Bank Sues: Couple Seeks Chapter 7 Protection
On behalf of Ellett Law Offices , P.C. posted in 1. Chapter 7 on Wednesday, September 26, 2012
When consumers owe large amounts of debt, they can easily fall behind on their payments. This can create serious problems and repercussions for consumers in Arizona and elsewhere. Along with damaging credit scores, falling behind on debt payments may prompt a creditor to file a lawsuit against those who owe past due amounts. However, one way consumers or businesses can remedy this is to petition for Chapter 7 bankruptcy, which puts an automatic stay on the lawsuit. This means that the lawsuit is halted and any legal actions against the petitioner is stopped while the bankruptcy is processed.
This is what one business, owned by a couple, decided to do recently when their bank filed a lawsuit against them for failure to pay debts owed. Their bank had attempted to put up the property, in which their business was located, for auction. However, when the couple filed for Chapter 7 a notice of a bankruptcy stay was sent to the court which took the property off the auction block. It also stopped the bank’s legal action against the couple pending the resolution of the bankruptcy proceeding.
Prior to the filing of the bankruptcy, the bank had loaned the couple $168,000. That was in October 2006. The couple agreed to repay the debt in 240 installment payments. The lawsuit alleges that the couple failed to make some required payments. The bank’s complaint asked for $150,790.87, which is the total unpaid balance. The bank also sought $2,000 for legal fees and interest.
A Chapter 7 bankruptcy petition in Arizona typically results in the appointment of a trustee by the court. That trustee is responsible for marshaling assets and overseeing their liquidation so that the proceeds may be applied to outstanding debt. Secured claims, such as those held by a mortgage lender, are considered ahead of unsecured claims.
By choosing to meet outstanding financial obligations through bankruptcy, individuals look to make good on their debt problems to the greatest extent possible while laying the groundwork for a return to financial stability.
Source: Republican Herald, “Deer Lake Inn owners file for Chapter 7 bankruptcy,” Amy Marchiano, Sept. 17, 2012
Tags: Chapter 7, bankruptcy protection, personal bankruptcy
Chapter 7, Chapter 13 bankruptcy: What Phoenix filers can keep
On behalf of Ellett Law Offices , P.C. posted in 1. Personal Bankruptcy on Tuesday, September 4, 2012
Bankruptcy is a difficult time for anyone, and may involve a lot of hard decisions involving what assets to sell off to satisfy creditors. Even when an individual is cooperative in doing what they must to turn their finances around, it’s natural to want to preserve things like wedding rings or life insurance policies. For Phoenix residents, whether in Chapter 7 or Chapter 13 bankruptcy, this is actually a distinct possibility.
For example, a person filing for bankruptcy would be able to keep wedding or engagement rings granted they are worth less than $1,000. They are also able to keep one car, one bike, and a typewriter if they are worth less than $5,000. Despite being items people have come to value, things like cars can be critical in allowing an individual to find work after bankruptcy, if they are unemployed.
In terms of life insurance policies or annuities, it’s nationally considered that these items can be retained if the beneficiary is a minor child. In Arizona, the 9th U.S. Circuit Court of Appeals has ruled that these policies can be kept in bankruptcy if the beneficiary is any child, even if they’re no longer legally dependent to the filer. Regardless of the value of these accounts, they can continue to benefit the children named under them.
Filers are also able to keep things like a stove, refrigerator, and a table and chairs which all benefit cooking for and feeding a family. They can also keep a washer and dryer, a television, a radio alarm, and other items that can help an individual maintain a productive daily life. For Phoenix residents, a Chapter 7 or Chapter 13 bankruptcy doesn’t have to be the end, and these exemptions can assist in seeking a new beginning. Further, under a Chapter 13 proceeding, the goal is to keep significant assets by proposing a plan for the court’s approval to repay creditors over a stipulated time period.
Source: Arizona Daily Star, “Annuities, life policies get shield in bankruptcies,” Howard Fischer, Capitol Media Services, Aug. 25, 2012
Tags: Chapter 13, Chapter7, personal bankruptcy
Struggle to dump debt showing up in Arizona bankruptcy rates
On behalf of Ellett Law Offices , P.C. posted in 1. Personal Bankruptcy on Thursday, August 30, 2012
Over the last several months Phoenix has seen significant dips in the number of bankruptcies in the area. Most recently, it’s said that bankruptcies declined by 14 percent in July. But what does this actually mean for consumers and their attempts to eliminate debt? It’s important to know how the figures are compiled.
