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We are on track for another great seminar on Saturday, July 23rd from 10-11 A.M.  The seminar will take place at our offices in Chandler on Cooper and Ray.

This will be a great time for anyone in debt and not sure what to do.  Click on the link for more info.  Free Bankruptcy Seminar in Chandler.

Being in debt and dealing with the stresses that come with it can be painful.  Whether it’s creditors calling and harassing you, overdraft fees in your bank account, being sued or a late mortgage.  It’s a recipe for getting overwhelmed and sometimes trying to avoid even thinking about it.  Well, that doesn’t help.  Getting some control back into your life is the way to go.  Knowing your options will help you get a clear picture of how to move your life forward and get past the hard times.  We are putting on a seminar on Thursday, May 26th to help the local community.  This seminar will be about bankruptcy and how you can legally get a fresh start and stop the craziness.  Click here for more information about the seminar in Chandler.

Bankruptcy timing is one of the most common issues I see this time of year.  As many people are anxious to file their bankruptcy, there are drawbacks to filing too early.  If you plan to receive a tax refund, you should wait to file your bankruptcy and spend the money.  Your tax refund is a non-exempt asset in the state of Arizona.  This means that the refund is treated much like money in your bank account and can be taken from you by the trustee.  You need to make sure that you spend the tax refund you receive on things that are exempt.  Here is a list of Arizona Exemptions. Spending your tax refund on things that are not exempt is dangerous and the trustee can take those assets from you.  Spending money on living expenses like: Food, electricity bills and home supplies is a good idea.  Make sure you keep the receipts for everything you have bought with your tax return money.  Paying your bankruptcy fees is one of the safest and most legitimate ways to spend the money and will get you a fresh start sooner.

We are having a free bankruptcy seminar on Thursday, January 27th at 7-8pm.  We have been putting on these seminars for a while and we really get great feedback.  If you looking to get a fresh start and eliminate your debt, this is great event for you.  If you are in foreclosure and you want clarity on what you should do with your home, register here.

One of the most important things you can do as you prepare to file bankruptcy is to stay well organized and keep exact records of all your financial dealings. These documents and expenses are used by the court to determine your financial capacities and what forms of bankruptcy protection you are eligible for.  In simple terms, saving all your receipts is a must when filing for bankruptcy protection. This is because like any other area of law, a bankruptcy hearing requires evidence; evidence in the form of financial documentation.

According to the US Bankruptcy Code Section 727, a bankruptcy discharge can be denied if a debtor has “concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information” that might be used to ascertain the debtor’s financial situation and standing. In other words, the trustee is going to examine all of your assets and expenses. Failing to adequately record and document your financial transactions can create all kinds of problems in a bankruptcy case, ranging from having an expense disallowed in your budget to having your entire bankruptcy case tossed out for failing to adhere to Section 727.

While preserving receipts for all your transactions should go without mention, it happens more often than one might think. Common problems that can arise in bankruptcy filings stem from debtors paying rent with cash, to even handling smaller expenses without receipt such as childcare fees, charitable donations, and even loans. Debtors who pay rent or the nanny with cash (especially to relatives or friends) risk the appearance of “fraudulent transfer” which if suspected can be disastrous on a bankruptcy hearing.

The best practice in any situation, but especially leading up to bankruptcy is to collect receipts for all your expenses, large or small, and let the trustee determine which are meaningful. Always create documentation for loans, even if the loan came from a family member. Otherwise the loan could be included as monthly income and affect your means test score. Keep copies off all your bank statements as well, and be sure to provide all your receipts and financial documents to your bankruptcy attorney prior to the filing date. And of course, if you are unsure about whether or not to include an expense or receipt consult with your attorney beforehand.

In summary: Make sure to put everything in writing before filing for bankruptcy.

A recent news article in the Arizona Republic paints a grim outlook for those facing foreclosure in the coming months. While the article doesn’t deal directly with bankruptcy law it does deal with some of the major contributing factors considered when determining whether or not bankruptcy is a viable option. The article discusses how foreclosures in the Phoenix area dropped to a new 32 month low in November, but warns homeowners that the relief to the plummeting housing market is only temporary as experts attribute the new lows to foreclosure moratoriums put in place by the valleys biggest lenders led by Bank of America.

