Can a Creditor Refuse to Let You File Chapter 7 Bankruptcy in Arizona?

Some people think that, if they declare bankruptcy, all their debts will be forgiven. To a certain extent, that is true. Most if not all your unsecured debts will be erased in a Chapter 7 bankruptcy. This includes things like credit card bills and personal loans. There are other debts that may not be forgiven. For example, if you have any secured debt, the creditors aren’t going to lay down and let the bankruptcy go through without a hitch. They’re going to challenge the bankruptcy. They’ll also demand that the collateral be surrendered once the bankruptcy is filed. Your Arizona bankruptcy attorney will have to work out the best arrangement possible. They may recommend that you file a Chapter 13 instead. It all depends on your situation.

Most of Your Debts Will Be Wiped Out in Your Bankruptcy

If you file a chapter 7 bankruptcy, most of your debts are going to be forgiven. Certain creditors don’t really have a say when it comes to whether your bankruptcy goes through. Your credit card companies don’t have much choice. Their debts aren’t secured so they don’t have a leg to stand on. The same is true for things like personal loans. These debts are going to be wiped out in your bankruptcy.

The other type of debt that is forgiven in a Chapter 7 is medical bills. When somebody gets sick, they end up with a ton in medical bills. Even if you have insurance, the out-of-pocket expenses can be overwhelming. Thankfully, your medical bills will be discharged in bankruptcy. It doesn’t matter how big they are or how old they are. If this is what’s keeping you up at night, it’s good to know that you won’t have to repay them when your bankruptcy is complete.

You May Want to Reaffirm Certain Debts

Most people who file bankruptcy have some debts that they want to keep. That may sound crazy. Consider that you have a mortgage on your house. You’ve lived there for twenty years and you’re almost done paying it off. You don’t want to lose your home. Nor do you want to sell it or do a short sale with the bank. You can affirm this debt in your bankruptcy. This menas that your Arizona bankruptcy attorney will ask the trustee if you can continue to pay your mortgage and remain in your home. The trustee and judge will usually approve this request. The last thing they want to do is strip people of their homes.

Secured Creditors Will Likely Not Forgive Your Debts

Unlike unsecured creditors who have no say in your bankruptcy, there are some creditors who will challenge it. Secured debts are those that have property attached to it. For example, a car loan is a secured debt. If you don’t pay your car payments, the bank can repossess the car. The same is true for a boat loan, motorcycle loan or home equity loan. If you don’t have the option of reaffirming these debts, you may have to return the collateral as part of your bankruptcy.

If You’re Considering Filing for Bankruptcy, Contact a Skilled Arizona Bankruptcy Attorney

If you’re like a lot of our clients, you really aren’t sure what to do. You just don’t know what’s best for your family. That’s why it’s a good idea to call and talk to one of our Arizona bankruptcy attorneys. Sit down and go over your debts and assets. Find out if a Chapter 7 bankruptcy is the best option for you.