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Can I File Bankruptcy Without My Spouse?

must i file bankruptcy with my spouse?

No, it is possible for a married person to individually file for bankruptcy but there are several key issues to be aware of. A married person filing for bankruptcy individually can be especially problematic if you live in a community property state like Arizona.

What is a Community Property State?

Community property laws make it so that whatever items accumulated during marriage and jointly owned—regardless of how it is titled.

COMMUNITY DEBT

For example, if you are married and your wife opens a credit card—in ONLY her name—takes the new credit cart and goes on a shopping spree and racks up $10,000 in debt, guess what? You just became half owner of that credit card debt! For this reason most couples in Arizona file for bankruptcy jointly.

COMMUNITY ASSETS

A second example is if you were to go down to the Chevy dealership and pay cash for a shiny new Corvette—and title it in only your name—your spouse just became half owner of the new car!

NON-FILING SPOUSE’S NON-EXEMPT ASSETS

Additionally, all assets of the non-filing spouse must also be included a.k.a “listed” in the bankruptcy. Why does this matter? Well your spouse may own non-exempt assets and they may be subject to confiscation by the bankruptcy court. Non-exempt assets can be a wide variety of “things” both tangible and intangible. A non-exempt asset could be a second home, land, time-share, stocks, bonds, certificate of deposits, motorcycle, boat, etc.

Considering bankruptcy and divorce?

Are you married and considering bankruptcy and divorce? Then you may be wondering if it is better to file bankruptcy and then divorce or if it is better to file for divorce and then file for bankruptcy. Generally, we recommend to file bankruptcy jointly and then file for divorce. Why?

One of the benefits to filing for bankruptcy while still married is the cost. The cost for a married to file bankruptcy is the same as it is for a single person. Meaning that if you wait until you are divorced to file bankruptcy, both you will pay separate attorneys, filing fees, bankruptcy classes, etc.

Another benefit to filing bankruptcy while you are still married is that you will have a clean slate once you are divorced. If you file bankruptcy first, then all of your debts will be discharged. Then when you file for divorce there won’t be any debts that the judge has to split between you and your ex-spouse.

Alternatively, if you and your spouse decide to get a divorce and then file for bankruptcy the family court judge will have to split the debts between you two. And what if after the bankruptcy your ex-spouse stops paying on their portion of the debt and doesn’t file for bankruptcy? It just makes a cleaner break if you file bankruptcy and then file for divorce.

If you would like to set up a consultation with an experienced bankruptcy attorney then call us at 480-389-6529 or message us HERE.

* The information provided is informational only, does not constitute legal advice, and will not create an attorney-client or attorney-prospective client relationship. Additionally, the Dunaway Law Group, PLC limits its practice to the State of Arizona.

Statement of Intentions in Bankruptcy

With any chapter 7 bankruptcy petition it is required to file a “Statement of Intentions”. This Statement of Intention(s) requires debtors to declare what they intend to do with property connected to their secured debts.

One option on the Statement of Intentions is to reaffirm the debt. Reaffirming a debt means that you agree with a creditor to make yourself liable for the total amount of the debt regardless of the value of the property.

You must act on your specified intentions within 45 days after your 341 hearing. Section § 521(a)(6) of the bankruptcy code states the consequences of failing to act very clearly:

If the debtor fails to so act within the 45-day period referred to in paragraph (6), the stay under sections § 362(a) is terminated with respect to the personal property of the estate or of the debtor which is affected, such property shall no longer be property of the estate, and the creditor may take whatever action as to such property as is permitted by applicable non-bankruptcy law…

If you indicate that you want to reaffirm your debt on your Statement of Intentions, but then never enter into a reaffirmation agreement within 45 days of your creditor’s hearing, the automatic stay is lifted and creditors are free to do as they please within the law. So bottom line: either enter the reaffirmation agreement after seriously considering the potential consequences, or amend your statement of intentions in a way that best serves your interests.

If you need help from an Arizona bankruptcy attorney then email us at clint@dunawaylg.com.

