An automatic stay is a legal provision in a bankruptcy case that orders creditors to halt collection efforts. Upon filing either Chapter 7 or Chapter 13 bankruptcy the court clerk sends notices to your creditors informing them that you have filed for bankruptcy and they are no longer able to contact you. An automatic stay is designed to offer protection from collection efforts while your filing is being reviewed by the bankruptcy court.

The automatic stay will prevent property from being repossessed, stop foreclosure efforts, prevent creditors from suing for debts owed and protect you from wage garnishment. However the automatic stay will not protect you from child support or criminal case collections. Automatic stay protection will not extend to cover any money borrowed after filing for bankruptcy.

Once you have filed for bankruptcy and the automatic stay is in effect, if creditors continue with collection efforts you should notify your attorney immediately.  The length of an automatic stay will vary depending upon the type of bankruptcy that was filed.  If you are not current on your home loan or car loan, secured creditors can file a motion with the court asking that the automatic stay be lifted in order to repossess a vehicle or foreclose on a home.

The law surrounding the use of automatic stays in bankruptcy is complicated and requires specific legal training. If you are considering filing for bankruptcy, contact a qualified attorney to learn your rights and protect your assets. Hastings and Hastings offers complimentary consultations with a dedicated bankruptcy attorney to learn about your legal options prior to filing for bankruptcy. Contact Hastings and Hastings at (800) 975-0080 to schedule a complimentary consultation today.

While the effects of the recession have been felt across the country, the past five years have proven especially difficult for Arizonans as many have been forced in to bankruptcy.  While the road to recovery is long, Arizona is on the right track, having improved its state ranking for declared bankruptcies from 40^th in 2007, to 11^th by September of 2011.

Below is a summary of Chapter 7 and Chapter 13 bankruptcy filings from the previous five years:

 Year

¹ Filings are Cumulative

² For every 1,000

³ Based on per capita filings

2011 marked the first year that Arizona has seen a decrease in bankruptcy filings, a reflection of the slowly improving economic climate. While the recovery is strong, bankruptcy still poses a serious threat for hundreds of Arizonans every year.

If you are considering filing for bankruptcy, it is in your best interest to contact a qualified bankruptcy attorney who understands Arizona Bankruptcy code. Hastings and Hastings offers complimentary consultations with a dedicated bankruptcy attorney to discuss your options.  Contact Hastings and Hastings at (800) 975-0080 to learn about your options prior to filing for bankruptcy.

The downturn in the real estate market and dramatic decrease in home values have become leading causes of homeowners filing for bankruptcy. With the increase of homeowners facing Chapter 7 or 13 bankruptcy an important factor in these proceedings has been the payment of Homeowners Association (HOA) dues.

A Homeowner’s Association is a formal legal entity formed to maintain the appearance of a residential neighborhood, provide security and run neighborhood operations. The HOA’s expenses for these services are paid by the homeowners in the neighborhood, through HOA dues.

Homeowners, living in a neighborhood with HOA dues, who file for bankruptcy, may find themselves liable for HOA dues long after they have walked away from the property. Unlike a mortgage or property taxes, which stay with the property following a bankruptcy, the HOA fees remain the responsibility of the homeowner, even if they are no longer living in the property. These dues will remain the responsibility of the homeowner until the home is legally owned by another party, either a creditor or another individual. Following bankruptcy proceedings, it may take months for a foreclosure or short sale to remove the property from the homeowner’s legal possession, during which time HOA dues may add up considerably.

Fortunately, in the current economic climate, many HOAs are much more willing to negotiate the amounts of post-bankruptcy HOA dues. This negotiation can prevent the homeowner from facing any further lawsuits regarding collections. At Hastings and Hastings clients are encouraged to contact the HOA management company directly to discuss possible renegotiation of HOA dues following bankruptcy proceedings.

Bankruptcy can be a challenging process, especially when faced with the loss of your home. Prior to making any debt elimination decisions, contact a qualified and experienced attorney at Hastings and Hastings at (800) 975-0080. Our bankruptcy attorneys are skilled at guiding people through this difficult time and protecting your assets.

Many people rely on the money from a tax refund. However if you are thinking about filing Chapter 7 Bankruptcy or have already filed for bankruptcy in Arizona your tax refund may become a part of the case. Before depositing the refund check or spending any of the money you should consult with a bankruptcy attorney to review your options. The amount of the refund and the time your taxes are filed will become important during your bankruptcy case.

If you receive a tax refund prior to filing bankruptcy, the money must be spent only on reasonable and necessary living expenses. In Arizona, tax refunds may also be used to pay the fees associated with the bankruptcy, including attorney’s fees and court costs. If you use the refund to purchase an asset, it may become part of the estate for debt repayment once bankruptcy is filed.

While it may sound strange, you should not use your tax refund to pay down debt. Debts that are paid off immediately before filing bankruptcy may be considered preferential and this includes repayment of debts to friends and family. In these cases the trustee may seek to have these funds returned and used to pay down other debts as determined by the court.

