Q: I just move to Arizona, can I still file bankruptcy?
If not now, you can file soon.  The bankruptcy code dictates that you must file in the state where you have spent the greater part of the 180 days immediately before filing.  Therefore, if you spent at least 91 of the last 180 days in Arizona, you are clear to file Chapter 7 bankruptcy or Chapter 13 bankruptcy in Arizona.  Talk to your Arizona bankruptcy attorney about the proper state to file your bankruptcy.

Q: How do I keep my creditors from repossessing my car?
Immediately when you file bankruptcy, provide notice to the creditor holding the security interest in your car.  The U.S. Bankruptcy Court will provide formal notice through U.S. Mail postage prepaid to the creditor as that creditor is listed in your bankruptcy schedules.  This is a very important process and needs to be completed accurately and completely.  This is a process that you want to have a professional complete.  However, that notice might not be quick enough to protect your car from repossession.  In order to make sure your car is safe, ask your Phoenix bankruptcy lawyer or other Arizona bankruptcy attorney to provide individual and specific notice to the secured creditor holding the secured lien on your car.  Once notice is received on this secured debt, the secured creditor will be immediately precluded from repossessing your car.

Q: Do I need to be delinquent on my debt to file bankruptcy?
No.  There are many forms of being insolvent.  Many people are actually bankrupt but able to make some or most of their minimum monthly payments giving the false appearance of solvency.  By the time it occurs to you that bankruptcy might be an option, you likely have more debt than income to satisfy the debt and are insolvent.  When you file bankruptcy there are specific exemptions that address property you get to keep.  These include things like your household goods, a reasonable amount of equity in a car and a home, and really all of the things that are necessary to continue your day to day life.  Don’t wait until you have no assets to protect to file bankruptcy.  Don’t liquidate all of your assets trying to pay a debt that you will never do.  There is a government program that allows you to discharge the debt without making yourself feel destitute and destroying your feeling of self worth.  You have paid taxes all of your life and you have also paid more interest to your creditors than you will ever owe.  Let your government taxes help you with your creditor interest and use bankruptcy for the renewing federal program it is.  File bankruptcy while you still have assets to protect and the ability to start fresh.  Contact our bankruptcy attorneys for a new lease on life.

Q: Can I discharge back taxes in my bankruptcy?
It depends. Certain tax obligations are dischargeable. There are several factors that need to be met in order for your back taxes to be discharged:

1. The tax obligation must be at least 3 years old, prior to the filing of your bankruptcy.
2. The specific tax return must have been filed no later than 2 years prior to filing your bankruptcy.
3. The overall tax debt must also have been assessed no earlier than 240 days prior to filing your bankruptcy.
4. The tax return was not fraudulent
5. The tax payer is not guilty of tax evasion.

Assuming that your tax debt fits all of those factors, then, yes, you can discharge your tax debt. However, if you do not meet all of those factors, you can still file a Ch. 13 bankruptcy and repay the priority tax debt through your plan. There are two huge advantages of choosing to repay tax obligations through a Ch. 13 bankruptcy. First, you should not incur any additional late fees, penalties, or interest on your tax debt, so you can structurally pay the debt as it was on the date of filing. Secondly, you will need to pay the taxes regardless, whether you decide to file a bankruptcy or not. But, should you choose to file a Ch. 13, you will be paying the tax obligation first, at the expense of your other unsecured debts. The tax debts take priority over other unsecured debts. You only have a finite amount of money and time to repay towards your debts in a Ch. 13. Your monthly repayment funds will be first paid towards your tax debts, while your other debts receive nothing. Once the tax debts are paid off, then, and only then, will other creditors start receiving any funds from your Ch. 13 Repayment Plan.

Q: Can I keep my home?
In most cases, yes, you can keep your house.  It is a better question to consider whether it is in your best interest to keep your home.  In most cases, if you are current you can keep your home through chapter7 bankruptcy.  If you are not current on your home but can afford to make payments to catch up you can keep your home through chapter 13 bankruptcy.  One of the bankruptcy methods should work to keep your home.  If you are in a position to modify your loan or take advantage of other government programs you may be able to keep your home and reduce your principal or mortgage payments and interest.  In any event, you can likely keep your home in bankruptcy.

However, a majority of the time a client asks me to find a way to keep a home, that home is underwater.  This means that the client owes more on the home than the home is worth.  When this is the case, an objective determination about keeping the home absent sentimental attachment or moral obligation needs to be conducted.  This is one of the hardest parts of bankruptcy.  If your home, or any other asset, is simply not worth what you owe, it is likely in your best interest to simply forfeit the home.  When you forfeit a home in bankruptcy it is similar to a foreclosure in that you are relieved of all debt associated with the home including taxes, late payment charges, foreclosure charges, liens, etc.  Because of a quirk in the bankruptcy code you will still be responsible for the HOA fees between the time you file and the time the home is sold, but most other debts and liens associated with the home are forgiven.  If you can buy a reasonable substitute for your home, or your exact home at the bank’s resale, for less money than you owe, there is no reason to fight to retain your home.  This is called a strategic foreclosure if done outside the bankruptcy system.  It is called a good decision no matter when it is made.

Whether you are going to keep your home or forfeit your home, you want it done right.  Improper categorization of your mortgage or other debt or improper use of your exemption could cause you to lose your home of to owe money after you try to forfeit it.  You had an attorney draft the documents to get into the real estate, consult an attorney to get you out of the real estate deal the right way.