Bankruptcy in Arizona – What is a 341 Meeting of Creditors, and What Can I Expect?

Bankruptcy in Arizona – What is a 341 Meeting of Creditors, and What Can I Expect?

The Bankruptcy Code maintains that every person or entity, who files for bankruptcy, must have a hearing with their court appointed trustee on the record and under oath. The purpose of the hearing is to gather information, clear up issues, and allow creditors a chance to be heard on the record, if they wish.

The name “Meeting of Creditors” is somewhat inappropriate however, because in most consumer cases (Chapter 7 & Chapter 13) creditors rarely attend this hearing. In fact, of the literally hundreds of consumer bankruptcy 341 hearings I’ve served as attorney of record on, I’ve only had a creditor attend a hearing twice. The first was for something personal (client owed a friend money) and the second, the creditor’s attorney simply entered their appearance. This meeting should be renamed, the “Trustee Hearing” which is what we call it anyway.

What will be asked?

The trustee or the trustee’s attorney assigned to your case will conduct your hearing. They will first look at your ID and Social Security card to be sure that you are the Debtor.  If you forget either one of these items, your case will be continued, and you’ll have to come back another time.

You will be sworn in. The trustee will ask you to raise your right hand and swear to tell the truth, under penalty of perjury.

The following are the most typical questions asked:

  1. Please state your name for the record
  2. What is your address?
  3. What is a good day time telephone number?
  4. Have you lived in Arizona for the better part of 180 days before the filing of your bankruptcy petition?
  5. How long have you lived in Arizona?
  6. Have you filed bankruptcy before?
  7. Are you personally familiar with all the information listed in your petition and statements?
  8. Does it list all your assets?
  9. Does it list all your debts?
  10. Do you owe anyone child support of spousal maintenance?
  11. Are you entitled to an inheritance of any kind?
  12. Are you expecting an award from a law suit?

At the end of the hearing, the trustee will ask if any creditors are present. 99% of the time there are none. The trustee may also ask something specific about your case. For example if any documents are missing, the trustee will ask for them (usually a bank statement or the like). In most cases, the trustee hearing is very straight forward.

Most law firms designate an attorney (usually a new attorney) to go to your hearing with you, regardless of whether that attorney worked with you on your case or not. I disagree with this practice.  An attorney who has never seen your file until the hearing, has no business representing you there.  Even though the 341 hearing is straight forward, the attorney you worked with, or an attorney who has personal knowledge of your case, should be there with you in the event of an issue arising.

I’m Far Behind on My Mortgage. Will Chapter 13 Bankruptcy Cure My Mortgage Arrears?

I’m Far Behind on My Mortgage. Will Chapter 13 Bankruptcy Cure My Mortgage Arrears?

Filing Chapter 13 bankruptcy any time before a foreclosure/trustee sale, will stop a foreclosure, and cure a homeowner’s mortgage arrears if they successfully complete a Chapter 13 bankruptcy.

How does Chapter 13 bankruptcy cure mortgage arrears? Chapter 13 bankruptcy is a plan to repay some or all of your debts over a period of usually 3 to 5 years. When a homeowner is behind on his/her mortgage payments, the chapter 13 plan pays back to the mortgage company, whatever the homeowner is behind on the mortgage. The effect is that after the homeowner completes his/her Chapter 13 plan, the homeowner’s mortgage is current and all other debts the homeowner had (for example credit cards) are discharged.

Here’s an example. Let’s say Bob home owner is behind 12 months on his mortgage payments because he lost his job a few months back, and has now recently become employed again.

Bob gets a notice from his mortgage lender in the mail stating that they are considering foreclosing on Bob’s home because he hasn’t made his payment in 12 months. Bob and his attorney then file Chapter 13 for Bob, and state in the chapter 13 plan, that Bob will pay his mortgage arrears a certain amount over the next 3 to 5 years.

Bob then goes the next 3 to 5 years making only 2 payments each month for his debts. One payment goes directly from Bob to his mortgage company for the usual mortgage payment he had, and the other, a small amount to the Chapter 13 bankruptcy trustee for all the debts that Bob had when he filed bankruptcy.

