FAQ Chapter 7 Bankruptcy

What is a bankruptcy?

Bankruptcy is a way for people or businesses who owe more money than they can pay right now, (a “debtor”), to either work out a plan to repay the money over time, under Chapter 11, 12 or 13, or for most of the bills to be wiped out (“discharged”), as in a chapter 7 case. While the debtor is either working out the plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor.

When the bankruptcy petition is stamped “relief ordered” upon filing, you are immediately protected from your creditors. What chapter you choose to file under, what bills can be eliminated, how long payments can be stretched out, and what possessions you can keep, and the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure control other details. These are federal laws, which means they apply all over the United States. The code and Rules are found in Title 11 of the United States Code.

What do I do when creditors call?

Once you have retained my office by paying your retainer fee, you may tell all of your creditors, “I have hired the Dunaway Law Group to represent me in a bankruptcy filing. They told me to tell you to direct all further communication to their office. His phone number is 480-389-6529.” Once you tell a collection agency that you have a lawyer they may not call you any more. If they call you back after you have told them you have a lawyer, make sure to get a name and phone number of the person calling you and then contact our office.

Yes, the automatic stay prevents bill collectors from taking any action to collect debts. Once you have retained our office to file your bankruptcy then direct all creditors to our office. You can tell them, “I have hired the Dunaway Law Group to represent me in a bankruptcy filing. They told me to tell you to direct all further communication to their office. Their phone number is 480-389-6529”.

The creditors will call our office and verify that you are a client. Once they have verified that you are a client then they will stop calling you.

What happens if I file a chapter 7 bankruptcy?

A chapter 7 bankruptcy begins by filing a “petition” and schedules with the bankruptcy court. The person filing a chapter 7 is referred to as the “debtor”. The debtor is required to disclose to the court all of his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.

Who can file a bankruptcy?

Any person, partnership, corporation or business trust may file a bankruptcy. If the person or entity that owes the money, referred to as the debtor, starts the bankruptcy, it is called a voluntary bankruptcy. The people or entities that are owed money, referred to as the creditors, can also file a petition against a person or an entity who owes them money, and that is called an involuntary bankruptcy.

Voluntary cases can be filed under chapters 7, 9, 11, 12 and 13. Certain types of entities, such as banks and insurance companies, may not be eligible to file bankruptcy, however, almost all other entities can file a bankruptcy.

A business that is NOT a partnership, corporation or business trust, cannot file a separate bankruptcy on its own. Those assets and debts would be included in the personal bankruptcy of the owner(s).

What is a joint petition?

A joint petition is the filing of a single petition by an individual and the individual’s spouse. Only people who are married on the date they file may file a joint petition. Unmarried persons, corporations and partnerships must each file a separate case. If you are an individual and have a business that is not a partnership, corporation or business trust, you should list the business as a “dba” (doing business as) on your petition. However, yours will not be considered a joint petition because the business is not an independently recognized legal entity.

How long after filing will the creditors stop calling?

Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court will mail a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks.

Creditors will also stop calling if you inform them that you filed the bankruptcy petition and supply them with the “docket number” from your case. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees.

Who notifies the creditors and bill collectors?

After the bankruptcy petition is filed, the bankruptcy court mails a notice to all the creditors listed in the schedules. This usually takes a couple of weeks.

Will my employer and landlord find out about my bankruptcy?

Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, it will not know you filed a bankruptcy petition. If your employer or landlord is a creditor is must be listed as a creditor on the schedules and receive notice of the bankruptcy proceeding.

Can my employer fire me for filing bankruptcy?

No. 11 U.S.C. §525 prohibits government units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.

What is an Adversary Proceeding?

An Adversary proceeding in bankruptcy is a lawsuit that takes place within a bankruptcy. The adversary proceeding begins by when a complaint is filed with the bankruptcy court. A trial then takes place within the context of the bankruptcy. Typically an adversary proceeding is filed by a creditor; however, your trustee may also file one on behalf of the bankruptcy estate.


