Debt Free in 2016? Now is the Time to File Your Arizona Bankruptcy

It is hard to believe we are getting ready to head into the July 4th weekend!  2015 is almost half-way over and I have started to plan out the remainder of the year  andit is crazy to think if you are thinking of filing bankruptcy and want to start the new year debt free then you will need to file your chapter 7 bankruptcy case within the next thirty (30) days.

Chapter 7 Bankruptcy Typically Takes 4 to 5 Months to Obtain a Discharge

Here in Arizona the typical chapter 7 bankruptcy takes about 4 to 5 months for you to obtain your discharge order – the order from the bankruptcy court that eliminates most of your unsecured debts.  What happens during that 4 to 5 months?  It can be broken down into the following steps:

Pre-Bankruptcy Filing

The time period prior to your bankruptcy filing is full of paperwork.  The typical bankruptcy petition is about 45-60 pages long of information about you and your finances.  This means that there is a lot of work for both you and your bankruptcy lawyer.

Your bankruptcy lawyer will need documents like tax returns, bank statements, pay stubs, titles to vehicles, and several other documents to accurately prepare your bankruptcy documents.  In my office the sooner we get his paperwork back from the more quickly we can get your case filed.

Pre-Filing Bankruptcy Credit Counseling

Before we file your case you will also be required to complete an online credit counseling course.  This is an informational course that will give tips and information on how to better manage finances and takes about an hour. This must be completed prior to the filing of your bankruptcy case.

Signing Your Documents

The final step before filing your bankruptcy case is completed when you come into my office and we sit down and go page-by-page over your documents.  It is important that the information contained within your bankruptcy documents be accurate because (1) you are signing the documents under penalty of perjury, and (2) you want to make sure all of your creditors are included and are provided notice.

Paying Your Legal Fees

I think this might be the most important step 🙂  (Bankruptcy lawyers are people too!)  But in a chapter 7 bankruptcy you are required to pay all of your legal fees and court filing fees before we file your case.  The reason is if you owe your bankruptcy lawyer money and you file your bankruptcy case, your lawyer actually becomes a creditor in your bankruptcy and can result in a conflict of interest in that your lawyer’s fees can now be discharged or eliminated.

This is the reason that chapter 7 bankruptcy lawyers usually require that the full fee be paid prior to the filing of your case.

Filing Day 

Once the day arrives to file your case it can actually be a little anti-climatic.  Here in Arizona all bankruptcy cases are filed electronically with the push of a button.  However there is something very powerful happens automatically when your bankruptcy case is filed.

The court issues the Automatic Stay.  This is a court order that immediately stops all collections.  This means that your creditors can’t call you on the phone, they can’t send you snotty letters, they can’t sue you, garnishment your wages, or levy your bank account.  Everything stops!

If you have been suffering through years of collection calls and everything that goes with bad debt then the filing can bring almost immediate relief from your creditors.

The Meeting of the Creditors

When I hear the title “Meeting of Creditors” I tend to imagine something akin to the Knights of the Roundtable where a bunch of important people sit around and discuss important things.  My clients tend to imagine the worse – that they are heading into some kind of police interrogation.

While your Meeting of Creditors is important it is likely a lot less formal than you might think.  First of all the title itself is somewhat of a misnomer.  This is because creditors rarely show up.  In fact, I have bene filing bankruptcy cases for over a decade and I can count on one hand how many times a creditor has actually appears – and in most cases it is an ex-spouse who is none too happy about the whole bankruptcy thing.

Usually the Meeting of Creditors is a meeting between me, you, and a bankruptcy trustee.  The trustee will check your photo ID and social security number and then ask you a series of questions starting with things like “how long have you lived in Arizona?”.  I actually give my clients a list of questions they can expect to be asked and hopefully that reduces a lot of the anxiety.

Debtor Education Course

After the Meeting of Creditors your next step is to complete a certified Debtor Education course.  These are typically done online and there are a lot of different providers.  I went through quite a few before I settled on Dave Ramsey’s Debtor Education Course.  I starting using Dave’s courses because I was a fan of what he teaches people but I have stuck with the course because of the overwhelming positive feedback I have received from clients who have taken the course.

The Dave Ramsey course lasts a little over an hour and is not only informative but very entertaining.  I had the great opportunity to travel to the Dave Ramsey headquarters in Tennessee recently and listen to Dave in person lessons he learned from his own bankruptcy filing.  Here is a picture of me and Dave!

 

 

 

 

 

 

The Entry of the Discharge Order

Assuming everything has gone well your case should be discharged about 4 to 5 months after it was filed with the bankruptcy court.  The entry of the Discharge Order is again somewhat anti-climatic.  The Discharge Order comes in the mail and your bankruptcy lawyer received it the same day you do.  This Order usually ends your case and the court will administratively close it out a month or so later.

So for a chapter 7 bankruptcy here in Arizona that is typically it.  There can be a few twists and turns, depending on how complex your case is, but in most instances a chapter 7 bankruptcy case can be finalized relatively quickly.

So, if 2015 was your year to become debt free and you are wanting to start 2016 without that nagging credit card debt, now is the time to get things started and wrap it up before the end of year!