Chapter 7 Arizona | Filing Bankruptcy in AZ

Suppose you’re thinking of filing BK in Arizona. Chapter 7 is the most popular type of bankruptcy for individuals in Arizona and the U.S. Not everyone is qualified to file for bankruptcy Chapter 7 in Arizona. There are specific criteria and guidelines you must meet to be eligible.

Do I Qualify for Chapter 7 Bankruptcy AZ?

To qualify for Chapter 7 bankruptcy in Arizona, the filers must pass the means test, which assesses your financial situation to determine if you truly need bankruptcy relief. The means test compares the individual’s average monthly income over the last six months to the median income for a household of your size in Arizona. 

If your income is below the median, you typically qualify for Chapter 7. If it is above the median, you may still qualify, but you’ll need to undergo further calculations to prove you cannot pay back even a portion of your debt. 

How to File for Bankruptcy in Az

If you’re wondering how to file bankruptcy in Arizona, you can contact Jim Gaudiosi for a free consultation (623) 777-4760.

Individuals are not legally required to hire an attorney for their bankruptcy filing. You can file for bankruptcy “pro se,” which means representing yourself. However, there are several reasons why hiring an attorney is highly recommended:

People are not legally required to hire an attorney to file for bankruptcy. You can file for bankruptcy “pro se,” which means representing yourself. However, there are several reasons why hiring an attorney is highly recommended:

Benefits of Hiring an Attorney

1. Expert Guidance: An attorney can help you understand the complex bankruptcy laws and ensure that you complete the process correctly.
2. Proper Documentation: An attorney will ensure all necessary forms are filled out accurately and completely, reducing the risk of your case being dismissed due to errors.
3. Representation in Court: An attorney can represent you in court and at the 341 Meeting of Creditors, answering questions and addressing any issues that arise.
4. Asset Protection: An attorney can help you use exemptions effectively to protect your property.
5. Legal Advice: An attorney can provide advice specific to your situation, such as whether Chapter 7 is the best option or if Chapter 13 would be more beneficial.
6. Stress Reduction: An attorney can handle the paperwork, deadlines, and legal procedures, reducing your stress during this difficult time.

What Debts Does Chapter 7 Eliminate?

Filing for bankruptcy in AZ can help you eliminate the following debts.

Dischargeable Debts

1. 1. Credit Card Debt: Most credit card debt is dischargeable, including overdue balances, late fees, and interest charges.
   2. Medical Bills: Medical bills are typically fully dischargeable.
   3. Personal Loans: Personal loans from friends, family, or financial institutions can be discharged.
   4. Utility Bills: Overdue utility bills (electric, gas, water, etc.) can be discharged. (You may be required to repay these debts, if you intend to continue using the utility company’s services).
   5. Payday Loans: High-interest payday loans are generally dischargeable.
   6. Car Registration Loans: These loans are dischargeable especially if you have another primary lender on the car. If not, they are still dischargeable as long as you have not provided the title to the car to the lender.
   7. Business Debts: Debts incurred through your business can usually be discharged as to your personal name. There is no discharge in a business chapter 7 bankruptcy.
   8. Collection Agency Accounts: Debts that have been sent to collections can be discharged.
   9. Lease Obligations: Obligations from residential leases can be discharged, but you may have to move out if you are behind on rent.
   10. Some Civil Court Judgments: Certain judgments, especially those not involving fraud or malicious conduct, can be discharged. Government fines or court orders involving domestic support liabilities are not dischargeable. Judgments may be attached to secured property such as a home. You can discharge your personal liability but any secured judgments to real property will continue to remain secured by the property.
   11. Old Tax Debts: Some income tax debts may be dischargeable if they meet specific criteria (e.g., the debt is at least three years old, and the tax return was filed at least two years before filing for bankruptcy).
   12. Student Loans: In some cases, student loans may be discharged through a special process called an Adversary Proceeding.