In the whole of Arizona, this 14 percent drop in July was one in a string of 18 consecutive months where bankruptcy rates have declined. These drops are based on a comparison to the rates for the same month year over year, so the 1,847 bankruptcies in Arizona this July are down 14 percent from the 2,153 bankruptcies in July 2011. In addition, the number of mortgage delinquencies fell by 21.1 percent for the state over the last year. At the same time, median home prices in the Maricopa and Pinal County areas have been ticking upward.
While these are certainly positive signs, analysts agree that consumers have a ways to go before they can be said to be flourishing. The experts note that it’s a tenuous recovery driven by banks tightening their standards for making loans and consumers remaining tight fisted in a bid to regain some stability.
The reality is that economic problems continue for many Phoenix area consumers still seeking to eliminate debt. These debts will keep posing a problem for many households. For these individuals, a personal bankruptcy option such as Chapter 7 or Chapter 13 may be helpful in setting finances straight and securing a stable financial future. And seeking advice from an experienced attorney about what may be the best approach to finally conquer outstanding debt may be a good first step.
Source: The Arizona Republic, “Phoenix-area bankruptcies fall 14%; 18th dip in a row,” Russ Wiles, Aug. 9, 2012
Tags: Chapter 13, Chapter 7, debt relief, personal bankruptcy
Phoenix debtors find relief; keep homes in Chapter 13 bankruptcy
On behalf of Ellett Law Offices , P.C. posted in 1. Chapter 13 on Monday, August 20, 2012
With the latest summer Olympics wrapped up, the eyes of Phoenix sports fans are on our athletes as they return home with victories and medals to prove it. As celebrity status goes, though, this attention can draw out the sometimes more embarrassing aspects of an Olympic athlete’s personal life. For superstar gymnast Gabby Douglas, this attention has been brought to her mother’s Chapter 13 bankruptcy filing.
The filing was made in the beginning of 2012, listing Douglas’ mother’s assets at just over $160,000 – made up mostly of the family’s home and car. She held nearly $80,000 in overall debts and was in need of a way to begin to repay this while still maintaining daily life for herself and her four children. The Chapter 13 bankruptcy filing is allowing her to do so, with monthly payments of $400 toward her debts over the next five years.
Douglas’ mother suffered a long-term medical disability in 2009, and like many in similar cases, found herself with a limited income. In fact, there was a six month period where the family took in little to no income. The income she does receive consists of child support payments from her former husband, as well as Social Security disability benefits. When attempting to support four children, one of which is pursuing a dream that comes with training costs, it can be understandably difficult to stay on top of debt payments for things such as home mortgages.
Chapter 13 bankruptcy is designed in a way that allows filers to reorganize their debt and form a feasible repayment plan that will span several years. For Douglas’ mother, it allows her to keep her car and home for her family and may also provide time for her to seek additional income to keep herself debt free after emerging from bankruptcy. Douglas’ mother says she isn’t ashamed of her bankruptcy and is glad there is a way she can protect and provide for her family. For Phoenix households in similar situations, a bankruptcy filing could bring the same sort of relief to debt and financial struggles.
Source: ESPN, “Bankruptcy for Gabby Douglas’ mom,” The Associated Press, Aug 5, 2012
Issues discussed in this post are of the type handled by our firm. Readers can learn more by visiting our Maricopa County Chapter 13 debt relief page.
Tags: Chapter 13, bankruptcy, bankruptcy protection, debt relief
Chapter 7 bankruptcy numbers positive for Arizona
On behalf of Ellett Law Offices , P.C. posted in 1. Chapter 7 on Wednesday, August 15, 2012
Some encouraging news has been released regarding the status of the United States economy. A recent report has stated that bankruptcy filings for businesses, which include those seeking Chapter 7 protection, have declined in the last 12 months. However, despite the decline, the numbers still indicate that there remain a large number of individuals and businesses in Arizona and elsewhere who seek the protection of bankruptcy each year.
The recent numbers from the U.S. Bankruptcy Courts show that, in the last 12 months, ending on June 30, there were a total of 44,435 businesses that filed for bankruptcy across the country. This is a 14.8 percent reduction from the 2011 report. It was not clear what percentage of these filings were for Chapter 7 protection.
Meanwhile, personal bankruptcies were also on the decline. It was reported that for the same time period as the business report, 1.27 million individuals filed for bankruptcy. This amounts to a 14.2 percent drop from 2011. Based on these numbers, many have claimed that this report is another sign that the United States economy is on the rebound.
Despite the reduction of bankruptcy filings across the United States, there are still a large number of people who are struggling financially. Whether it is a business or an individual, filing for Chapter 7 bankruptcy allows those who are struggling to free themselves from the pressure brought on by unmanageable debt to give themselves a fresh financial start.
By seeking the proper advice, those Arizona residents struggling to stay afloat are arming themselves with all the necessary information they need to ensure that they can chart a new course to prosperity.