When a creditor files an adversary proceeding, it is typically because the creditor believes that a specific debt owed to them should not be discharged in the bankruptcy. The creditor may argue that the debt falls within one of the exceptions to discharge, such as a debt created through fraud, willful or malicious injury, or a personal injury caused by drunk driving.


Additionally, a trustee may file an adversary proceeding if he or she believes that you intentionally tried to hide assets. The trustee would then liquidate any non-exempt assets to collect money back from a creditor who received funds or property from a debtor. A trustee may also file an adversary proceeding to undo a transfer of real property. The U.S. Trustee may file an adversarial proceeding to try and force a debtor to move from Chapter 7 to Chapter 13; if he or she believes that the filing of the bankruptcy petition was done in bad faith.

Adversary proceedings are very rare, they are filed in less than 1% of all bankruptcy filings. So unless you are trying to commit some type of fraud the chances of an adversary proceeding being filed in your case are very small. Typically, prior to even filing the bankruptcy we have a good idea if an adversary proceeding is going to be filed.

Does the spouse of a married person also have to file bankruptcy?

No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouse have joint debt, the fact that one spouse discharged the debt may show on the other spouses credit report.

Can I keep my credit cards?

Typically no, however, under some circumstances you may be able to keep a credit card if the creditor agrees. There are many factors that must be considered. Some of those include the credit card balance at the time of the bankruptcy, what the credit card company is willing to do and your ability to pay the present and future credit card debt.

Will I have to go to court?

About 30 to 40 days after filing the bankruptcy petition, you will have to attend a “341 Hearing” at the bankruptcy courthouse. This hearing is called the Meeting of Creditors. the trustee is not a judge. Trustees are appointed to oversee bankruptcy cases. At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters.

Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not ask questions at the Meeting of Creditors. After the initial meeting you normally do not need to return to court.

What should I do to prepare for filing bankruptcy?

If you intend to file bankruptcy you should stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt is not dischargeable.

In addition, three specific circumstances are worth mentioning: (a) certain luxury purchases over $1225 within 60 days of the bankruptcy filing are presumed nondischargeable; (b) cash advances aggregating $1225 within 60 days of the bankruptcy filing are presumed nondischargeable; and (c) debts involving materially false financial statements are nondischargeable under certain circumstances.

Don’t transfer your assets to friends, family and business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.

Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away.

Do I have to disclose all of my assets?

You must disclose all of your assets. If you knowingly and fraudulently conceal an asset from the court you have committed a felony and can be fined up to $5,000, imprisoned for up to five years, or both. In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.

What kinds of debts can I wipe out?

Generally, if you go through bankruptcy your goal is to wipe out your unsecured debts. Your unsecured debts are typically major credit cards, department store cards, personal loans or lines of credit from banks, medical bills, or any other money you may owe someone that is not secured.

Can I keep my house and my car?

Yes. Most people filing bankruptcy keep their homes, their cars, and all of the property. However, this assumes you continue making your payments!

Can I get rid of taxes in bankruptcy?

You may have heard that you cannot wipe out taxes in bankruptcy. THAT IS NOT ALWAYS TRUE! Under certain conditions you may be able to wipe out taxes in bankruptcy.

Can I get rid of student loans in bankruptcy?

You may have heard that student loans cannot be wiped out in bankruptcy. THAT IS NOT ALWAYS TRUE! Under certain conditions you may be able to wipe out student loans in bankruptcy, although it is very difficult to do so.

How long does BANKRUPTCY TAKE and who will be notified?

Typically, you can expect your case to take about three to four months from the day you file your papers (known as the bankruptcy petition) until the day the court actually wipes out your debts. Notices will only be sent to those you have listed on your bankruptcy petition.

What if I have used my credit cards just before bankruptcy?

If you intentionally run up your credit cards in hopes of wiping them out in bankruptcy, you have committed fraud. If you reasonably purchased necessities or needed to support yourself, that is not fraud.

What affect will bankruptcy have on my credit?

