HELPING CLIENTS NAVIGATE THROUGH BANKRUPTCY
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Utilize The Laws of Bankruptcy in Arizona To Your Advantage
Arizona lawmakers understand that there are times when citizens struggle with their outstanding debts.
Whether it be making their monthly credit card payments, mortgage or paying an outstanding vehicle note – the laws of bankruptcy can assist borrowers that are in distress.
Bankruptcy can lead to the discharge of debt, but in many cases consumers have options alternative to bankruptcy that may offer the relief needed to get their finances back on track.
Understanding and utilizing the laws of bankruptcy in Arizona to your advantage will assist in determining whether filing bankruptcy will provide the needed relief in your own financial situation.
2005 Bankruptcy Abuse Prevention and Consumer Protection Act
This acts requires all individual debtors who file for bankruptcy on or after October 17th, 2005 to receive credit counseling. The credit counseling must begin within six months prior to filing for bankruptcy relief.
The credit counseling course also includes studying financial management after bankruptcy has been formally filed.
Also, under the 2005 Bankruptcy Act, an applicant’s income and expenses are studied to decide if they’re eligible to file for Chapter 7 bankruptcy or if Chapter 13 bankruptcy must be filed.
The analysis of test will review the average income of an applicant for the 6 months immediately prior to filing, which will then be compared to the median income for Arizona.
If the study reveals a level of income below the median, Chapter 7 will likely be an option.
In situations where income exceeds the median income for Arizona, more elements of the means test will be evaluated to determine if Chapter 7 can be filed or if the applicant must file Chapter 13 bankruptcy.
The First Steps of Filing Bankruptcy in Arizona
Before filing for bankruptcy in Arizona, potential applicants must itemize:
- All current income streams
- Large financial transactions dating back up to 24 months
- Monthly recurring living expenses
- All secure and unsecured debts
- All assets and possessions.
Filing Bankruptcy in Arizona
After gathering all of the information detailed above, a Hilltop Law Firm attorney will prepare a detailed petition to be filed with the court.
Your Rights Under Arizona Wage Garnishment Laws
Mirroring federal laws, Arizona wage garnishment laws provide identical protections for citizens, limiting the amount that creditors can garnish from their paychecks.
With only non exempt wages accessible to creditors for garnishment, there are also strict limits in Arizona on how much can be garnished per paycheck.
Understanding How Wage Garnishment Works
Wage garnishments, referred to as wage attachments in some cases, are orders from a court or government agency that require your employer to withhold a specific amount of money per check, sending it instead directly to the creditor.
When Do Creditors Get To Garnish Wages?
Before garnishing your wages, most creditors must obtain a court judgement that indicates you owe them money.
Simply falling behind on payments to a creditor does not warrant wage garnishment until the creditor files a lawsuit and gets a judgement in court.
The following types of debt are exempt from following this rule and are able to garnish wages without a judgement:
- Court Ordered Child Support
- Student Loan Defaults
- Unpaid Income Tax
Wage Garnishment Laws in Arizona
Though states can impose their own laws over wage garnishment limits, Arizona’s are exactly the same as Federal wage garnishment laws.
Remember these key elements of wage garnishment law in Arizona
Creditors Are Only Allowed To Take The Lessor of the Following.
- 25% of Non-Exempt Weekly Earnings
- Amount of Non-Exempt Earnings that exceed 30 times the federal minimum wage
The wages that remain after an employer has made the required deductions are referred to as “Disposable Earnings”.
Termination of Employment Due To Wage Garnishment
Arizona wage garnishment laws dictate that an employer cannot fire their employee because of a child support wage garnishment.
Rehires, returning employees or new hires are sometimes required to disclose their child support withholding status, but hiring or firing cannot be based on this disclosure of information.
Bank Levy Laws in Arizona
A bank levy grants the creditor the right to take money from the bank account of a debtor and apply these funds to the balance of a judgement.
Under Arizona Title 25 – Chapter 5 – Article 1 25-521, the state of Arizona allows bank levies for family support.
In the event of a court ordered judgement, the department may issue a levy and collect the full amount owed.Arizona bank levy laws also allow collection on all property and rights to property not including exemptions under federal and state laws.
Arizona Title 23 – Chapter 4 – Article 5 23-752 and 23-755 allow for the seizure of personal property as well as wages under Arizona bank levy laws.
Lien Laws in Arizona
Liens are claim on property after a judgement has given a creditor the right to do so.
Having a lien placed on your property in Arizona will make it difficult to sell or refinance your house.
If the equity in your home exceeds the homestead exemption, creditors may attach a judgement to the non-exempt equity in your property.
What To Do If You Have A Judgment Against You
In Arizona, having a judgment against debt owed to a creditor can drastically impact your financial health.
One adverse effect of receiving adjustment comes by way of wage garnishment, as detailed above.
Often, creditors that hold a judgement against an Arizona resident will seek to garnish their bank accounts towards the balance of a debt.
There are a variety of options available to Arizona citizens who currently have a creditor judgement.
Motion To Vacate The Judgment
Arizona Rules of Civil Procedure dictate a process to remove a judgement, granted that there are grounds for doing so.
Because most debt driven judgements come way of default by the debtor, often it becomes unclear if a proper notice of lawsuit had been given.
There are situations that happen where a debtor was never properly served regarding the lawsuit in question.
Debtors are expected to explain why they waited to file a motion (excusable neglect) and provide a defense to the lawsuit if able.
Other situations that are grounds for setting a judgement aside include fraud and lack of jurisdiction.
To determine how likely success will be achieved on such motion, it’s recommended that you speak with an experienced Arizona debt attorney regarding the judgement.
Our free consultation service can evaluate such a motion.
Though it may seem simple, settling a judgement can be more complicated than it appears.
With a multitude of elements factoring into any judgement, debtors must fully understand their judgement and the conditions granted upon settling.
Before settling any judgement, several facts regarding the case must first be answered, which typically can be best handled by an experienced attorney.
Remember, a judgement that has already entered some form of garnishment can be extremely hard to settle.
Many creditors may be unwilling to settle the judgement once garnishment of wages has started.
With a lack of options, many debtors find filing bankruptcy to be the best form of relief from a judgement in Arizona when unable to easily pay the full amount owed to the creditor.
A Word On Foreclosures In Arizona
Arizona foreclosure law affords citizens several provisions that may assist in preventing the seizure of their home or investment property.
Most foreclosures that happen in Arizona take place outside of court (nonjudicial), rather than instances where lenders file a lawsuit to foreclose on a home.
Know Your Rights In Arizona
You may be eligible to avoid bankruptcy all together, and even keep your property in the process.
Speaking with Cy T. Hainey and his team at Hilltop Law Firm will give you a clearer picture of the options available to you, possibly avoiding bankruptcy, wage garnishment, and foreclosure.
Reach out to Hilltop Law Firm for a 100% FREE ZERO OBLIGATION CONSULTATION.