. If you filed for bankruptcy, or plan to, then you need stay on top of your current tax reporting obligations.

IRS tax reporting requirements are well known to Tempe bankruptcy lawyers. Failure to file tax returns during your bankruptcy can affect your case.

With every case filed after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub.L. 109-8, 119 Stat. 23, the U.S. Bankruptcy Code takes a hard line for the benefit of the IRS. For Tempe residents, bankruptcy lawyers caution against careless avoidance when filing tax returns during the pendency of the case, and for good reason.

Tempe bankruptcy lawyers warn that your bankruptcy case can be dismissed or converted to a different chapter should you fail to file your tax returns.

When the bankruptcy is pending, the debtor must file his or her tax returns on time, or seek a timely extension. For example, if the bankruptcy is filed on Friday, March 30, 2012, the debtor’s 2011 return is still due on April 17 unless an extension is filed. (That’s right, federal tax returns for the 2011 tax year are due April 17, 2012.)

If the bankruptcy petitioner fails to file the return, then the IRS can motion the court to dismiss the case or convert the case to a different chapter (which would usually be a conversion to a Chapter 7 Liquidation from a Chapter 13 Wage Earner Plan. The clock starts running against the taxpayer as soon as the IRS files its request with the bankruptcy court; the debtor has only 90 days to file the late return or obtain an IRS extension. If the debtor fails to file the return or get the extension, the court is required by law to either dismiss the case or convert it (whichever is in the best interests of the creditors). 11 U.S.C. § 521(j).

Your Tempe bankruptcy lawyers do not take this rule lightly!

Even when every other aspect of the bankruptcy case is in order, the bankruptcy court has no alternative. Following BAPCPA changes to the U.S. Bankruptcy Code, the court has no discretion in the matter and must order the conversion or dismissal of the case when the debtor fails to file the tax return or extension.

To avoid the conversion or dismissal of a client’s case, our Tempe bankruptcy lawyers work with our clients to ensure that all tax returns due during the pendency of the Chapter 7 or Chapter 13 are filed. We take our bankruptcy responsibilities seriously; we don’t cut corners; and we don’t take unnecessary risks with our clients’ financial futures.

Are you dealing with serious debt problems? Before the situation gets worse, consult with attorney Brian M. Blum about your bankruptcy solutions. Don’t delay your right to a fresh start any longer – contact the Rosenstein Law Group today.

Resource:

IRS Publication 908 – Bankruptcy Code Tax Compliance Requirements

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Arriving at the decision to file for bankruptcy is a challenging and emotional process. When we meet with individuals for the first time, we can see how difficult it is for them to reach out for help from an Arizona bankruptcy lawyer. We can see the palpable distress that they are in. Those who seek our help will share their regrets about certain financial decisions made in the past. They may have had health problems that led to medical debts that they cannot begin to pay. They may feel guilty about not being able to take care of their families the way they believe they should. They may be unemployed or underemployed through no fault of their own. They may feel defeated because they are now dependent upon others for financial support and assistance. Whatever unique events and circumstances led to their financial troubles, the toll that uncontrolled debt takes on individuals in this economy is very high.

In Arizona, Bankruptcy Lawyer Representation Stops Creditors

We know how difficult it is to admit to anyone, let alone someone you’ve just met, that you cannot pay your debts any longer. We also know from experience that an Arizona bankruptcy lawyer can put a swift end to the steady march of bill collectors and creditors to your door. Filing for bankruptcy will immediately stop those endless telephone calls, demand letters, lawsuits, garnishments, repossessions, evictions and foreclosures – all creditor collection efforts must stop at the moment the bankruptcy petition is filed.

Once you have decided to seek federal bankruptcy protection by filing under Chapter 7 (Liquidation) or Chapter 13 (Wage Earner Plan) of the U.S. Bankruptcy Code, you have to make a second critical decision.

Will you attempt to file for bankruptcy on your own or will you hire an Arizona bankruptcy lawyer?

When you decide to rely on the experience of a trained bankruptcy professional, here are six things you should inquire into before hiring an Arizona bankruptcy lawyer:

1. Experience:  Does this Arizona bankruptcy lawyer routinely work with consumer bankruptcies under Chapter 7 and Chapter 13 and so has the experience you need and require?