Bankruptcy may appear on a credit report for up to 10 years. But that doesn’t mean you can’t get credit for 10 years.

Can I rebuild my credit after bankruptcy?

Yes. You may have heard about people who have filed bankruptcy two or three times. Maybe they are the best proof that people can actually get credit after bankruptcy. If they weren’t able to get credit after their first bankruptcy, they would not have had to file bankruptcy again.

Basic Procedure

Upon filing, you will be required to file a sworn list of creditors, a schedule of assets and liabilities, a list of exempt property, a schedule of current income and expenditures, a statement of your financial affairs and a statement of intent regarding consumer debts secured by property of the estate. You will also be required to surrender to the trustee all property of the estate. 11 U.S.C. §521. The order of relief is granted when you file. What this means, among other things, is that an automatic stay is triggered, prohibiting creditors from pursuing you or your property outside of the bankruptcy proceeding.

The clerk of the court will mail notice of the bankruptcy to your creditors.

An objection to your receiving a general discharge of all your debts must be filed by the Trustee or a creditor within 60 days following the first date set for the creditors meeting. If no objections are filed, and if no motion to dismiss is pending, the court will ordinarily grant a discharge upon expiration of the 60 day period. Bankruptcy Rules 4004 and 1017; 11 U.S.C. §727.

A creditor may object to the dischargeability of a particular debt at any time if the debt: (1) is for a tax or customs duty; (2) is not listed in the schedules so that a creditor could file a proof of claim; (3) is related to alimony or child support; (4) is a government fine or penalty; or (5) is a government insured student loan.  Any student loans guaranteed or insured by the government or a non-profit institution will not be dischargeable. This means that you will continue to be liable for the payment even if you file bankruptcy.

A creditor may object to the dischargeability of a particular debt only within 60 days of the first date set for the meeting of creditors, if the debt: (1) is a consumer debt incurred close to filing; is a result of fraud; or (3) is a result of a willful and malicious injury to a person or property of another. Bankruptcy Rule 4007; 11 U.S.C. § 523.


A debtor’s goal in any chapter 7 bankruptcy is to have as many debts discharged as possible. The general rule is that all debts created before the bankruptcy filing are discharged. Discharge destroys any personal liability you may have on a claim or debt.

There are ten categories of debt excluded from discharge under §523. These fall into two areas: debts that are not dischargeable due to the wrongful conduct of the debtor and debts that are not dischargeable due to public policy.

The debts not dischargeable due to the debtor’s misconduct include those created by intentional torts, fraud, larceny, embezzlement, fiduciary violations, and drunken driving. The debts not dischargeable due to public policy include alimony and child support, taxes and customs duties, governmental fines, penalties and forfeitures, educational loans, unscheduled debts and certain debts surviving a prior bankruptcy case. A claim must fall within one of these exceptions to be found non-dischargeable.

To prevail on a fraud exception, the creditor would need to show that there was a false, material representation of fact made by the debtor that the debtor knew was false at the time he made it, made with the intention of deceiving the creditor. Some courts have held that when a credit card is used, the debtor impliedly represents that the debtor has the ability and intention to pay for the goods and services charged. Those courts have therefore found that some credit card debt is non-dischargeable under the fraud exception.

This is not the only potential problem that can arise with credit card or similar debt. Section 523 also provides that there is a presumption that certain consumer debt created right before filing a chapter 7 is non-dischargeable.  The presumption of non-dischargeability will apply if the debt is consumer debt for so-called “luxury goods or services” incurred within 40 days before the filing, owing to a single creditor aggregating more than $500.00. Further, the presumption of non-dischargeability will apply if there are cash advances made by a creditor for more than $1,000 that are extensions of consumer credit under an open end credit plan within 20 days of filing bankruptcy.

Any credit based upon false financial statements is subject to exception from discharge. Statements made in the financial statements have to be materially false with the intent to deceive the creditor to fall within this exception. Note that a credit application should not qualify as a “financial statement” if it does not require a disclosure of debts.