Source: The Orange County Register, “Business bankruptcies continue to fall,” Jan Norman, Aug. 6, 2012
Tags: Chapter 7, bankruptcy protection, debt relief
Credit card debt problems for stay-at-home Phoenix spouses
On behalf of Ellett Law Offices , P.C. posted in 1. Credit Card Debt on Tuesday, August 7, 2012
Credit cards are commonplace for many Phoenix consumers, as is the growing presence of credit card debt in Arizona and across the nation. Credit card debt is one that can build up unexpectedly and become a problem before some consumers are able to turn it around. This can lead to further debt problems, and even bankruptcy solutions later on if left unchecked.
For individuals such as stay-at-home spouses who don’t directly earn an income, credit cards can be an extra hassle. The Credit Card Accountability Responsibility and Disclosure Act of 2009 prevents individuals who don’t earn a direct income – such as stay-at-home spouses and college students – from obtaining a credit hard. However, spouses are able to apply jointly for credit cards, and a stay-at-home spouse can have a card in their spouse’s name.
In some states, this joint card ownership would be complicated, with the person who has their name on the card being the one responsible for any debt. Arizona, though, is what is considered to be a community property state. This means that, when both spouses benefit from the use of a credit card or loan of some sort, both spouses are responsible for any debt incurred. Even if the card is in one spouse’s name, both spouses can be held responsible in the eyes of creditors.
This may make a debt situation easier to handle, having two individuals to be responsible for debt. Yet, having only one household income can be a struggle, especially if one spouse must stay at home for health or childcare reasons. As with any credit card holder, smart spending practices are important to maintaining and avoiding credit card debt. When one finds themselves in a heavy debt situation, though, solutions such as bankruptcy may provide an orderly and positive means of resolving those financial problems while clearing the way for a return to financial stability.
Source: Fox Business, “Four Credit Card Myths for Stay-at-Home Spouses,” Janna Herron, July 24, 2012
Tags: bankruptcy, credit card debt, debt relief
What may tip scales for Phoenix companies on filing Chapter 7?
On behalf of Ellett Law Offices , P.C. posted in 1. Chapter 7 on Wednesday, August 1, 2012
When a Phoenix individual or business is faced with levels of debt that are higher than their available assets there are often limited options for their financial future. Commonly, individuals and businesses turn to bankruptcy, Chapter 7, Chapter 11 or Chapter 13, as an answer to their debt. Chapters 11 and 13 essentially allow a company or individual respectively to reorganize and pay off debts. Chapter 7 is a filing that liquidates a company or a person’s assets in order to repay debts.
Some Phoenix area businesses may find the recent Chapter 7 bankruptcy filing of National Service Industries elucidating. The company provides linens to industries across the country, including the health-care, hotel, and restaurant industries. With declared assets of only $500,000 compared to their $100 million in various debts, the company will be liquidating under Chapter 7 in an attempt to pay off creditors.
With their Chapter 7 filing, National Service Industries anticipates closing its doors as the entire company is liquidated to pay off debt. The company’s board said in formal documents that it believes this is the best decision for the company as well as its creditors and other affected parties. The filing was a voluntary decision on the part of the company.
While National Service Industries could have chosen a Chapter 13 filing, it is likely that the significant difference between the company’s assets and their debts made the Chapter 7 filing more sensible for this company. There’s no word on what specific factors led to the company’s asset-debt imbalance. Perhaps it, like many Phoenix area businesses, faced stiff competition and was confronted with high costs of doing business. In a faltering economy, the chances of successfully climbing out of severe financial distress can be low. Sometimes dissolving under a Chapter 7 bankruptcy filing is the optimal option.
Source: Bloomberg Business week, “National Service Industries in Bankruptcy, Will Liquidate,” Dawn McCarty, July 12, 2012
Tags: Chapter 13, Chapter 7, Chapter11, bankruptcy
Should Phoenix parents let students take on credit card debt
On behalf of Ellett Law Offices , P.C. posted in 1. Credit Card Debt on Tuesday, July 24, 2012
College time is just around the corner, and with it thousands of new college freshmen will be off to start their undergraduate careers. During this time, Phoenix parents are faced with a dilemma: sending their newly independent teenagers off with financial independence or keeping them dependent on mom and dad. With such high levels of national credit card debt on record, this can be an understandably difficult decision.
Financial independence comes with a responsibility for credit and debit cards, as well as knowledge of one’s own finances. However, immature spending practices are common among young people who aren’t entirely aware of the consequences of their actions. Extravagant spending during this time can lead to huge financial burdens later when debt is the last thing a young adult starting out in the world needs, especially with the amount of college loan debt that often is incurred these days.