2. Client Testimonials:  Does this Arizona bankruptcy lawyer provide client testimonials so you know how previous clients felt about the representation they received?

3. Length of Practice:  Has this Arizona bankruptcy lawyer been representing clients for three years or longer and knows all the ropes?

4. No Waiting List:  Is this Arizona bankruptcy lawyer willing and able to take on your case right away so you don’t have to suffer with creditors any longer?

5. Willingness to Help:  Is this Arizona bankruptcy lawyer able to meet with you outside regular business hours so you do not have to take time off from work to get your case started?

6. Conveniently Located:  Does this Arizona bankruptcy lawyer have a convenient office location so you do not need to travel too far?

When you meet with Arizona bankruptcy lawyer Brian M. Blum at the Rosenstein Law Group, you will have your best choice for legal representation in your Chapter 7 or Chapter 13 case. Whatever events or circumstances have led you to seek protection through bankruptcy, Mr. Blum is here to provide compassionate legal advice and experienced advocacy. He can help you move beyond your current debt crisis and start your financial life afresh.

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When our Scottsdale bankruptcy attorneys meet with a client, the first question they are asked is “Can I file for Chapter 7 bankruptcy?” This is the chapter clients have heard and read the most about. This is the chapter that advances clients to a discharge order in the shortest period of time, something that most debtors are desperate for. Although Chapter 7 liquidations are fairly common, not every petitioner in bankruptcy will be eligible for that chapter. (Read our recent article on determining Chapter 7 eligibility through the Means Test.)

This may be somewhat surprising, but those who are eligible for Chapter 7 debt relief may choose to file under Chapter 13’s Wage Earner Plan instead. The reason is straightforward enough, as explained by our Scottsdale bankruptcy attorneys. Chapter 13 offers certain advantages that are unavailable to a Chapter 7 petitioner.

In this post, we’ll discuss two significant advantages to filing for protection from creditors under Chapter 13 of the U.S. Bankruptcy Code – lien stripping and cramdowns.

Home Loans:  Court’s Lien Stripping Power in Chapter 13 Bankruptcy

A winning tool for Scottsdale bankruptcy attorneys in a Chapter 13 is the judge’s power to strip away a home equity line of credit (HELOC) or other junior lien on the debtor’s primary residence – referred to as lien stripping. When the market value of the home is less than the amount owed on the primary home mortgage, then the court may strip away the junior mortgage. This is because the junior lien is effectively unsecured with insufficient equity in the home to provide security for the debt.

In Chapter 7, bankruptcy judges are not empowered to lien strip, but this remedy is available in Chapter 13 cases. (This procedure is also available under Chapters 11 and 12, but those chapters are beyond the scope of this article.)

Vehicle Loans:  Court’s Cramdown Power in Chapter 13 Bankruptcy

Another winning tool for Scottsdale bankruptcy attorneys in a Chapter 13 is the judge’s power to force secured creditor to accept a loan modification that is more beneficial to the debtor. This so-called judicial cramdown power over the loan is unavailable in a Chapter 7 case. However, there are some restrictions. For example, the cramdown is not allowed on loans secured by the debtor’s residence. Also, for the cramdown to work on an automobile loan, the loan must be at least 910 days old (roughly 2 ½ years). Certain other limitations apply, you should consult with an experienced bankruptcy attorney to see if this cramdown power will benefit you.

When the market value of a vehicle is less than the amount due on the loan – that is, the borrower owes more than the vehicle is worth – then the loan may be modified to mirror the vehicle’s market value. Say, for example, the debtor’s car has a market value of $20,000, but he or she still owes $35,000 on the loan. The bankruptcy judge can approve a reduction of the loan to reflect the $20,000 value – this crams down the new loan terms which the creditor has no choice but to accept.

Although the Chapter 13 bankruptcy plan takes three to five years to complete and receive a discharge, it has distinct advantages that may be applicable to your circumstances. At the Rosenstein Law Group, we want you to have the best information available so that you can make decisions about how to deal with financial difficulties. Contact us for a free consultation with one of our Scottsdale bankruptcy attorneys.

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