Bank of America pushed back over two months worth of foreclosures to revise internal policy and counter claims involving “robo-signing” of thousands of mortgage documents without first reviewing them. The article goes on to point out that starting in early 2011 Bank of America will have 2 months and over 8,000 foreclosures to catch up on in Phoenix alone. The ultimate message if you are sitting on the verge of foreclosure; be prepared for paperwork early next year. If you didn’t have a chance to read it you can catch the article here.

The question poised by many homeowners staring at foreclosure is; which is the better option, foreclosure or bankruptcy?  Here are so facts to consider:

Bankruptcy Can Halt the Foreclosure Process

For many homeowners facing foreclosure bankruptcy can help. When your bankruptcy attorney files for bankruptcy, whether it’s Chapter 7 or Chapter 13, the court will automatically issue an Order for Relief including an Automatic Stay. The Automatic Stay provides immediate relief for debtors by requiring creditors to immediately cease all collection activities while the bankruptcy is pending. This includes any attempts to foreclose on a house and evict the tenant.

The Automatic Stay stalls the foreclosure process and typically buys individuals three to four months to catch up on missed payments and reorganize their finances. However, Order of Relief doesn’t permanently put a stop to the foreclosure. Home lenders can ask the court for to lift the stay during the bankruptcy process, especially if the homeowner had been served with foreclosure paperwork prior to the bankruptcy filing date. Your bankruptcy attorney is the best source for information on whether or not your bank is likely to seek a lift on the Automatic Stay.

Bankruptcy Can Keep You in Your Home

Not all forms of bankruptcy can offer complete protection from foreclosure. For example, Chapter 7 protection can delay foreclosure, but inevitably results in the liquidation of most all assets. As a result those filing a Chapter 7 bankruptcy almost always lose their home.

Chapter 13 is more effective at helping borrowers keep their homes. Through Chapter 13 lenders are able to make payment plans to repay the arrearage on their mortgage. There are financial qualifications to ensure you are able to make suitable payments for both your current mortgage as well as the outstanding amounts, but assuming you are able to make all the necessary payments you will avoid foreclosure.

Chapter 13 can also provide relief by potentially eliminating second and third mortgages. Home values have fallen to record lows, and many home owners in the Phoenix area now owe more on their original mortgages than the value of their homes. When the first mortgage is secured by the entire value of a home, there may no longer be equity to secure the later mortgages which may change the status of second or third mortgages to unsecured debt. In Chapter 13 bankruptcy unsecured debt takes last priority and often times does not have to be repaid at all.

Bankruptcy May Lessen the Impact on Your Credit

It’s important to acknowledge that both foreclosure and bankruptcy have adverse impact on your credit standing. However, bankruptcy can be the better option for rebuilding credit. First, bankruptcy discharges most all debt while foreclosure does nothing to reduce credit card, auto loan, or other forms of debt which may have contributed to the overall financial crisis one may be experiencing. By filing bankruptcy you are able to start rebuilding healthy credit quicker. Additionally many banks and mortgage lenders look particularly unenthusiastically upon foreclosures and may be more understanding of a bankruptcy when considering an application for a home loan. Even if you are faced with no alternative to losing your home bankruptcy may be the more effective route.

There are many factors I haven’t presented here which need to be considered when looking at bankruptcy versus foreclosure. Among them are the value and equity of the home, the ability to make timely payments and more. If you are facing possible foreclosure and want to learn if bankruptcy could be a more suitable option for you, the first thing you should do is schedule a consultation with a bankruptcy attorney to review the individual merits of your case. Each bankruptcy is unique and working with an experienced bankruptcy attorney who understands the laws surrounding bankruptcy is pivotal to getting back in control of your financial future.

For many consumers looking to bankruptcy credits cards are more than just a luxury, they are a means of living. Many people in financial turmoil rely on credit cards and cash advances to help keep the electricity on and food on the table. If you are considering filing bankruptcy one question you may have already begun to ask yourself is, “Can I continue to use my credit cards?”