It is crucial for the debtor to include all creditors in his schedules filed with the Court. If a debtor knows of the creditor and does not schedule him, the creditor is denied participation in any distribution; to protect the creditor from this type of problem, the code provides that unscheduled claims may be non-dischargeable.

Debts created by willful and malicious injury will also be excepted from discharge. These types of claims arise from intentional actions by the debtor, done with malice that causes damage.  It is important to note that ordinary negligence claims are dischargeable. A plaintiff with a personal injury claim would need to allege significantly more than simple negligence to have his or her claim deemed non-dischargeable in the Bankruptcy Court.

Cash on Hand – What does that meaN?

Cash on hand is anything in a bank account, safety deposit box, your wallet, under the mattress, etc. Money that is “pending” in your bank account is considered to still be in the account! So just because you have written checks from your account, unless they have cleared your account it is still considered to be in your account and “cash on hand”!

If you need help from an experienced Arizona attorney, then contact the Dunaway Law Group at 480-702-1608 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 states of Arizona and New York.

Automatic Stay of Bankruptcy

understanding the automatic stay

One essential concept within bankruptcy law is the automatic stay, a crucial provision that offers immediate relief and protection to debtors facing financial distress.

The automatic stay is one of the biggest benefits to someone filing for bankruptcy. Once a bankruptcy is filed, the automatic stay goes into effect, halting all collection efforts, lawsuits, foreclosures, repossessions, evictions and creditor contact. The reprieve from creditor harassment provides debtors breathing space and a chance to reorganize and begin a new financial life without being subjected to aggressive collection efforts.

effects of the automatic stay of bankruptcy

Protection from Collection Activities. The automatic stay prevents creditors from pursuing legal actions to recover their debts. This includes phone calls, letters, lawsuits, wage garnishments, and even utility disconnections.

Once the bankruptcy is filed then creditors cannot repossess vehicles, foreclose on real estate, telephone debtors, mail collection letters, file lawsuits or continue lawsuits already in progress, wage or bank garnishments, recording any liens or judgments, or anything else that attempts to collect a debt or improve a creditor’s position.

Preservation of Assets: The stay of bankruptcy safeguards a debtor’s assets from being liquidated by creditors while the bankruptcy process is underway. For example, it will stop the repossession of vehicles and the foreclosure of homes.

The Automatic Stay of Bankruptcy can also be described as an injunction that immediately stops lawsuits, foreclosure, garnishments, and most collection activity against the debtor the moment a bankruptcy petition is filed. This automatic stay is the equivalent to a restraining order that prevents creditors from taking certain collection actions against a debtor.

penalties for violating the automatic stay

Creditors must and do respect the automatic stay, as any violations can lead to serious consequences. The bankruptcy court takes violations seriously to maintain the integrity of the process and ensure that debtors receive the full benefits of bankruptcy protection. The following is a list of potential penalties creditors may face if they violate the automatic stay.

Damages Against Creditors. Creditors who willfully violate the automatic stay can be liable for actual damages, which may include financial losses suffered by the debtor due to the violation.

Injunctions and Orders. The bankruptcy court can issue injunctions and orders to prevent further violations, including restraining orders against harassing collection actions.

The Automatic Stay is Not Absolute

The automatic stay is not absolute and creditors are given the right to file a Motion with the bankruptcy court requesting the stay to be “lifted”. By having the stay lifted creditors are free to pursue their collection activities.

For example, an auto finance company can file a Motion to Lift the Automatic Stay if a debtor is delinquent on their car your payments. In those cases, the creditor will be granted its relief and will be permitted to recover the collateral despite the bankruptcy. So if a debtor does not continue to make the car payment after the bankruptcy has been filed then you may have your vehicle repossessed.

Also, the automatic stay will only provide temporary relief if you are not making your mortgage payments. As far as general creditors and unsecured creditors, the automatic stay will continue until the case is discharged.

municipalities and money owed

Additionally, the automatic stay does not prevent Federal, State or local authorities from pursuing criminal action. Furthermore, lawsuits involving child support or spousal support (alimony) are not stayed and cannot be discharged in bankruptcy.

