Bankruptcy: Pros and Cons

Bankruptcy may make it possible for you to eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.

Thompson Law Firm can help you determine which debts are eligible for discharge.

Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)

Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.

Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.

Restore or prevent termination of utility service.

Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

What Bankruptcy Can Not Do —

Bankruptcy can not, however, cure every financial problem. Nor is it the right step for every individual — for some an Arizona loan modification may be a better option. In bankruptcy, it is usually not possible to:

Eliminate certain rights of “secured” creditors. A creditor is “secured” if it has taken a mortgage or other lien on property as collateral for a loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money on the debt if you decide to give back the property. But you generally can not keep secured property unless you continue to pay the debt.

Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines, and most taxes.

Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.

Discharge debts that arise after bankruptcy has been filed.

WHAT PROPERTY WOULD BE EXEMPT?

There is a myth amongst people that creditors will come to your home and take everything if you file bankruptcy. That simply is not true.

In fact, in the typical Arizona Chapter 7 Bankruptcy, practically everything is exempt. There is certain property that debtors are allowed to keep after a bankruptcy that cannot be liquidated including a home, a car and other necessary items. If you still owe money on a mortgage or a car loan, however, bankruptcy does not eliminate your responsibility for keeping up with future payments.

Among the property exemptions in Arizona are:

• Your home, up to a certain level of equity
• Your car, within value limits
• Necessary clothing
• Household goods including television, furniture and appliances Jewelry and family heirlooms
• Tools needed to do your job
• Your income
• Your pension
• Welfare, social security, unemployment and similar benefits
• Funds from legal settlements

Some of these options also apply to Arizona Chapter 13 bankruptcy.  Loan Modification or Debt Settlement are other choices that we are prepared to help you consider.

You can learn more from us today.

Call 480-634-7480 to make an appointment with a Thompson Law Firm Chandler bankruptcy attorney.  Or you can fill out the form for a FREE EVALUATION.  An attorney from our firm will contact you promptly and help you set up an appointment to discuss solutions for your financial situation.  Arizona Legal Advocacy Group, LLC serves Arizona communities in Maricopa County, including Phoenix, Scottsdale, Tempe, Apache Junction, Queen Creek, Chandler, Gilbert and beyond.