It is has become increasingly more difficult, over time, for young people to get credit or debit cards on their own. For anyone under 21, most cards require co-signers, and parents are the ones who often fill this role. As a result, most young people rely on their parents’ decision to get a card as well as to teach them how to use one smartly.
Often, Phoenix parents are around to pay off their kid’s debts, but poor spending habits picked up now can carry on into these teenagers’ adult lives. Even when educated about smart spending, some young people may still find themselves in difficult financial situations at some point in their adult lives. In those cases, seeking bankruptcy relief with the help of experienced legal counsel could become a valid solution to resolve financial problems that have become insurmountable.
Source: Daily Reporter, “Credit, debit or no card at all? Parents face choice as they prepare to send kids to college,” Dave Carpenter, Associated Press, July 11, 2012
Tags: bankruptcy, credit card debt, debt relief
Phoenix business bankruptcy: Chapter 7 or Chapter 11?
On behalf of Ellett Law Offices , P.C. posted in 1. Chapter 7 on Monday, July 16, 2012
When businesses in Phoenix decide to file for bankruptcy, a decision must be made on which bankruptcy type to file under. The two most common of these filings are Chapter 7, in which a company liquidates assets to pay off debt or Chapter 11, in which a company restructures to cut costs and pay off debt. The decision between these can be difficult, and often is based on whether the company seeks to continue business operations post-bankruptcy.
A solar module manufacturer in a state to our northeast faced this decision earlier in the month. When the company, Abound Solar, initially filed for bankruptcy it was unclear whether it would go the Chapter 7 or Chapter 11 route, as its assets and liabilities were estimated to be similar. However, it has been recently confirmed that the company will be liquidating under Chapter 7 and ending its business operations.
The Colorado company says it has between 200 and 999 creditors to which it owes an estimated $100 to $500 million in liabilities. The company’s assets are estimated to be between $100 and $500 million as well. Previously, the company had reduced its workforce to 125 workers and now those remaining employees have reportedly been laid off.
When a company in Phoenix has assets and liabilities that are similar, bankruptcy could help them reorganize their debt so that they can continue in operation and emerge from bankruptcy protection stronger and in a better financial position to succeed. For Abound Solar, high competition from foreign markets apparently made it impossible for their product to compete, a problem that other U.S. solar energy companies have also had to confront.
When situations such as this occur, Chapter 7 bankruptcy offers an orderly and structured method for liquidating assets, paying as many debts as possible with the proceeds. It’s a process that can apply in personal bankruptcy as well. In this manner, the principals can achieve debt relief and ultimately free themselves start fresh.
Source: Northern Colorado Business Report, “Abound Solar goes Chapter 7 route,” Steve Lynn, July 5, 2012
Tags: Chapter 11, Chapter 7, bankruptcy
Too broke for Arizona bankruptcy? Research before deciding
On behalf of Ellett Law Offices , P.C. posted in 1. Personal Bankruptcy on Monday, July 9, 2012
The number of bankruptcy filings across the country is slowly returning to pre-recession levels, but that may not be a sign that Phoenix households are out of the woods yet. According to some observers, due to legislation and economic conditions, many Americans might not have enough money to go even through the process of filing for bankruptcy to eliminate personal debt they have accumulated.
In the first six months of 2012, new bankruptcy filings across the country fell 14 percent from the previous year. And it’s projected by tracking organizations that the year will end with the lowest rate of filings since before the 2008 financial crisis.
The number of individuals seeking to file for bankruptcy has also fallen 13 percent compared to last year. Some of this is credited to low interest rates encouraging households to take on more debt than they should for their financial means. And some is attributed to other factors that a household might be unable to avoid.
The Bankruptcy Abuse Prevention Act is thought to be another one of these factors. The act was passed in 2005, and was designed to keep wealthy individuals from abusing the bankruptcy system. This act did succeed in lowering the number of bankruptcies. However, a 60 percent increase in filing costs prevented some individuals from being able to afford bankruptcy. Now, as job creation and wage increases remain low, many hurting households may be even less able to afford bankruptcy filing costs in order to eliminate the debt burdens they have accumulated.
One source of funds that appears to be being tapped as a result is tax refunds. As many as 200,000 Americans are estimated to be using their tax refunds to pay for bankruptcy filings. While this may allow Phoenix households to finally file for bankruptcy, individuals would be wise to consult with an experienced attorney to learn about the process and all that’s involved in order to take full advantage of the protection that the law provides.
Source: ibtimes.com, “Americans Too Broke To Go Bankrupt? US Bankruptcy Filings On Pace To Fall To Pre-2008 Level,” July 6, 2012
Tags: Chapter 13, Chapter 7, debt relief, personal bankruptcy