The answer is laid out in U.S. Bankruptcy Code §523(c) which states:

(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable;

§523 goes on to clarify luxury goods as excluding “goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.” In simple terms, what the code states is that any debts to one creditor totaling $500 or more, and taking place within 90 of the bankruptcy filing are nondischargeable. Even charges the consumer may see as essential can be deemed nondischargeable if the creditor can prove the debt was incurred with the intent to never pay the amount back. Furthermore the term “luxury goods” has often been argued in bankruptcy court to include a variety of charges including clothing, electronics, travel and entertainment expenses among others. Determining what does or does not qualify as a luxury good is ultimately in the hands of the Court.

In response to §523 a good bankruptcy attorney will generally advise a client to immediately stop using credits cards for any purchases after first consulting with the attorney and to wait a minimum of 3 months (90 days) before filing bankruptcy. Waiting the full 90 days where feasible greatly reduces the chances the trustee or a creditor will file an objection. If you are considering bankruptcy or in the process of filing bankruptcy it is important to keep your attorney educated on any credit card purchases and provide your attorney with a comprehensive list of your purchases and credit card transactions prior to filing.

The timing of the date for filing bankruptcy is important.  You have a small exemption of $150 per debtor for money in your bank account on the date that your bankruptcy is filed.  There is no exemption for cash on hand.  If, on the date your bankruptcy case is filed, you are holding a pay check that was not deposited or any other payment instruments such as cashier’s checks or money orders, the trustee could require that you turn them over to pay something to your creditors.  The trustee is entitled to take any sum over $150 in your bank account for the benefit of your creditors.  The trustee will require that you provide them with a copy of your bank account which shows the sum in your account on the date your bankruptcy was filed.  If possible, you should bring that bank statement with you to the Meeting of Creditors (Sec. 341 hearing) which is usually scheduled approximately 35-45 days after your case is filed.  This is only possible if your bank has issued a bank statement prior to your hearing date prior to your hearing date.

Part of the process of preparing for filing bankruptcy includes monitoring your bank account so that the amount in your account ON THE DATE YOUR BANKRUPTCY CASE WAS FILED will not exceed the amount which is exempt under the law ($150 per debtor if you are using Arizona exemptions).  The following steps should be taken to help you avoid losing money that could have been used to pay your bills:

• Stop using checks to pay bills at least 2 weeks prior to filing bankruptcy.  Remember you have no control over when the payee will cash or deposit your check and if the check has not cleared your bank, the bank will report exactly what was still in your bank account.  It is not wise to simply write checks which are sent out to various payees because the checks may take from several days to several weeks to clear the bank.  Until the checks are actually paid by your bank, that balance is still counted as being available to you in your bank account.  Thus if you were to file bankruptcy at a time during which you have several outstanding checks, the trustee will be entitled to take that amount over $150.  Then when the outstanding checks are presented to your bank, you will have overdraft fees or bounced checks.
• Purchase money orders or cashier’s checks to pay your regular bills or buy groceries, gasoline etc.  This will result in an immediate debit to your account and also provides a convenient receipt.  However, don’t hold the money orders or cashier’s checks; send them out via mail before the date your bankruptcy case is filed.  If you still hold them, it may be possible for you to get cash by seeking a refund from the issuer.  There is no exemption for cash on hand when filing bankruptcy.
• If you use debit cards to pay for anything, the money will come out of your account more quickly than when paying with a paper check; however, it doesn’t happen instantly so be careful to monitor your account during the last few days before filing bankruptcy.
• Schedule the date for filing the bankruptcy case on a date just prior to your next pay day so that your pay check is not deposited just before your bankruptcy case is filed.
• If a large deposit has been made to your account shortly before filing your bankruptcy, the trustee may ask you to document how that money was spent.  You may be asked to provide receipts for the items you purchased or even a list of what you purchased.
• You can monitor your account and purchase money orders or get cashier’s checks for the bills you have to pay and send out those money orders and cashier’s checks prior to the date your bankruptcy is filed.

There were 1,596,355 bankruptcy filings in the Unites States in fiscal year 2010.  Bankruptcy filings have risen almost 14 percent from last October 31st 2009 to September 30th 2010. Maricopa has an increasing rate also.  Seven of every thousand people in Maricopa County filed bankruptcy last year.