If you are suffering under the weight of crushing debt, you may see no way out in terms of taking control over your financial future. Fortunately, there are legal options that enable you to address debt, and bankruptcy may be a wise choice for your circumstances. One type of bankruptcy for individuals and married couples is Chapter 7, a process for discharging debt. Because it is a legal matter, you will probably wonder whether you will have to go to court if you file for Chapter 7 bankruptcy in Arizona.
The details vary according to the facts in your case, but most Chapter 7 cases will not involve an actual hearing in court. There are exceptions, and you will need to attend a type of official proceeding during the process. You can feel confident during all stages of the case when you have an Arizona Chapter 7 bankruptcy lawyer to assist. Some background may also help you understand the basics about Chapter 7.
Summary of Chapter 7 Bankruptcy Rules
It is important to first get an overview about bankruptcy laws when considering whether you will have to go to court. With Chapter 7 bankruptcy, you can discharge all qualifying debt if you qualify. Eligibility is based upon your income, so you could file Chapter 7 if:
- Your pay is below the state median income level for a household your size; or,
- You qualify under the Means Test, which looks at your income and monthly expenses for bills.
Under Chapter 7, there is an attempt to pay back creditors through liquidation. This means that the bankruptcy trustee has the power to sell your assets to satisfy debt. However, you can protect your home, vehicle, and other personal items through exemptions. Plus, the bankruptcy trustee may not liquidate assets that would not bring a reasonable profit to pay debt to creditors.
Court Proceedings for Chapter 7 Bankruptcy
The Chapter 7 process starts by filing a petition with the US Bankruptcy Court for the District of Arizona. There is some preparation to do in advance, starting by assessing your eligibility and whether Chapter 7 is the best fit for your financial situation. In addition, you will need to take a credit counseling course within 180 days before filing.
Additional steps in the bankruptcy process may take place in court, though there are activities that take place behind the scenes. Your Arizona Chapter 7 lawyer will assist with essential tasks, such as:
- Organizing your financial documents;
- Preparing the bankruptcy petition and relevant schedules;
- Assisting you to ensure the protections of bankruptcy exemptions;
- Attending the 341 creditors’ meeting, where your presence is required; and,
- Finalizing your case and obtaining a final bankruptcy discharge order from the court.
Facts About the 341 Meeting of Creditors
The meeting of creditors is a proceeding that you will be required to attend in a Chapter 7 case. However, note that the session does not actually take place in a courtroom as part of an official court proceeding. The creditor’s meeting will occur in a designated room at the federal courthouse for the bankruptcy court. The bankruptcy trustee is present, and creditors will have notice of the meeting. The judge for your case will not be at the proceeding.
The 341 creditors’ meeting is a session where creditors will have the opportunity to ask questions about the information you included on your bankruptcy petition. Because they have an interest in liquidation of your assets, creditors will assess what they may be able to recover as losses. They do not have the power to liquidate in the same way as the bankruptcy trustee.
Debts You Can Discharge in Chapter 7 Bankruptcy
Not all debt can be eliminated through Chapter 7, but the process could wipe out most unsecured debt. Examples include credit cards, medical debt, personal loans, and lines of credit. You cannot discharge secured debts through Chapter 7, including your mortgage. The lender can still pursue foreclosure measures for its secured interests, which means you could lose your home in the Chapter 7 process. However, by staying current on your mortgage, you can keep your house.
There are additional debts that you cannot get rid of in Chapter 7, including:
- Alimony;
- Child support;
- Certain court-ordered fees and fines;
- Personal injury lawsuits based upon DUI accidents; and,
- Some types of taxes.
Consult with an Arizona Bankruptcy Attorney About Chapter 7
Though you may not have to go to court when filing Chapter 7 bankruptcy in Arizona, there are still official parts of the process and critical implications for your future. Therefore, working with an experienced bankruptcy law firm is essential. To learn how our team can help, please contact DebtBusters by calling (866) 223-4395 or visiting our website. We can set up a free consultation with an Arizona Chapter 7 attorney at our offices in Scottsdale, AZ.