The Chapter 13 bankruptcy trustee takes Bob’s monthly payments, and distributes most of it to Bob’s mortgage company for the arrears.  Over the 3 to 5 year period of Bob’s payment, the trustee has paid the mortgage arrears to the mortgage company in full.

The effect is, now Bob is current on his home, and he’s cured all of his arrears through Chapter 13 bankruptcy. Also, in this scenario, if Bob had any unsecured debt, like credit cards, those would be discharged at the end of the payment plan whether or not they were paid back in full.

Chapter 13 bankruptcy works well for lots of people who had a temporary period of economic hardship, and just need some time to recover.

If you’re substantially behind on your mortgage, you don’t have to lose your home. You have options. Here at the Yontz Law Group, we are more than happy to meet with anyone to explain their options.  Contact an experienced Arizona Bankruptcy Attorney here.

Please be aware that any information on this website is for educational purposes only and is not intended to be legal advice. If you need legal advice, please contact an attorney, or contact the Yontz Law Group, P.C. for a free consultation with a bankruptcy attorney in Phoenix, Mesa, Gilbert, Apache Junction, Chandler, or throughout the state of Arizona.

Will Filing for Bankruptcy Wipe Out My Tax Debt?

Will Filing for Bankruptcy Wipe Out My Tax Debt?

Believe it or not, personal income taxes are eligible to be discharged in Chapter 13 bankruptcy and Chapter 7 bankruptcy.

However, in order for a tax debt to be dischargable in bankruptcy, it MUST meet the following criteria:

  1. The tax debt must be at least 3 years old. That is, the due date of the tax debt must have been at least 3 years ago
  2. The tax return for the tax year must have been filed at least 2 years ago.
  3. The person filing bankruptcy or the “Debtor” must not have been assessed for the taxes in the last 240 days.
  4. The tax return was not fraudulent.
  5. The tax payer isn’t guilty of tax evasion.

If you have a significant tax debt and are considering filing bankruptcy, contact an experienced Arizona Bankruptcy Attorney, because you may be able to get rid of it.

Please be aware that any information on this website is for educational purposes only and is not intended to be legal advice. If you need legal advice, please contact an attorney, or contact the Yontz Law Group, P.C. for a free consultation with a bankruptcy attorney in Mesa, Gilbert, Apache Junction, Phoenix, or throughout the state of Arizona.

What is a “Motion To Lift the Automatic Stay” (Bankruptcy in Arizona)?

What is a “Motion To Lift the Automatic Stay” (Bankruptcy in Arizona) ?

 A “motion to lift the automatic stay” is sometimes filed by a lender/creditor (usually for a home or vehicle) after a Debtor has filed bankruptcy (most of the time, after filing Chapter 7 bankruptcy).  It is a process by which said lender/creditor obtains the bankruptcy court’s permission to foreclose on real, or repossess personal property (such as a vehicle), that is liened by said lender/creditor.

 The “automatic stay” is the protection that you as a Debtor get when you file bankruptcy. It is what halts all of your creditors. After filing bankruptcy (usually Chapter 7 bankruptcy), for any creditor to take action against you, or a piece of property that you have possession of, that lender/creditor must “lift” this protection by filing a motion with the court.

 A “motion to lift the automatic stay” is usually filed where the debtor, either before or after filing bankruptcy, is far behind on payments for a piece of real or personal property.  It is almost always filed by a lender/creditor where Chapter 7 bankruptcy was filed within a short time before a foreclosure date.

 If you’re considering filing bankruptcy, be certain that you know the effects of the automatic stay in regard to your property.  Remember that all the chapters of bankruptcy are different, and depending on the chapter of bankruptcy you file, your property may be affected differently. This is one of the many reasons why it is important to contact a bankruptcy attorney if you’re thinking about filing bankruptcy.  It is especially important to seek the advice of a bankruptcy attorney who is familiar with the rules in your area (e.g if you’re filing bankruptcy in Arizona, it is important to contact an Arizona bankruptcy attorney).

After Foreclosure, will my lender come after me? If so, would bankruptcy benefit me?

After foreclosure in Arizona, will my lender come after me for the deficiency?

It depends on the type of loan you as homeowner had/have.  If the loan was used to purchase the home, then the loan is considered a “non-recourse” loan, and the homeowner has no personal liability for it, unless there is excessive damage to the home.

