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Chapter 7 Bankruptcy-Defeat the Debt
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Chapter 7 Info
If you are buried in credit card, medical bills, pay day loans, older tax debts, judgments for debts, most lines of credit and/or any other unsecured debts, Chapter 7 Bankruptcy may be the right option for you. Chapter 7 Bankruptcy is also a good option to stop foreclosures, repossessions, pending lawsuits and garnishments. An Automatic Stay goes into effect once your case if filed. Some debts in a Chapter 7 Bankruptcy are Non-Dischargeable meaning they remain after the filing of a Chapter 7 Bankruptcy. These debts include child support, recent tax debts and most student loans.
Eligibility
To qualify for a Chapter 7 Bankruptcy debtors must pass the Chapter 7 Means Test. Initially, if your income is below the Arizona average for your household size, you qualify. Your Chapter 7 Bankruptcy Attorney Kaveh Mostafavi will take time to thoroughly analyze your household income. Kaveh will ask for your last 6 months of income to determine if you qualify.
If your income is above the Arizona average for your household size we must complete the Chapter 7 Means Test. This formula calculates the household’s Disposable Monthly Income to determine if debtor can repay unsecured debts. Your average income is calculated for the 6 months prior to filing and monthly household expenses are subtracted from that income. If your household’s Disposable Monthly Income is below $100 per month you pass the Chapter 7 Mean’s Test and qualify for a Chapter 7 Bankruptcy. If your household’s Disposable Monthly Income is over $166 per month there is a Presumption of “Abuse”. This means that the household yields enough Disposable Monthly Income each month to pay back unsecured creditors. If your Disposable Monthly Income is somewhere between $100 and $166 per month we must determine if at least 25% of your unsecured debt would be paid. If at least 25% of unsecured debt would not be paid, you qualify for the Chapter 7 Bankruptcy. If 25% or more of your unsecured debt would be paid, there is a Presumption of “Abuse” and you would not qualify for a Chapter 7 Bankruptcy.
That is a lot of confusing information. Your Chapter 7 Bankruptcy Attorney Kaveh Mostafavi understands this concept is not easy to grasp. He will take time with you to explain each aspect of the Chapter 7 Mean’s Test to ensure you are well-informed.
Arizona Average Income For Household Size
Family Size |
1 |
2 |
3 |
4 |
Each Additional Family Member |
Household Income |
$43,397 |
$57,620 |
$62,002 |
$71,867 |
Add $6,900 per person |
These amounts reflect the average incomes in Arizona. To qualify for a Chapter 7 bankruptcy under the Chapter 7 “Means Test”, debtors must earn an annual income below these amounts for their household size. Debtor’s annual income is determined by doubling the income generated in the 6 months prior to filing. If debtor’s earned income is below the Arizona average the “presumption of abuse” does not arise. In layman’s terms, the debtor is not presumed to earn enough income to support repayment of their debt.
Chapter 7 Bankruptcy Process
Once we determine you qualify for a Chapter 7 Bankruptcy what happens? You must provide your Chapter 7 Bankruptcy Attorney Kaveh Mostafavi the information he needs to complete your Chapter 7 Bankruptcy petitions, schedules and statements. Kaveh will give you a “List of Documents Needed” and quote you the “FEES”. Once you submit the documents and fees Kaveh and his team will complete your Chapter 7 Bankruptcy Filing. In the meantime, you are required to complete the mandatory pre-filing Credit Counseling Briefing. We sign you up for the class online or telephonically. You will be given a login and password to take the class. Each debtor will need to complete the class, at which point The Law Office of Kaveh Mostafavi will receive your Certificate of Completion and file it with the Bankruptcy Court. If your income is over the Arizona average you may still qualify for a Ch. 7. Kaveh will discuss this with you in depth.
