- I CAN’T FILE BANKRUPTCY UNTIL I’VE FALLEN BEHIND ON DEBT PAYMENTS.
There is no problem with filing bankruptcy even if you are current on monthly payments but can no longer continue to make them.
- I WILL LOSE MY HOUSE IF I FILE BANKRUPTCY.
As long as you remain current on any and all mortgage payments, and your house is protected by a homestead exemption, you can file bankruptcy and still keep your house. Arizona exemptions apply to your bankruptcy case if you have lived in Arizona continuously for two years prior to filing. Under Arizona law, the house you live in is exempt up to $150,000 in equity, or a maximum of $150,000 in fair market value if owned free and clear of mortgage liens.
- I WILL LOSE MY CAR IF I FILE BANKRUPTCY.
As long as you remain current on any auto loans and/or title loans secured by the vehicle, and your car is protected by an exemption, you can file bankruptcy and still keep your car. If the Arizona exemptions apply to your case, you can protect up to $6,000 in equity in a motor vehicle, or fair market value if owned free and clear, and $12,000 when you’re disabled (license plate or placard required). Fair market value is generally determined by the www.kbb.com private party valuation.
For married couples, each spouse receives an exemption. Therefore, applying Arizona exemptions,
you and your spouse can protect two vehicles with no more than $6,000 in equity or a single vehicle with a maximum of $12,000 in equity. If owned free and clear, these amounts are based on the fair market value of the vehicle(s). These exemption figures double for each disabled spouse.
- MY CREDIT SCORE WILL TANK FOR SEVEN YEARS AFTER FILING BANKRUPTCY.
Once you’ve missed payments on debts, it takes seven years for the negative delinquency
information to drop off your credit report. Filing bankruptcy hits the reset button and you’re more likely to be approved for credit after resolving the debt with a discharge than if you had not filed bankruptcy. It’s important to rebuild your credit after the bankruptcy discharge has been entered, which may involve starting with a secured credit card and working your way up to unsecured credit cards, auto loans, etc. Making timely payments, staying within advisable debt to credit limit ratios, and avoiding a high rate of credit card utilization will help improve your credit score. A Chapter 7 bankruptcy stays on your credit report for ten years and a Chapter 13 bankruptcy for seven years, but if you’re diligent in rebuilding your credit, it’s possible to achieve a 700 or higher credit score with bankruptcy still on your record.
- BANKRUPTCY WILL RUIN MY PLAN TO BUY A HOUSE IN A FEW YEARS.
If you’re in default on debt payments, or soon will be, qualifying for a mortgage in the near future is probably out of the question anyway. Bankruptcy can put you on a path to getting a mortgage loan by clearing out the bad debt. There is an automatic two year wait for FHA and VA mortgage loans after bankruptcy. While no such waiting period applies to conventional mortgages, depending upon market conditions, it’s likely to be at least three years before qualifying for a mortgage. The bankruptcy discharge operates to free up income that was previously going towards debt payments but can now be set aside for a down payment on a house.
- THE JUDGE MAY NOT GRANT MY DISCHARGE.
An experienced bankruptcy attorney will properly analyze your situation to ensure that you’re eligible to receive a bankruptcy discharge prior to filing the petition. As long as you meet all the requirements of a debtor in bankruptcy, such as complying with the bankruptcy trustee’s request for documents and information, appearing at the 341 meeting of creditors with proper identification and proof of social security number, filing any unfiled income tax returns, turning over any assets that are not protected by exemptions, and taking the post-filing debtor education course, you shouldn’t have to worry about the discharge going through.
- I CAN CHOOSE TO LEAVE SOME DEBTS OUT OF THE BANKRUPTCY.
The bankruptcy code requires that you list all debts. This even includes non-dischargeable debts, like student loans, as well as debts owed to family members. At your 341 meeting of creditors, the bankruptcy trustee will ask you if you listed all your debts in the bankruptcy schedules. You are not prohibited from repaying debt listed in your bankruptcy schedules should you so choose.
- GOOD PEOPLE DON’T FILE BANKRUPTCY.
Bankruptcy relief was designed for the honest but unfortunate debtor. The events leading up to having to file bankruptcy are different for everyone. Sometimes it’s caused by job loss, illness, injury, death of a loved one, divorce, or a failed business. Other times it’s the result of financial mistakes, overspending, addiction issues, being victimized by fraudulent scams, or simply not having adequate income to make ends meet. No matter what the reasons are, you deserve not to be judged and get a fresh start. At Ellett Law Offices, we’re here when you need us to help you get through the tough times.
*Please keep in mind that it is general information only, which may not be appropriate for your specific situation, and is not intended to constitute legal advice or create an attorney-client relationship.*