If you need help from an Arizona Bankruptcy Attorney then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

The Dunaway Law Group provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice and does not create a lawyer-client or attorney-prospective client relationship. Readers should not act upon this information without seeking advice from professional advisers. This Firm limits its practice to the states of Arizona and New York.

Debt Collection

There is a multi-billion dollar debt-buying industry in this country. Debt collectors purchase literally hundreds of thousands of old debts for pennies on the dollar of what the original creditors have written off. These debt buyers/collectors receive minimal information on each account, and then begin attempting to collect.

Their business model is to cast a wide net without properly verifying whether the consumer owes the money, or even that they are suing the right consumer, and see what money is recovered. This litigation strategy is effective because very few consumers obtain legal representation, and the overwhelming majority of consumer defendants default in the collection action. Quite often, debt buyers do not have sufficient evidence to prove its case, but rely on junk evidence improperly admitted.

Many Arizonans do not answer the debt buyer’s complaint (lawsuit) and guess what? The debt collectors win by default, this is called a “Default Judgment”! This is what they are hoping happens—that you don’t seek legal representation—and that they will win without having to prove their case. In fact, many debt collectors will not even pursue a case once they know a defendant has obtained legal representation.

Reason #1: Because You May Not Owe This Debt

Debt buyers rely on credit reports to locate consumers, but the credit reports themselves are filled with errors, including “mismerged” information that mixes the credit reports of two or more people with similar names and other identifying information that results in the collector suing the wrong person. Also, debt collectors 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 include, suits against authorized user not liable on the account and against family members of a deceased debtor. Additionally, the statute of limitations may make it possible for you to avoid a judgment.

Reason #2: Protect Your Assets and Income

A judgment against you can have serious financial consequences. Once a judgment is entered against you, your assets and income may be at risk. Your wages could be garnished. Once a debt collector obtains a Writ of Garnishment they can begin taking 10% of your gross paycheck–directly from your paycheck.

Additionally, bank accounts, may be frozen for days or even weeks, and may eventually be seized unless exemptions are properly pursued. Defeating this collection action eliminates those threats. Even if a default judgment has already been entered, contact us immediately because we may succeed in setting aside the default judgment or in minimizing the impact of these creditor remedies.

Reason #3: You May Have your own Claims

Often we discover that our clients have separate affirmative actions under the Fair Debt Collections Practice Act (FDCPA), Fair Credit Reporting Act (FCRA), and other federal and Arizona statutes, resulting in significant actual and statutory damages and attorney fees. Investigating the facts relating to your specific situation will often uncover various creditor violations.

Reason #4: Debt Collector May Have to Pay Your Attorney’s Fees

Often Arizona 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 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 #5: Prevailing in the Collection Action Can Improve Your Credit Rating

If your case is dismissed, you can take action to ensure that credit reports indicate that the current balance of that debt is now reported as zero. If the Arizona judge also rules that you never owed the money (for example, because the collector sued the wrong person), then you can seek to delete information showing that you had been in default in the past. Additionally, you may have a cause of action under the Fair Credit Reporting Act (FCRA) if that information is not properly corrected.

Furthermore, in addition to fighting debt collectors, the Dunaway Law Group, assists Arizonans in seeking debt relief through bankruptcy. So if your debts have grown to an unmanageable level let’s see what we can do to help.

Time is not on your side, if you do nothing, a judgment will be entered against you. Arizona Consumers fare much better in court when they obtain legal representation. Know your rights, know your options, and have someone in your corner to fight for you. Contact the Dunaway Law Group at 480-702-1608 or by messaging us HERE, we may be able to help.

The Dunaway Law Group provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice and does not create a lawyer-client or attorney-prospective client relationship. Readers should not act upon this information without seeking advice from professional advisers. Additionally, this Firm limits its practice to the states of Arizona and New York.

When Tenant Files Bankruptcy

What Should You do if a Tenant Files Bankruptcy?

