Chapter 7 bankruptcy is commonly referred to as a "liquidation bankruptcy". That means that in Chapter 7 if you have unprotected assets the court-appointed trustee will sell those assets in order to pay your debt. DON'T PANIC! At Mortensen Law Offices the majority of our clients lose NO assets when they file a Chapter 7 Bankruptcy. The reason is simple - they get advice from a qualified bankruptcy attorney prior to filing a Chapter 7 bankruptcy.
Lets say there is an asset that the trustee takes and sells. What happens next? The proceeds from the sale of the assets are distributed to the creditors. This can get a little technical. After the property has been sold and the proceeds distributed, the debtor is discharged. However, some debts don't go away in a Chapter 7 bankruptcy. Some debts that are not automatically discharged include SOME taxes, student loans, fines and penalties. There are others - so consult with Mortensen Law Offices about which debt will most likely be discharged in a Chapter 7 bankruptcy.
The most common types of consumer debts that Mortensen Law Offices discharges in a Chapter 7 bankruptcy include the following:
- Credit Card Debt
- Personal Loans
- Pay Day Loans
- Medical Debt
- Judgment Debt
- Repossession Debt
- Certain OLD tax debt (see below)
- Student Loans (see below)
To qualify for Chapter 7 you must pass the means test. Discuss this with Mortensen Law Offices and we can direct you in passing the means test so you can qualify for Chapter 7 bankruptcy in Arizona.
As to Student Loan discharge, there have been recent changes regarding hardship lawsuits in bankruptcy. Student loan discharge is now more realistic because the Department of Education and the Department of Justice have instituted new procedures to stipulate to dischargeability of student loan debt. These are new rules and guides that give clear direction so you will have more confidence in the outcome of a lawsuit in bankruptcy court. See my other blog on student loan discharge.
Clients always come in and tell me that "they know they have to pay back taxes and they cannot be discharged in bankruptcy". Nothing can be further from the truth. I have discharged Millions of dollars in back taxes. If you have consulted with an attorney about bankruptcy and they have not discussed discharging old taxes -RUN AWAY very fast. Come see Mortensen Law Offices and we will tell you how to discharge back taxes in bankruptcy.