What is a 2004 Examination

Rule 2004 of the Federal Rules of Bankruptcy allows any “interested person” to depose someone who filed bankruptcy. Additionally, the bankruptcy filer must producer documents on matters related to your bankruptcy. The 2004 Exam can cover a broad range of issues, including:

Your actions, conduct or property, your debts and financial condition, any issue that relates to your bankruptcy assets or Chapter 13 plan, and any matter that affects your right to a discharge.

A 2004 Exam is not like a 341 meeting of creditors. It is more formal and involves a more detailed investigation of issues related to your bankruptcy. It is similar to a deposition, sometimes requiring the production of documents. Additionally, 2004 Exams last much longer than a 341 hearing, often lasting several hours.

Rule 2004 Exams are typically held in a law office and not the bankruptcy courthouse. If you are looking for an Arizona bankruptcy then call us at 480-389-6529 or message us HERE.

Objections to Bankruptcy Discharge

Can an interested party object to your discharge?

Bankruptcy Discharge of Debt:

What is a bankruptcy discharge of debt? A discharge is a release of a debtor from personal liability for certain dischargeable debts. A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor or the debtor’s property to collect the debts. The discharge also prohibits creditors from communicating with the debtor in any form in an attempt to collect on the debt. This includes communication via texts, email, phone calls, letters or person contact.

In a typical Chapter 7 bankruptcy case, a discharge order is entered by the bankruptcy court roughly 70 to 90 days after the § 341 hearing. However, just because a discharge order has been entered doesn’t mean that it can’t be objected to by your Trustee, the United States Trustee, or a Creditor. An Objection to a discharge is very usual, however, there are several common reasons a party will object.

Reasons for Objecting to Discharge

The most common reason for the objection of a chapter 7 bankruptcy discharge is for “fraud or misrepresentation of material facts”. Trustee’s and their staff are very skilled and masters at reading paper trails. They can spot a liar from a mile away. So my advice? Don’t lie! Not only can you lose your discharge but concealing assets in a bankruptcy is a felony and punishable by up to 5 years in prison!

Another common reason a Trustee will revoke a discharge is for failure to provide additional documentation. A Trustee may ask for additional bank statements, pay stubs, tax returns or documentation surrounding a particular transaction. So just because you’ve received your discharge doesn’t mean you can ignore your Trustee. Give him or her exactly what they ask for exactly when they ask for it. The bankruptcy court’s main form of communication is through the mail. So if you move during your bankruptcy let your attorney know so he can file a change of address with the court. Otherwise the Trustee may be sending you letters requesting additional documents and you will not be able to comply.

If you need help from an Arizona bankruptcy attorney then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

* These blog posts are not intended, nor shall they be deemed to render legal advice. Reading these blog post does not create an attorney-client relationship, nor shall it impose an obligation on the part of the law firm to respond to further inquiry.

Defending Credit Card Lawsuits

Reasons to Defend a Consumer Collection Complaint

The distressed debt buying industry is a multi-billion dollar industry in which debt collectors purchase literally millions of old debts for pennies on the dollar that the original creditors have written off. The debt buyers receive minimal information on each account, and certainly do not receive the contract or copies of any communications in which the consumer might have disputed the amount owed. In addition, after having unsuccessfully attempted to collect the accounts, these debt buyers regularly resell repackaged portfolios of uncollectable debts to other debt buyers whose connection to the original creditor—and to original documentation and proof—is even more attenuated.

Statute of Limitations

Because debt buyers purchase very old debt, the statute of limitations is an important consumer defense. Debt buyers who cannot produce the written contract often bring the case on an account stated or other claim not based upon a written contract. In many states, such causes of action have a shorter limitations period than a claim based upon a written contract. Credit card collection cases, even when brought on a contract theory, may have to be brought within a shorter limitations period applying to non-written contracts. Moreover, the action may have to be brought within a shorter limitations period found in the law of some other state than the forum state.

Because the debts are old, the consumer often will have moved after the credit account was closed, and the debt buyer must first try to locate the consumer’s present residence. Debt buyers may try to serve the consumer at the wrong address or even sue the wrong consumer. Debt buyers rely on credit reports to locate the consumer, but the credit reports themselves are filled with errors, including incorrectly merged information that mixes the credit reports of two or more people with similar names and other identifying information, and that results in the collector then suing the wrong person.

