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What Type of Bankruptcy Should You File in Arizona?

May 31st, 2017

There are several different types of bankruptcy to consider if you are in serious debt you cannot pay back. First, you have to decide that bankruptcy is the best course of action to take. Once you have done that, you should decide under which “chapter” under which to file for bankruptcy.

The most common types of personal bankruptcy are Chapter 7 or Chapter 13. To decide between the two, you should seek legal advice from a local bankruptcy lawyer in Scottsdale, Phoenix or elsewhere. Let’s look at the types of bankruptcy available and which type may suit your needs the best:

Chapter 7

Chapter 7 bankruptcy is sometimes referred to as “liquidation bankruptcy.” It’s quite common because it allows the court to discharge many types of unsecured debts. For example, massive amounts of credit card debt or personal loan debt can be completely discharged by a judge under this law. If there are nonexempt properties or debts, the court would appoint a Trustee to oversee your finances until remaining creditors are paid off.

This type of bankruptcy is only available to debtors with medium to low-income. The process to file for Chapter 7 bankruptcy can take up to 4 months, and sometimes involves significant paperwork.

Chapter 11

This type of bankruptcy is similar to Chapter 13 in that it is also a type of “reorganization” bankruptcy. It is typically used by large corporations or companies but individuals can use it too. Personal bankruptcy is rarely filed under Chapter 11 however.

Chapter 12

Chapter 12 bankruptcy is exclusively for fishermen and farmers. It involved submitting a repayment plan to court like in Chapter 13. However, unlike Chapter 13, these plans are allowed to be more flexible. Chapter 12 offers more flexibility with cramdowns and lien shipping for unsecured aspects of secured loans. Chapter 12 requires higher debt limits to get a favorable ruling.

Chapter 13

Chapter 13 bankruptcy is called the “wage earners” bankruptcy. It’s usually the last resort for those who don’t qualify for Chapter 7 bankruptcy. This route allows debtors to pay back their creditor in full or part via a court-approved payment plan. Paying the debts off can take up to 5 years depending on the petitioner’s income. Once the payment plan is approved, the court may discharge some unsecured debts. Chapter 13 bankruptcy can prevent a home foreclosure and allow debtors to keep much their property.  Discussing these issues with experienced bankruptcy legal counsel is critical.

Under Chapter 13 bankruptcy law in Arizona, only unsecured debt below a certain fixed debt amount (e.g. $394k) will be discharged by a court. Submitting a payment plan for this type of bankruptcy can be complicated so a bankruptcy attorney is almost always needed to successfully procure court approval of your 3 or 5 years Chapter 13 discharge plan.

To decide which type of bankruptcy is best for you, look at two things: assets and income. Income matters because filing under Chapter 7 is only possible for people in a certainly limited income bracket. You must also choose the right type of bankruptcy to protect assets that could be considered nonexempt. Speaking in general terms, if you are unemployed or earn a low income with few available assets, Chapter 7 may be the best option. If you earn a significantly high income and have many assets, Chapter 13 could be the best option.  Under either Chapter, counsel with experienced and seasoned bankruptcy legal counsel is the critical first step in the process.

 

How to Find a Divorce Mediator in Arizona

May 27th, 2017

A divorce mediator is a neutral third-party that tries to facilitate legal negotiations between spouses who are getting divorced. If you and your spouse cannot come to conciliatory terms on your own, you may require the services of a divorce mediator.  Some spouses conduct the mediation with just a mediator and no lawyers (3-way mediation), and others bring their own lawyers to aid their representation in front of a private mediator (5-way mediation).

Hiring a divorce mediator is not the same as hiring an attorney. A divorce mediator has the interests of both spouses in mind. That’s why your divorce lawyer in Scottsdale cannot typically act as a mediator; the lawyer will always act on your behalf, and the same goes for the other party’s lawyer as well. Divorce mediators listen to both parties, assist positive communications, and try to get the divorce negotiations going.