If you filed for bankruptcy prior to the arrival of a tax return check, the money must be turned over to the trustee of the bankruptcy estate. Regardless of the amount, the return must be disclosed to avoid facing penalties. Anticipate the return being used to pay off creditors.

To ensure the best outcome of a Chapter 7 bankruptcy, inform your bankruptcy attorney of any tax returns, anticipated or recently received. The attorneys at Hastings and Hastings have locations across Arizona and can determine the best course of action for your bankruptcy case.

Don’t bank where you owe! During a bankruptcy case there are many decisions you can take time to consider before taking action, this is not one of them. If you are currently banking at an institution that you owe money to, move it, immediately. Your bank has access to your accounts. If you also owe this bank money and fall behind on payments, they can, and will, access your account and remove money. This can be done without your approval or knowledge, leaving you with zero’s in your bank accounts. Even if the bank chooses not to withdraw any money, they can freeze your accounts and keep your money tied up for weeks or months.

If you do bank at an institution that is also a creditor (someone you owe money to), it is absolutely imperative that you change banks now, to protect your accounts. You cannot afford to wait and see if it happens to you. If you want to keep your money, move it, before the bank doesn’t give you that choice.

If you are considering bankruptcy, or are behind on payments to your bank for other lines of credit, it is in your best interest to contact an experienced Arizona bankruptcy attorney. The attorneys at Hastings and Hastings will guide you through the bankruptcy process and help you avoid common mistakes such as banking where you owe. If you are considering filing for bankruptcy contact our firm today, toll free at (800) 975-0080 to speak with an experienced Arizona bankruptcy attorney to learn about your options.

As Arizonans continue to be faced with a challenging economic climate, many homeowners whose properties have lost significant value are forced to make difficult decisions about homes that they are upside down in. When a homeowner owes more on a home than it is worth and cannot continue paying on the mortgage there are generally three options available; sell the home in a short sale, let the bank foreclose on the home, or surrender the home after filing for bankruptcy.

If possible, the best option is negotiate with your lender and sell the home through a short sale. However if a second mortgage or home equity line of credit has been taken out on the home the best financial solution may be to surrender the home during bankruptcy.

Second Mortgages & Home Equity Lines of Credit

In Arizona, a second mortgage or line of credit that was not used in the original purchase the home is a called a recourse loan.  A recourse loan is a loan personally backed by the borrower. If the borrower is unable to continue to pay the lender may seize collateral on the loan and require the borrower to pay any remaining balance of the loan. This occurs when the value of the collateral is not enough to cover the full amount of the loan. In cases where homeowners have a first mortgage as well as a recourse loan, following a short sale or foreclosure they may be sued for the remaining balance.

If you are a homeowner with a recourse loan and decide to proceed with a short sale it is imperative to get your lender to agree to waive the balance on the recourse loan to prevent further action. Include this agreement as a provision in the short sale, stating that you will owe nothing after the sale of the home. If this is not agreed to, up front and in writing, you may be required to pay the balance of any recourse loans after the short sale of your home.

Following a short sale and disposition of recourse loans you may still be faced with tax liability. There is a potential for you to incur tax liability on any cancelled debt should the bank agree to cancel or waive its right to pursue you for any deficient balance.  Your lender will issue a form 1099 giving notice to the IRS of any debt cancellation after a short sale or foreclosure.  For tax purposes debt cancellation is considered ordinary income. There are no tax consequences for debts discharged in bankruptcy.

What to do?

If possible, a short sale is the best option when faced with the potential of losing your home as it will result in less damage to your credit and leave you with some financial options. However if you have recourse loans or are facing significant tax consequences due to debt cancellation you may be better off filing for bankruptcy.

When facing the loss of your home or other Arizona bankruptcy problems it is in your best interest to consult a qualified Arizona bankruptcy attorney to guide you through the process and provide you with the best solutions for your unique situation. The Hastings & Hastings team of qualified Arizona bankruptcy attorneys will work with you to develop the best debt resolution scenario. If you are considering filing for bankruptcy contact our firm today, toll free at (800) 975-0080 to speak with an experienced Arizona bankruptcy attorney and learn about your options.

With the decline in housing values the once seldom used bankruptcy technique, known as lien stripping, has taken on a new life. A lien strip allows a Chapter 13 debtor to convert a second or third mortgage or home equity line of credit into an unsecured debt, eliminating monthly payments. A Lien Strip eliminates any lien or mortgage that is not supported by the value of the home; however it will not provide protection or relief from a first mortgage

Say you owe $200,000.00 on your first mortgage and $50,000.00 on a home equity line of credit, but the value of the home is only $150,000.00. In this case the equity line is not supported because the value of the home is less than the first mortgage making the additional line of credit unsupported. The debtor can ask a bankruptcy judge to “strip” the line of credit since the entire value of the home is less than the first mortgage. Should this home be sold the lender on the line of credit would not be paid.