In most cases, if the loan was NOT used to purchase or improve the home (such as a HELOC) the lender can sue the homeowner to collect on the loan.  For example, if the homeowner purchased the home, and then borrowed $100,000 under a HELOC, that lender can file a suit in court to collect on the promissory note.

 Would bankruptcy benefit me if I am responsible for the deficiency?

Depending on the homeowner’s financial situation, and depending on the chapter, filing bankruptcy can discharge, or reorganize this type of debt (unsecured debt, once the home is foreclosed). It is common for a homeowner who has/had a significant outstanding balance on a HELOC to file bankruptcy once they’ve realized that foreclosure is probably inevitable, or that foreclosure is the best business decision to make in their situation.

The homeowner must be aware that deficiency statutes, or “anti-deficiency” statutes are different in every state. Therefore, if the homeowner is considering filing bankruptcy after foreclosure, or in anticipation of foreclosure, the homeowner should always seek the advice of an experienced Arizona bankruptcy attorney (or a bankruptcy attorney in whichever state you’re in) to become educated on how bankruptcy would effect them.

Please be aware that any information here or on these sites is for educational purposes only and is not intended to be legal advice. If you need legal advice, please contact an attorney, or contact the Yontz Law Group, P.C. for a free consultation with a bankruptcy attorney in Mesa, Gilbert, Apache Junction, Phoenix, or throughout the state of Arizona.

How Long Does Bankruptcy Take?

How long will the bankruptcy process take?

Bankruptcy Timeline

The timelines and processes involved in a bankruptcy case in Arizona, are different depending upon which chapter of bankruptcy you file (Chapter 7, Chapter 13 or chapter 11). Our law firm offers a free initial consultation to discuss your situation. Below are the basic timelines for bankruptcy cases in Arizona.

8 Years Before Filing – In Arizona, and every jurisdiction, you must wait 8 years to file a Chapter 7 bankruptcy case if you have already received a discharge from a prior Chapter 7.

4 Years Before Bankruptcy – You must wait at least 4 years to file for a Chapter 13 bankruptcy if you have already filed for Chapter 7, 11 or 12 previously. For a prior Chapter 13 case, you need only wait 2 years after the bankruptcy discharge.

180 Days Before Filing – You must take a credit counseling course from a certified credit counseling agency in order to be eligible to file for bankruptcy. These course are convenient as you can do them on-line, and take up about 60 minutes of your time.

90 Days Before Filing – You must be a resident of the state in which you are filing for a minimum of 90 days or you must have been a resident of Arizona for at least 90 days.

Filing – Your bankruptcy case officially begins when you file your petition with the bankruptcy court. At this time, creditors cannot take action against you, and you are officially protected.

After Filing and Before Discharge – In Chapter 7 and Chapter 13 bankruptcy cases in Arizona, you are required by the Arizona Federal District Court to complete a debtor education course provided by a certified agency. Some of these courses can be very educational and helpful. These courses are convenient because like the initial credit counseling, can be done on line. Our law firm recommends Dave Ramsey’s Debtor Education Course (www.daveramsey.com/bankruptcy).

15 Days After Filing – At this time, you should have gotten a letter from your trustee. You have 15 days after filing for bankruptcy to provide the bankruptcy trustee with specific information about assets, expenses, liabilities, income and more.

45 Days After Filing 341 Meeting of Creditors – In Arizona, you will be in a meeting with the bankruptcy trustee about 45 days after filing for bankruptcy. If you live in Maricopa county your meeting will be in downtown Phoenix, if you live in Pinal County, your meeting will be in Casa Grande. These meetings are held on the record and under oath. They are generally straight forward with a few standard questions, and last about 5 to 10 minutes. Our office will prepare you for your meeting and there will be no surprises.

180 Days After Filing – Government agencies that have claims against you, such as taxes owed to the IRS, will have 180 days after the date of your petition to submit proof of their claims against you.

6 to 9 Weeks after the 341 meeting of creditors – in a chapter 7 bankruptcy case, you will receive a letter from the court, telling you that your case has been discharged.

3 to 5 Years After Filing (Chapter 13 only) –Approximately 3 to 5 years after the date of your first payment based off your Chapter 13 repayment plan, you will receive a formal discharge from the court. All eligible debts will be discharged.