Here is a list of qualities to look for when finding a divorce mediator in Arizona:

Neutrality is Very Important

The purpose of hiring a divorce mediator is to level the playing field and make the talking table less hostile and aggressive. So make sure the person you hire is absolutely neutral. That means no friends, family, colleagues or divorce lawyers. The divorce mediator will act as an advocate, but not a legal advocate. All responsible divorce mediators encourage spouses to hire divorce lawyers separately to review any legally-binding agreements.  Mediations can be one day or a series of days.  Both spouses may want to consult their own privately retained lawyers before, during or after mediation sessions.

Search for Mediators who Offer Flat Fees

No matter what, you will both have to pay for a divorce mediator. Good divorce mediators understand that the financial costs of divorce are high, and offer affordable rates. Ideally, find a mediator that charges only a flat fee for all services provided. Avoid the ones that charge various additional fees. Divorce mediation in Arizona can cost anywhere between $3,000 and $10,000. The spouses can split the costs.  This is usually far cheaper than heavily contested litigation with lawyers on both sides.  Even if mediation ‘fails’, you will be far better equipped to enter the court system against your spouse with your separately retained legal counsel.

Choose a Mediator who Knows the Law

Divorce mediators do not have to be lawyers, but they typically are and are always knowledgeable about the law. It’s best to choose one of these mediators so he or she can help you both make informed decisions regarding the separation process. During negotiations, an educated mediator will be able to make suggestions according to the established law. You can then have these suggestions run by your lawyer to see if they are in your best interest.

Strong and Stable Communication is a Must

Divorce mediators typically excel in communication. However, communication goes both ways. If you are, for any reason, uncomfortable communicating with the divorce mediator, it’s time to look for a new one. Mediators must encourage fairness with the other spouse and act swiftly to diffuse problematic situations. Without the proper manner of communication, a divorce mediator will not offer many benefits to you.   You can walk out, your spouse can walk out, and in some cases, the mediator will terminate the session if he or she believes that a final mediated settlement is not achievable.

It’s best to hire an experienced divorce mediator who has been doing this job for years. Many private litigation attorneys practice divorce mediation part-time. You might also consider a full-time divorce mediator who can dedicate full attention to your case. The problem with divorce lawyers acting as mediators is that lawyers are used to battling for a client, not acting as a neutral party. So, hire a neutral mediator and hire a lawyer separately to watch out for your best interest in the negotiations.  As noted, some parties elect to conduct 5-way mediations: (1) Husband (2) Husband’s legal counsel (3) Wife (4) Wife’s legal counsel and (5) the Mediator.

How to Explain Child Custody to a Child

May 21st, 2017

In Arizona family courts, judges often do everything in their power to keep divorce proceedings from negatively impacting children’s emotional well-being, especially when there are contentious custody proceedings taking place. Most judges discourage parents from even speaking to the children about custody disputes. However, at some point parents getting a divorce will eventually have to explain the divorce and custody arrangements to the children. It will have to be done regardless of the type of custody arrangement the court ultimately orders.

Explaining custody to a child can be a bit difficult if the child is still quite young. The process may be easier for an older teen, but they are still emotionally vulnerable as well. You can always ask for family Law help in Scottsdale to get pointers in explaining custody arrangements to children. Here are several tips from divorce experts who have navigated these waters before you:

Tell Them the Important Facts of the Custody Arrangement

You don’t need to explain the intricate legalities of joint or sole custody to children. However, you will have to explain terms of the custody arrangement as simply as possible, because it will affect them more profoundly than you. Here are the things you should tell children:

  • With which parents the kids will stay, or how much time they will have to spend at each parent’s house. These courts ordered parenting time allocations are not optional and must be followed by both parents, and the children.
  • The parent who will drop them off and pick up from school.
  • The parent who will handle transportation.
  • Repeatable schedules with each parent.
  • Living arrangements for the summer or annual vacation times (e.g. Spring or Fall Break).

Avoid Distressing Subjects

You don’t have to explain to children why the custody arrangement is the way it is, or why the parents went through a divorce. Do not bad mouth the other parent in front of the children, either. Doing some of these things may even land you in trouble with the court. Do not discuss child support, alimony or other money issues with the children either. If something is not of immediate concern to the wellbeing of the child, avoid the subject.  Money and property and other adult issues should remain discussed between counsel and the parents, not the minor children.