Once we have completed your Chapter 7 Bankruptcy petitions, schedules and statements you will review the documents and sign them. We must ensure that on the day that we file you only have $150(single debtor) or $300(joint debtor) in all your bank accounts. Kaveh will go over all the “ARIZONA BANKRUPTCY EXEMPTIONS” with you to make sure your assets are protected.
After we file your Chapter 7 Bankruptcy you will receive 2 letters so please make sure to check your mail regularly. These will arrive approximately 1-2 weeks after filing. One letter will come from the Bankruptcy Court notifying you of the time and date of your 341 Meeting of Creditors. The second letter will be a request for documents from the Chapter 7 Bankruptcy Trustee. Please adhere to all requests and recommendations of the Chapter 7 Trustee before your hearing date.
30-45 days after the Chapter 7 Bankruptcy file date you will attend your 341 Meeting of Creditors with Kaveh. Please show up on the day on your notice approximately 15 minutes early. Kaveh will meet you at the courthouse to prepare you. Please ensure you have a valid identification card and your Social Security card.
After your 341 Meeting of Creditors you will need to complete the second mandatory Debtor Education course online or telephonically.
If no issues arise you will receive your discharge approximately 60-90 days after the date of your 341 Meeting of Creditors. The discharge letter will come in the mail so please make sure to update any changes of address.
What happens to my assets in a Chapter 7 Bankruptcy?
In Arizona, Chapter 7 Bankruptcy Debtors are given “ARIZONA EXEMPTIONS” for their personal property. For example, each debtor is given a $5,000 exemption for a vehicle. This means that as long as your vehicle has $5,000 or less of equity you can keep it. The Homestead Exemption is $150,000.
You have 3 options with your car loan in a Chapter 7 Bankruptcy, depending on what you want to do with it. You can:
- Reaffirm the note: Contract with creditor to keep paying the note. These agreements survive the bankruptcy. The creditor will not repossess the vehicle, however if you fall behind on payments they may take the vehicle, auction it off and you would still be liable for the resulting “deficiency”. These agreements are voluntary so Kaveh will carefully analyze them to ensure his client will be able to meet the obligations.
- Redeem the vehicle: In a Chapter 7 bankruptcy you have the option of redeeming the vehicle at its Fair Market Value. If you owe much more on the vehicle than it is actually worth you can pay the creditor a lump sum payment. This payment will be for the Fair Market Value of the vehicle rather than what you actually owe. Ask Kaveh if this is a good option for you.
- Surrender the vehicle: If the debt obligations of the vehicle are unmanageable you can let go of the vehicle in the Chapter 7 Bankruptcy. You will not be liable for any deficiencies resulting from the repossession and subsequent auction.
Your Chapter 7 Bankruptcy Attorney Kaveh Mostafavi will take time and fully explain all the “ARIZONA EXEMPTIONS”, to determine if and to what extent your personal assets are protected by the Bankruptcy Code.
When not to file a Chapter 7 Bankruptcy
Certain conditions affect your ability to achieve the desired benefit from a Chapter 7 Bankruptcy discharge. These include:
- Own luxury items you do not want to lose;
- Most of your debts are non-dischargeable;
- Joint ownership of property;
- You are entitled to moneys in the future.
At you initial consultation it is imperative that you inform your Chapter 7 Bankruptcy Attorney Kaveh Mostafavi of any of these conditions. He will discuss the effects on your filing and whether a Chapter 13 would be more beneficial.
Chapter 7 Bankruptcy Attorney Kaveh Mostafavi has filed hundreds of Chapter 7 Bankruptcies and represented hundreds of Chapter 7 Bankruptcy clients in 341 Meeting of Creditors. He has successfully worked with Chapter 7 Bankruptcy Trustee’s addressing complications that affect his client’s Chapter 7 Bankruptcies. Kaveh strives to ensure his clients receive the maximum benefit the law allows. Furthermore, he wants his clients to be confident that Kaveh represents them during the pendency of their Chapter 7 Bankruptcy with the utmost candor, diligence and professionalism.
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