Although commonly seen as a last resort, bankruptcy is actually a new beginning. Bankruptcy protections were written into the United States Constitution because they provide struggling Americans with an avenue to financial freedom. Many Tucson residents and businesses are considering filing for bankruptcy in Arizona, and there are multiple types of bankruptcy designed to address your specific financial needs. Nonetheless, filing for bankruptcy is a serious decision that can have lasting financial, professional, and personal implications.
Choose a Compassionate Debt Relief Lawyer for Before, During, and After Bankruptcy Proceedings
For some, bankruptcy isn’t the right choice. For others, it’s the only choice. Despite the negative connotations associated with the term, bankruptcy is designed to provide relief, protection, and a fresh start to overwhelmed debtors. This relief comes with certain conditions, such as potential property loss, a lower credit score, and difficulty obtaining future financing, and top-rated bankruptcy attorneys concern themselves with their clients’ present and future best interests.
Tucson bankruptcy and debt relief lawyer attorney German Yusufov of Yusufov Law Firm analyzes each client’s financial situation and future goals to develop a holistic plan for relieving debt and rebuilding credit. Schedule your free, confidential personal or business Tucson bankruptcy consultation today by calling (520) 745-4429 or contacting him online.
Types of Bankruptcy in the United States
Individuals and businesses struggling to pay their debts during this economic downturn may be considering bankruptcy. There are actually six different types of bankruptcy in the United States, but most cases are filed in one of the following classes:
- Chapter 7 Liquidation (Personal): This can seem like a drastic type of bankruptcy because it requires the liquidation (sale) of all non-exempt assets, including community property. This can potentially include your home, vehicle, furniture, jewelry, stocks, and bank accounts. Even horses and certain livestock worth over $1,000 must be sold, and wedding rings are only exempt up to $2,000. Once all the non-exempt items are liquidated, the bankruptcy court allocates the funds to your creditors. The majority of your remaining debts are then discharged (forgiven).
- Chapter 13 Payment Plan (Personal and Business Owners): For individuals with a steady income who’ve gotten in over their heads, Chapter 13 bankruptcy restructures debt into a manageable repayment plan. Business owners who run the business as a sole proprietorship, or wish to reorganize their personal finances without losing their business, can also use Chapter 13. Chapter 13 does not require liquidation, and individuals can keep all their assets, even non-exempt assets. The court sets petitioners on a three-to-five-year repayment plan, with payments determined primarily by the petitioner’s income. Most debt (excluding your mortgage and other secured debt, student loans, and certain taxes) is forgiven after successful competition of the repayment plan. There are limits on how much debt a person filing for Chapter 13 can have.
- Chapter 11 Reorganization (Businesses and Individuals with very high debt): Chapter 11 is commonly used by large corporations that need to restructure the whole business but wish to keep operating. Small businesses can also file for Chapter 11. This is the only type of bankruptcy that can be filed by a business that is a corporation, limited liability company, or partnership. In addition, individuals who have very high debt and are not able to file for Chapter 7, can also file for Chapter 11 bankruptcy. The process involves the creation of a reorganization plan, with input from the creditors, and a repayment of some portion of the debt through the plan. Most debt left over after the successful completion of the plan is forgiven.
Experienced Tucson bankruptcy attorneys analyze your assets, income, and liabilities to determine whether bankruptcy is necessary and which type is best for you. High-earners must generally file for Chapter 13 bankruptcy, while individuals with minor assets may benefit from Chapter 7 liquidation.
Do You Qualify to File for Bankruptcy?
Not everyone can file for bankruptcy. To qualify for Chapter 7 bankruptcy, the debtor must submit to a “means test.” The debtor can satisfy the means test in one of two ways. First, the debtor must make less than the state’s median yearly income depending on household size. These amounts fluctuate, and change several times each year. In Arizona, the median income has ranged from about $45,000 to about $55,000 per individual over the last several years ($50,000 to $70,000 per couple). The second alternative, for debtors whose income is above the median, is to show that the debtor’s necessary expenses do not leave sufficient disposable income to pay back the debt. This is a complex calculation that requires strong knowledge of the applicable laws and rules, and sometimes even judicial rulings. In most cases, a non-attorney will not be able to properly conduct this calculation.
Those who don’t qualify for Chapter 7 bankruptcy may qualify for Chapter 13 bankruptcy. Chapter 13 bankruptcies require debtors to have less than approximately $400,000 in unsecured debts (personal loans, student loans, credit cards) and less than approximately $1.2 million in secured debts (mortgage, car). The petitioner must also have steady income sufficient to maintain any proposed payment plan. Businesses that don’t qualify for Chapter 13 may qualify for a Chapter 11 restructuring.
The Pros and Cons of Filing for Bankruptcy in Tucson
An experienced Tucson debt relief and bankruptcy lawyer will review the benefits and drawbacks of each type of bankruptcy with his clients. Some of the benefits of bankruptcy include:
- An immediate freeze of all litigation and lawsuits against you
- Immediate stop to all debt collection efforts including calls, mailing, and wage garnishment
- Immediate halt of foreclosure and repossession proceedings
- Protection from creditors through the bankruptcy court
- Potential discharge of unsecured, high-interest debts
- Ability to catch up on mortgage and secured debt payments without risking foreclosure
- Centralized, single payments through the bankruptcy court without creditor contact
Some of the drawbacks to bankruptcy include:
- Potential loss of your non-exempt assets
- A reduction in your credit score
- Record of bankruptcy on your credit history for 7 to 10 years
- Inability to obtain financing immediately after bankruptcy
- Possible difficulty obtaining rental housing
Don’t file for bankruptcy in Tucson without speaking with a qualified Tucson debt relief attorney to weigh the benefits, drawbacks, and alternatives to bankruptcy in Arizona.
Find the Right Tucson Bankruptcy & Debt Relief Attorney at Yusufov Law Firm
Bankruptcy is a serious decision, and the right Arizona debt relief attorneys will explore the following alternatives with clients:
- Negotiating reduced payoffs or payment plans with creditors
- Consolidating debt with a reputable private lender
- Applying for federal or state debt relief or restructuring programs
- Challenging and litigating illegal or bad debts
- Voluntary liquidation of assets with strategic payoffs
Simply having a Tucson debt relief lawyer in your corner can bring creditors to the negotiating table. Tucson bankruptcy attorney German Yusufov of Yusufov Law Firm takes a holistic approach to debt relief proceedings. From analyzing your options to helping you rebuild your credit after bankruptcy. Call him today at (520) 745-4429 or contact him online for your free, no-obligation Tucson debt relief and bankruptcy consultation.