Let Them Know They are Loved

Children of divorced parents may experience a host of negative emotions, including feelings of abandonment or guilt. Some children feel like it is “their fault” that Mom and Dad split up.  It’s important to let the children know that both parents love them even if the parents are now divorced. Don’t leave any room for them to be alarmed about the custody arrangement. Show them that it is in their best interest. If the children have to spend time at two locations, tell them it is so because both parents want to take part in both their lives. Explain custody in a positive note so children are not unnecessarily distressed and worried with the new realities post-Decree.

Let them Feel Comfortable with Lawyers and Mediators

Children in the middle of contentious divorces may have to put up with strangers whom they keep encountering like lawyers and court-appointed advisors or interviewers. It’s important that children become familiar with these people and this process and not feel ambushed.  If explaining custody is too much for you, you can ask your lawyer to gently break the news to them. The lawyer will be familiar with what information is allowed by the court and what is not, to tell directly to the children.

It’s never easy to discuss divorce or custody with children. Hopefully, the above suggestions will help.  Regardless, you should rely on your chosen legal professional to help you navigate these critical and choppy waters.

 How to Divide Property When Getting a Divorce in Arizona

May 10th, 2017

Property division can become challenging for divorcing couples. However, this need not be a challenge.  And If you and the soon-to-be-ex cannot come to good terms on your own, a court will have to do it for you. Under Arizona’s community property law, debts and assets accumulated during a marriage belong to both parties 50/50 in the absence of a prenuptial or postnuptial agreement that says otherwise.  Arizonian family courts emphasize fairness when dividing up a property. Unlike in some states, the property may not be divided equally 50/50, but equitably in the eyes of the judge assigned to your case.  This can sometimes mean 55/45 or 60/40 or 40/60—every case is unique.

No matter what the facts, you will have to hire a talented divorce attorney in Scottsdale, Phoenix or your local area in the state. Absent years of litigation experience, you likely won’t be able to capably represent your interests in court without a deep knowledge of divorce and property laws in the state. If you are undergoing a process of dividing property in a divorce, here are some important items you should be aware of:

Determine if the Property Belongs to the Community or the Separate Category

There is a very clear distinction between community and separate property under Arizona law. Separate property is assets a spouse owned before marriage, inherited solely during the marriage, was gifted solely during the marriage, or purchased alone during the marriage with sole and separate finances. A prenuptial or postnuptial contract may also designate that certain items are to be treated as separate property.  Absent these facts, the law presumes all property and all debt, acquired or originated during the marriage, is community property.

Courts in Arizona only have jurisdiction over community property, not either spouse’s sole and separate property. Each party will have to provide evidence for separate property claims in the form of financial documents. It is possible that property that was originally separate later becomes community property during the marriage. For example, a house purchased by one spouse before marriage may become community property following the marriage if both spouses names are later placed on the recorded deed.

The reason that each is different is that the distinction between community and separate property during the marriage can be blurry. Some spouses may have unknowingly turned separate assets into community property by the “commingling” process, where two assets are combined. A bank account owned by one spouse before marriage becomes marital property if the other spouse makes deposits to it later with community income. Sometimes assets are partially community and partially separate, such as houses and retirement accounts. A business that one spouse operated but later received contributions from the other spouse after marriage can fall into this category.   A seasoned lawyer can walk you through these issues, and advance them in a court of law.

Set Values for Property

Regardless of whether community or separate property, all assets and debts must be assigned a monetary value before equitable division. The two spouses can do this themselves, or a court can do it in case the parties cannot agree on values. Typically appraisals are used to set values of real assets, like houses, antiques, or vehicles. The toughest asset to value can sometimes be retirement accounts.  You may have to hire a financial professional like an actuary to ascertain the value of a retirement account and the growth in value of such retirement assets since the original marriage date.

The Process of Dividing Property

You can see the first section above that determining whether a property is community or separate can be complicated. Ideally, both parties come to an agreement out of court. But this rarely happens when multiple assets are in question and the stakes involve hundreds of thousands of dollars or more.

