Your household size determines the median income “cutoff” that will be used to determine whether you must take the “means test.” If your gross income for the past six months was less than the cutoff for your household size, you have cleared that hurdle on the way toward a chapter 7. If you are over the cutoff, you must take the means test. The means test deducts from your past six months’ gross income certain permitted expenses and allows certain additional expenses to be taken into consideration. The resulting figure will determine whether you qualify for a chapter 7 or must file a chapter 13.
Yes. We are seeing more of these cases in Arizona, mostly due to the large real estate loans that people incurred during the boom. Also, real estate investors typically need to file personal chapter 11, depending on their secured and unsecured debts. Debt limits exist for chapter 13 cases. Therefore, if you would normally need to file a chapter 13 but do not qualify for a chapter 13 due to the debt limits, a chapter 11 may be the best option. There are other reasons for filing an individual chapter 11 in Arizona, but the most common reason Arizona individuals file chapter 11s is the debt limit. The cost of chapter 11s is much higher than is the case for chapter 7s or chapter 13s. Be prepared to spend a minimum of $5,000 for a chapter 11 bankruptcy, whereas chapter 13s in Arizona typically do not cost more than $4,500 in legal fees.
This is almost always your only bankruptcy hearing. In Arizona, if you file your case in the Phoenix metro area, your hearing will almost always be held downtown at the United States Bankruptcy Court for the district of Arizona. The meeting is typically not held in the courtroom but rather in a hearing room. Contrary to the implication in the name of the hearing, creditors usually do not show up for a meeting with you. Although they have the right to question you about certain relevant matters, most creditors do not have the time or money to send legal counsel on their behalf. The creditors that do show up usually need some specific information, believe that you committed fraud, or are unsophisticated small business owners in Arizona who mistakenly believe they are required to attend the standard meeting (they are not).
It typically lasts only five to ten minutes. However, you should be prepared to wait for up to a couple of hours in case the trustee is not on schedule. Occasionally, there will be one or more complicated cases that cause the docket to become backed up from a few minutes to a couple of hours. You should remember to take with you your social security card and drivers license. If you don’t have those documents, certain other ones will suffice (ask us). You must, however, use only the permitted ones.
This is the hearing in which the judge decides whether to accept your proposed repayment plan in a chapter 13 case. In Arizona, we can often structure your plan in such a way as to avoid your having to attend the confirmation hearing. You will need to attend the Meeting of Creditors, but you can often avoid being required to attend the confirmation hearing.
To reaffirm a debt means to essentially take it out of your bankruptcy and fully recommit yourself to paying it back. Almost always, this is a bad idea. Creditors often push hard to convince debtors that it’s in their best interest to reaffirm a debt when there is collateral securing the debt, but this is usually not really necessary in practice. There are risks to not reaffirming your debt, but those risks are often worth the benefits of simply retaining the property and making regular timely payments. We will analyze whether you should or should not reaffirm your particular secured obligations.
Creditors will probably be able to garnish your Arizona wages at some point in time. What we often see is that Arizona clients are scared that creditors will be able to garnish their wages immediately. This is often not possible, because the creditor must first sue the client in order to obtain a legal judgment before wages can be garnished. This takes time. If you are sued, someone will come to your door to hand you a copy of the debt collection lawsuit. I often advise clients that they should not resist this process. It is better to obtain a copy and hand it to us, so that we can determine whether there is some way to fight it while we get the bankruptcy case prepared for filing. The bankruptcy case will stop the lawsuit in its tracks, pending the outcome of the bankruptcy and some other factors.