Quite often, the debt buyer does not have sufficient evidence to prove its case, relies on business records that are not properly introduced into evidence, or tries to prove its case based on clearly defective affidavits. Debt buyers frequently cannot even prove that they own the debt they are collecting and they may not have access to better evidence or may not want to expend the resources acquiring that evidence, so they try to win cases by default without an ability to prove that money is owed.

Creditors also may commit billing errors which may be the reason the creditor stopped collection efforts—the consumer did not owe all or part of the money claimed. When these debts are sold, the debt buyer does not receive or retain this information concerning consumer defenses. The consumer can then defend the collection action based upon the original dispute the consumer had with the creditor.

Too often debt buyers will bring actions against spouses and other parties knowing these defendants do not owe the debt, but hoping to either pressure them into payment or obtain a default judgment against them. Examples includes suits against authorized user not liable on the account and against family members of a deceased debtor. The debt buying business model is to cast a wide net without consideration as to whether the consumer owes the money, and see what money is recovered.

Reason #1: Prevailing Can Improve Your Credit Rating

If your case is dismissed, the consumer can take action to ensure that credit reports indicate that the current balance of that debt is now reported as zero. If the judge also rules that the consumer never owed the money (for example, because the collector sued the wrong consumer), then the consumer can seek to delete information in their credit report that the debt had been in default in the past. In addition, the attorney can help the consumer dispute inaccurate information in a credit report, and the consumer has a cause of action under the Fair Credit Reporting Act (FCRA) if that information is not properly investigated and corrected.

Reason #3: Alleviate Stress

Being sued is an extremely upsetting and difficult experience. You probably have never been sued in your entire life and may be feeling distressed over the suit, even for a relatively minor debt. That distress can place strain on your intrafamily relationships, work, and health. Medical problems can be accentuated under stress. You need legal representation to explain what is happening and how to depend your interests.

Reason #4: Protection of Your Assets and Income

A judgment against you can have serious financial consequences. Your assets and income may be at risk. Bank accounts, even those containing certain exempt funds, may be frozen for days or even weeks, and may eventually be seized unless exemptions are properly pursued. Your wages can be garnished. Cars and other property can be seized. Defeating this collection action eliminates those threats. Even if a default judgment has already been entered, an attorney can assist the consumer either in setting aside the default judgment or in minimizing the impact of these creditor remedies.

Often we discover that the consumer has separate affirmative actions under the FDCPA, FCRA, and other federal and state statutes, resulting in significant actual and statutory damages and attorney fees, either on an individual or class-wide basis. Investigating the facts relating to the collection action will often uncover various systematic law violations.

Reason #6: Debt Collector May Have to Pay the Consumer’s Attorney Fees

Often Debtors wonder how they may be able to pay for an attorney. However, there are a several ways that we may be able to recover our legal fees from the debt collector. Fees may be recovered by statute in about twenty states. Fees are also available to the consumer for prevailing on certain counterclaims, or as a result of the collector’s bringing an action without adequate facts.

Reason #6: Stopping Systematic Abuse of the Court System

Debt buyers today are using the courts to engage in wholesale litigation abuse. They sue huge numbers of consumers with no real knowledge of whether the consumer owes the debt or whether the statute of limitations has run. Debt buyers sue with little or no evidence to prove that the consumer owes the money, that the debt buyer in fact owns the debt, or even that they are suing the right consumer. This litigation strategy is effective because very few consumers obtain legal representation, and the overwhelming majority of consumer defendants default in the collection action.

When the consumer contests an action, the collector utilizes various techniques to win without having to produce admissible evidence to prove its claim. The collector may take advantage of the unrepresented consumer by working out a stipulated judgment without disclosing that the collector cannot prove the debt. Another technique is to send the consumer a long list of requests for admission to which the consumer does not timely respond. The requests are deemed admitted, and the collector needs no other evidence to prove its case. Alternatively, collectors seek summary judgment on junk evidence—attachments that are not attached, affidavits from debt buyer employees (or even non-employees) who state conclusory facts about which the affiant has no personal knowledge, or about pretend business records created years after the fact.

If you have outstanding debts or judgments then let an Arizona bankruptcy attorney help you come up with a solution. Contact the Dunaway Law Group at 480-389-6529 or message us HERE.