A landlord must immediately stop an eviction if a tenant files bankruptcy. If you receive a notice from the bankruptcy court that a tenant you are trying to evict has filed bankruptcy then stop the process! Bankruptcy law is very complicated, with severe penalties for any creditors seeking to take action against someone who has filed for bankruptcy. If a tenant files for bankruptcy before you have obtained the eviction judgment then you must stop with the eviction lawsuit.

As soon as a person files bankruptcy an “automatic stay of protection” goes into effect. The Automatic stay of bankruptcy is an injunction that stops; garnishments, lawsuits, foreclosure, repossession, evictions, etc. It is the equivalent of a restraining order that prevents creditors from taking collection actions.

The Automatic Stay is not Absolute

The automatic stay is not an absolute and landlords are given the right to file a Motion with the bankruptcy court requesting the bankruptcy to “lift” the automatic stay. Once the automatic stay has been “lifted”, the landlord may proceed with the eviction. It takes approximately 30 days for the bankruptcy court to grant permission to proceed with the eviction. If the tenant files an “objection” to the lift-stay motion then a hearing will be set in the bankruptcy court. If a hearing is required, then it may be 2 to 3 months before a hearing has been set and the request to lift the stay can be argued in front of a bankruptcy judge.

If you are an Arizona landlord whose tenant has filed for bankruptcy then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

The Dunaway Law Group provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers. The Firm limits its practice to the states of Arizona and New York.

Reaffirmation Agreements

A reaffirmation agreement is a contract made between a debtor and a creditor during a bankruptcy proceeding. In this agreement, the debtor agrees to continue repaying a specific debt even after the bankruptcy case is concluded. The debt remains valid and unaffected by the bankruptcy discharge, allowing the debtor to keep certain collateral, such as a car, that is tied to the debt.


As long as debtor abides by the terms of the reaffirmation agreement it is a sure way to keep your property. The creditor will mail the debtor monthly statements and report payments to the credit bureaus which will increase your credit score.


A reaffirmed debt remains your personal legal obligation to pay. The reaffirmed debt is not discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is over, the creditor may be able to take your property or your wages.

So, if you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien. The creditor can also take legal action to recover a judgment against you. The reaffirmation leaves a debtor personally liable, and can no longer just “walk away” from the debt.

UNDUE HARDSHIP to the debtor(s)?

In Arizona, a bankruptcy judge can deny a debtor’s request to reaffirm a debt if it appears that the agreement would pose an undue hardship. In fact, in 99% of instances the bankruptcy judge will find that there is a presumption of undue hardship and will not approve the reaffirmation agreement.

If a debtor does not have enough income left over, after deducting expenses, to make the required payments. In this situation, you will have to overcome the presumption of undue hardship by showing that you can afford to pay for the property.

reaffirmation agreement hearing

As part of the reaffirmation process hearing is held with the bankruptcy court. The court will approve the reaffirmation agreement only if you can demonstrate that you are financially able to make the monthly payments without it being an undue hardship.

When will the reaffirmation be effective?

If the creditor is a traditional bank, the reaffirmation agreement becomes effective when it is filed with the court unless the reaffirmation is presumed to be an undue hardship.

If the Reaffirmation Agreement is presumed to be an undue hardship, the court must review it and may set a hearing to determine whether you have rebutted the presumption of undue hardship.

How soon must a debtor decide?  

If you decide to enter into a reaffirmation agreement, you must do so before you receive your discharge. The signed agreement is to be filed with the bankruptcy court no later than 45 days after the 341 hearing, so the court will have time to schedule a hearing to approve the agreement if approval is required. However, the court may extend the time for filing, even after the 45-day period has ended.

If you need help from an Arizona bankruptcy attorney then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

The Dunaway Law Group provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice and does not create a lawyer-client or attorney-prospective client relationship. Readers should not act upon this information without seeking advice from professional advisers. Additionally, this Firm limits its practice to the states of Arizona and New York.