Courts may divide up property in multiple ways. In the case of property that is partially separate, the court may offer a spouse the option of buying out the remaining portion from the other. In some cases, it may be recommended to mutually sell the assets and divide the proceeds. Some property, like family homes, can be co-owned even following a divorce if children are living there or visiting each year.

Arizona courts typically divide property approximately equally among the divorcing partners. There are only a handful of exceptions to the rule. For example, if one spouse is known to have squandered money through irresponsible activities like gambling or drug use, the court may rule in favor of the other. In the case of property under massive debt, the court may rule against the spouse responsible for the debt.  At the end of the day, you will need the guidance and stewardship of experienced legal counsel to navigate these issues for you.

 

Advantages and Disadvantages of Filing for Chapter 7 or 13 Bankruptcy in Arizona

May 2nd, 2017

If you have decided to file for bankruptcy, you may be wondering whether you should file for Chapter 7 or Chapter 13. Chapter 7 bankruptcy is not suitable for all situations. Also, Chapter 13 bankruptcy is usually the more common option for petitioners who are behind on mortgage payments but still want to keep their property. Chapter 13 bankruptcy allows the borrower to agree to pay back overdue charges and settle back on the original mortgage contract. Chapter 7 bankruptcy is the most commonly used option for those who are severely indebted and simply wish to start over.  

You can always consult with a local bankruptcy attorney in Scottsdale or your area to decide which option is best for you. Otherwise, take a look at advantages and disadvantages of both Chapter 7 and Chapter 13 forms of bankruptcy to decide which option is the best for you:

Chapter 7 Bankruptcy in Arizona

Most Arizonans who are in heavy debt choose this option to solve their financial situation. Under Chapter 7 filings, a court will most likely discharge unsecured debts like credit card debt or personal loans. The petitioners will only have to pay back debts secured with assets once the parties have agreed on a “Reaffirmed Agreement.”

Chapter 7 bankruptcy is particularly attractive to many because it offers protection against debt collection efforts like constant calls and holding back wages. If you earn any wages on a property you have bought, the money will belong to you, not the creditor, following the Chapter 7 bankruptcy filing date.

There is also no minimum debt amount needed to file for Chapter 7 bankruptcy. You can expect the proceedings to end within 3 to 6 months from the filing date.

As attractive as it may be, Chapter 7 bankruptcy is not without its setbacks. Mainly, the law does not cover assets given up as collateral for a loan, such as a property or a vehicle. The petitioners could lose non-exempt property, which would later be sold by a court-appointed Trustee. Chapter 7 bankruptcy is not typically suitable if your home is undergoing foreclosure. Filing for bankruptcy will only temporarily halt the proceedings. Co-signers will also be contractually bound unless they separately file for bankruptcy.

Chapter 13 Bankruptcy in Arizona

This option allows petitioners to keep all property, whether exempt or nonexempt, under a court-approved payment plan. If you have many secured loans, then Chapter 13 bankruptcy is the best option for you. Some debts will not be canceled under Chapter 7, but a judge can reduce them. Like with Chapter 7, Chapter 13 filings afford protections against collection calls and similar efforts by the creditor.   When pursuing Chapter 13, you’re most likely going to need experienced legal counsel by your side.  

If you agree on a full payment, co-signers will be protected from creditor’s collection efforts. You can also obtain protection against foreclosure of your home if you completely follow the new payment agreement. You can also get more time to pay off debts under this proceeding, especially ones that are not discharged, like child support or taxes. You can also repeatedly file for Chapter 13 bankruptcy.

The disadvantage is that the payment plan you agree to will be based on your income earned after the filing date. You will have to be frugal until the debts are paid back as per the agreement. These plans can last from 3 to 5 years. As a result, the proceedings can last up to 5 years. Attorney fees for Chapter 13 bankruptcy also tend to be higher.  Some professions, like stockbrokers, cannot file for Chapter 13 bankruptcy in Arizona.

Carefully consider the advantages and disadvantages given above before discussing your bankruptcy with an attorney.  For more email the firm at info@clgaz.com or call 480-240-0040.