A Lien Strip can never “strip” the first mortgage on your primary residence nor can it “strip” the first mortgage on an investment property. It can only strip second and third mortgages on both primary and investment properties, and home equity lines of credit considering the home value conditions are met.

When considering a lien strip the primary issue that arises is assessing the fair market value of the home. Lein stripping, as well as all bankruptcy proceedings, are complicated processes with many variables. It is always in your best interest to contact a qualified and experienced Arizona bankruptcy attorney rather than trying to manage the process on your own. The attorneys at Hastings and Hastings understand the steps in lien stripping and will work with you to develop the best bankruptcy case for your needs. Contact our offices to schedule a free consultation.

Legally, Do I Need to Hire an Attorney to File Bankruptcy in Arizona?

No, you are not legally required to hire a bankruptcy attorney when filing in Arizona.

Should I Hire an Attorney When Filing for Bankruptcy?

It is in your best interest to consult and hire a bankruptcy attorney.  Bankruptcy laws are complex and it is easy to make costly mistakes if you are not a bankruptcy attorney. For example, if property is not listed correctly on the filing paperwork your case may be dismissed or you might end up losing property which could have been protected.

Another benefit of hiring an attorney is protection from harassment by collection agencies. Your attorney will take creditor calls to help keep the creditors at bay until your bankruptcy is filed.  Once your bankruptcy has been filed you creditors are obligated to adhere to the automatic stay which is an injunction that prevents creditors from calling, collecting and garnishing your wages.

Bankruptcy laws are very intricate and take years to learn. Accurately knowing the laws as well as your rights are essential to a successful bankruptcy petition. During such a stressful financial time do you really want to handle complicated issues on your own?

The Hastings & Hastings team of qualified legal counsel are skilled at guiding people through this difficult time. If you are considering bankruptcy contact our firm today, toll free at (800) 975-0080 to speak with an experienced bankruptcy attorney and learn the best options for you.

There are countless laws and statutes that govern bankruptcy. One of the most challenging aspects is determining which laws apply to your case. People move from state to state and even internationally, and often own property in more than one location. When facing a bankruptcy it is important to understand how both your place of residence the location of property may affect your case.

Federal law regulates many of the bankruptcy policies and procedures regardless of which state you file in. Federal laws provide general regulations for protecting property, but often defer to the individual state laws to determine more specifically which property is protected.

To file for bankruptcy in Arizona you must have lived in the state for at least 91 consecutive days, even if you own property elsewhere. However there are some exceptions to this time period requirement so it is important to speak with a knowledgeable bankruptcy attorney prior to filing.

Once you have filed for bankruptcy the exemption laws which apply to your case must be determined. In order to use the Arizona state exemption laws you must have lived in Arizona for two years prior to filing your bankruptcy. If you have lived in another state within 2 years of filing, you will be required to use either the exemption laws from the state in which you previously resided, or the exemption laws provided by the bankruptcy code itself. If you recently moved to Arizona and wish to file for bankruptcy it is important to consult an Arizona bankruptcy attorney.

Keep in mind that the laws for personal property differ from those that apply to real property (land and structures).  For personal property, such as cars and household items, the bankruptcy laws of the state in which the owner resides governs the property during the bankruptcy.  This means if the owner of a car lives in Arizona, the laws of Arizona will decide whether the car is protected, regardless if the car is located in another state.

For real property the state laws of the property’s physical location apply regardless of where the owner is located. This means if you have real property located in Wisconsin that the bankruptcy laws of Wisconsin apply to that real property and not the bankruptcy laws of Arizona.

Bankruptcy laws are detailed and complex, if you are considering a bankruptcy it is in your best interest to speak with a qualified attorney. Hastings & Hastings has a team of qualified legal counsel to guide you through the bankruptcy process and protect your property. Contact our firm to speak with a Phoenix bankruptcy attorney.

Among the many myths that circulate around bankruptcy and how it can affect your life, many people wonder how this situation can affect their children. It can be very scary to think that if you have to file for bankruptcy, you might have to give up custody of your children to your former spouse that might not be having the same issues.

Rest assured that bankruptcy does not affect child custody rights. Filing for bankruptcy in Arizona will not change your current custody or visitation agreement or order.  Furthermore, any agreement or order regarding child support is unaffected by the bankruptcy.

However, on the other side of the coin, child support is deemed a non-dischargeable debt.  This means that any past due child support obligation cannot be discharged in the bankruptcy and any monies you are obligated to pay for child support remain the same unless a change is made directly by the court. In other words, just because you file for bankruptcy, doesn’t mean that you don’t have to pay for child support.

In either of these scenarios, talking to an attorney is in your absolute best interest. You will probably need legal counsel to help you walk through the maze of bankruptcy and divorce. Call one of our Phoenix attorneys today to see how we can help.