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Filing for bankruptcy in Arizona

People in Arizona may benefit from learning more about how to qualify for Chapter 7 bankruptcy. According to federal Bankruptcy Code, certain types of business entities, corporations, partnerships and individuals may qualify as the petitioning debtor. Debtors are required to pass a means test in order to qualify for the relief provided under Chapter 7 status. The selection process is based on calculating whether a presumption of abuse is apparent in the accumulation of debt.

Abuse is presumed if the debtor's monthly 5-year income, minus certain expenses, exceeds $12,475 or 25 percent of the non-priority secured debt, exceeding $7,025. Debtors who are unable to overcome a ruling of presumption of abuse are relegated to Chapter 13 bankruptcy, or the case is dismissed. Applicants have the opportunity to appeal the ruling by showing that additional expenses were due to extenuating circumstances. Debtors can apply for bankruptcy regardless of the amount of debt or whether or not they are solvent.

Debtors are also required to undergo credit counseling within 180 days before filing for Chapter 7 bankruptcy status. In certain emergency situations, the U.S trustee or bank administrator may determine that there were no sufficient credit counseling agencies available to the debtor. Any debt management plans developed during counseling must be submitted to the court. Only individual debtors may qualify to have their debts discharged. The discharge reliefs liability for most debt but does not supersede a lien on a property.

Debtors who have questions or need advice about filing for bankruptcy could benefit from speaking with a lawyer. Bankruptcy lawyers may help debtors with developing alternative strategies for debt consolidation. These lawyers might also be effective with helping debtors prepare for bankruptcy and avoid potential headwinds throughout the process. Many debtors rely on legal counsel to act as an intermediary that tries to ensure adequate protections from creditor harassment and economic garnishments.

Source: US courts, "Liquidation Under the Bankruptcy Code", August 20, 2014

Source: US courts, "Liquidation Under the Bankruptcy Code", August 20, 2014

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  • MCBA | Maricopa County Bar Association
  • State Bar of Arizona
  • ABA | American bar Association | Defending Liberty Pursuing Justice
  • Oregon State bar
  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
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