Non-Dischargeable Debts:

1. Recent tax debt: If you filed the tax return within the last 3 years, the debt will most likely be non-dischargeable. Consider filing chapter 13 or an Offer-in-Compromise to eliminate any recent tax debt.
2. Domestic Support Obligations: Current or past-due child support or spousal maintenance obligations or any court order from a family court judge deemed to be a domestic support obligation will not be dischargeable.
3. Government Fines: If you were recently fined by a government agency for anything, the debt will not be dischargeable.
4. Student Loans; Without court approval after going through an Adversary Proceeding requesting relief from student loans, they are generally classified as non-dischargeable debt. 
5. Recent Credit Card Debt: If you have used a credit card for any major purpose, cash advance, or withdrawal within 90 days of filing your case, the credit lender could petition the court for a discharge exception for that specific credit card. It’s best to avoid using any credit cards in the 90 day period prior to filing if possible. 

Frequently Asked Questions

Do I Qualify for Bankruptcy in Arizona?

To determine if you qualify for Chapter 7 bankruptcy in Arizona, you’ll need to assess your financial situation against specific criteria. Here are the key factors to consider:

1. Means Test

The means test is used to determine if your income is low enough to qualify for Chapter 7 bankruptcy.

• Step 1: Compare Your Income to the Median Income in Arizona
  • Calculate your average monthly income over the six months before filing.
  • Multiply this amount by 12 to get your annual income.
  • Compare your annual income to the median income for a household of your size in Arizona.
  • If your income is below the median, you qualify for Chapter 7.
• As of 2024, the median income for a household in Arizona is approximately:
  • 1 person: $64,830
  • 2 people: $79,078
  • 3 people: $88,648
  • 4 people: $103,652
  • Add $9,900 for each additional household member beyond four.
• Step 2: Complete the Means Test Calculation
  • If your income is above the median, you need to complete the full means test calculation, which involves deducting certain allowed expenses from your income to determine your disposable income.
  • If your disposable income is below a certain threshold, you qualify for Chapter 7.

2. Credit Counseling

• You must complete a credit counseling course from an approved agency within 180 days before filing for bankruptcy.
• You must file a certificate of completion with your bankruptcy petition.

3. Previous Bankruptcy Discharge

• You cannot file for Chapter 7 bankruptcy if you have received a Chapter 7 discharge in the last eight years or a Chapter 13 discharge in the last six years.

4. Prior Bankruptcy Dismissal

• If a previous bankruptcy case was dismissed within the last 180 days for certain reasons, such as violating a court order or requesting a dismissal after a creditor asked for relief from the automatic stay, you may not be eligible to file.

5. Examination of Financial Transactions

• The court will review your financial transactions over the past several years. Fraudulent transfers, hiding assets, or other financial misconduct may disqualify you.

6. Sufficient Documentation

• You must provide complete and accurate documentation of your financial situation, including income, expenses, assets, and debts.

How Many Times Can You File Bankruptcy in Az?

In Arizona, as in the rest of the United States, the federal bankruptcy laws set the rules for how often you can file for bankruptcy. The number of times and the waiting periods between filings depend on the type of bankruptcy you previously filed and the type you intend to file. Here’s a breakdown of the key rules:

Chapter 7 Bankruptcy

1. From Chapter 7 to Chapter 7:
   • If you received a discharge in a previous Chapter 7 case, you must wait 8 years from the date you filed the previous Chapter 7 case before you can file another Chapter 7 case.
2. From Chapter 13 to Chapter 7:
   • If you received a discharge in a previous Chapter 13 case, you must wait 6 years from the date you filed the Chapter 13 case before filing for Chapter 7.
   • There is an exception if you paid back 100% of your unsecured debts or 70% under a plan that was proposed in good faith and your best effort was made.

Chapter 13 Bankruptcy

1. From Chapter 7 to Chapter 13:
   • If you received a discharge in a previous Chapter 7 case, you must wait 4 years from the date you filed the Chapter 7 case before you can file for Chapter 13.
2. From Chapter 13 to Chapter 13:
   • If you received a discharge in a previous Chapter 13 case, you must wait 2 years from the date you filed the previous Chapter 13 case before you can file another Chapter 13 case.