Is It Time For Me to File For Bankruptcy in Mesa Arizona?

After you unburden your financial woes on your friends, you might ask them whether or not you should file for bankruptcy in Mesa, Arizona. Most likely, you will hear them say, “Only as a last resort” or “Surely, there might be other ways.”  Your friends may mean well when they respond like this because they want you to explore all other suitable alternatives to bankruptcy.  This usually means, bankruptcies are the last straw if and only if you have looked into all viable options for debt relief.

Bankruptcy brings with it a certain stigma in society. Many are often misguided into thinking that people who go bankrupt are failures and have brought this upon themselves. Bankruptcy is seen as an ugly scar that leaves an undesirable mark on an individual. In Mesa, most people do not view it like a scab that, with proper care and attention, clears up and fades away, leaving little to no traces of a wound that it once was. Like a scab, when the bankruptcy process was handled carefully and with due diligence, there is a great chance for a debtor acquire a discharge and thereafter get a fresh start. As such, bankruptcy laws are in place to give people another chance to pick up after themselves and do better in life.

Like getting hitched, bankruptcy in Arizona could very well be one of the major decisions anybody makes in their lives. That being said, before you commit to it, you must first look into the reasons why you are even considering it.  You also need to study the pros and cons of a bankruptcy filing in Mesa, Arizona.

Reasons to Consider Before Filing Bankruptcy in Mesa Arizona

Medical debt is regarded as the number one reason why Americans file for bankruptcy. In a recent study, an estimated 66.5% of all bankruptcies are because of health-related expenses, followed by unaffordable mortgages (45%) and spending or living beyond one’s means (44.4%). Even if one has insurance, it is not enough to cover medical bills.  Health problems are further complicated by the eventuality of underperforming in your job, resulting in you quitting or being let go by your employer. Being jobless while your medical bills are piling up clearly not something to cheer about. There are other reasons why you might file for bankruptcy:

  • You are using your cards for everyday necessities
  • You have resorted to paying one credit card with another credit card
  • You have incurred high-interest rates on missed credit card payments
  • Your second or third job may not be enough to pay off the bills
  • Your creditors have filed lawsuits in order to make you pay up
  • You are about to lose your home
  • You are facing wage garnishment
  • You are tempted to dip into your retirement account to cover the bills
  • You work and personal life is affected by debt-related stress

Are there viable alternatives to a bankruptcy filing?

 While it may be daunting to have to face and address your financial distress, you need to objectively study your options.

Before you dive into bankruptcy in Mesa, Arizona, look at other alternatives. You may start by going to credit counselors. There are pro bono ones that will help you assess your financial state and present to you the benefits and drawbacks of other debt management programs such as debt consolidation or debt settlement.

While we are on the subject of your financial state, have you considered taking a look at your expenses? Before you purchase something, do you ever stop and ask yourself whether that gadget on the shelf or that bauble posted on the online shop is a necessity or just a passing fancy? You might be surprised that the bills may have ballooned because of impulse buying. It is about time to get a grip and draw the line on your spending.  Live within your means.

It also helps if you take on a second or third job to further supplement your income. Doing so can help pay off the bills. So does selling off assets you no longer need.

Have you also tried negotiating with your creditors on the terms of payment? Perhaps you can haggle for lower monthly payments?

Have you been able to take a step back and assess your current situation if it just something temporary and that there is a great chance of improvement soon?

Lastly, before you decide to file bankruptcy in Mesa, Arizona, check if you are going to have substantial bills or series of payables coming your way.  You might want to hold off on paying that until you decide whether or not to file bankruptcy since those bills could be discharged through bankruptcy.

Am I Qualified to File for Bankruptcy?

Chapter 7 and Chapter 13 are the two types of bankruptcies for individuals. Both have certain criteria to qualify:

Chapter 7 bankruptcy is more of liquidation and allows the debtor to wipe out debts and get a completely fresh start. A bankruptcy court appoints a trustee who collects all of a debtor’s non-exempt property and sells them to pay back the creditors.  A debtor is allowed to keep what is known as exempt property. Exempt property often includes most retirement accounts, Social Security payments, and a certain amount of home equity. In Mesa, Arizona, Chapter 7 bankruptcy is suitable for income-qualified debtors with little or no assets with which to pay off their debts. The majority of Chapter 7 filers can keep (exempt) everything they own.

 Chapter 13 bankruptcy is also called the wage earner plan because it allows Chapter 13 filers to pay off all or part of their debts in a span of three to five years. Your Chapter 13 bankruptcy lawyer will help you draft a proposed payment plan, which must be approved by the bankruptcy court before your petition can proceed further. The purpose of the plan is to show how you will fully pay all priority claims, such as child support, unpaid wages, and taxes, within three to five years. Unsecured debts like credit card debts and medical bills may be partially paid over time. Chapter 13 bankruptcy works for individuals who make too much money to qualify for Chapter 7 bankruptcy, or for those who would stand to lose property that they prefer to keep.

Can Bankruptcy in Mesa Arizona Wipe Out All Debts?

One of the common misconceptions about bankruptcy is that it wipes out all debts. Unfortunately, some debts are not included in a bankruptcy discharge. These are student loans, child support, and alimony, income taxes, debts to government agencies, debts for personal injury caused by driving while intoxicated and any court fines or penalties. On a positive note, Chapter 7 bankruptcy discharges credit card debt, medical bills, personal loans, lawsuit judgments and obligations from leases or contracts. Chapter 13 bankruptcy wipes out those debts, plus debts from a divorce (except support payments), debts for loans from a retirement plan.

For retirees or senior citizens who have no significant property, bankruptcy may no longer be necessary. If you have no considerable assets such as valuable property or money in the bank, you are already considered judgment proof.  This means, your collectors can no longer demand anything from you. Under the law, no one can go after your assets from social security, pension plans, 401(k) retirement savings, disability benefits, veterans benefits, alimony or support payments.

Do I Need to Work With a Bankruptcy Attorney?

Yes! You do not want to be stuck in a financial quagmire. When life takes a turn for the worse due to unexpected situations such as job loss or sudden illness, it is best to look at the bright side of debt relief that bankruptcy provides. Appreciate what is beyond the short-term effects of bankruptcy on your credit score and welcome the long-term benefits that bankruptcy offers to regain your financial freedom.

Consulting an experienced bankruptcy attorney in Mesa, Arizona is one of the critical first steps when you are considering bankruptcy. You will find that working with a trusted bankruptcy lawyer who will guide and help you throughout the bankruptcy proceedings will also take a load off your shoulders. Call our Mesa bankruptcy attorneys at the Pew Law Center for a free initial assessment of your case.