Written by Attorney Andrea Wimmer.
Updated July 27, 2020
Are you drowning in debt, basically using one credit card to pay another only to turn around and use the first one again? Many have to once they get to that point, because groceries still need to be bought and rent still needs to be paid. One course of action you may want to consider is filing a Chapter 7 bankruptcy. Although the mere mention of "bankruptcy" sounds like someone has done something irresponsible or outright wrong, that is not at all the case.
The vast majority of people filing bankruptcy in Yuma are just regular people, trying to make it from one paycheck to the next without going in the red in their bank account. 40% of Americans today have less than $400 in emergency savings. That's one blown car transmission or one emergency visit to the dentist away from complete financial disaster and missed payments.
Anyone that's ever had a credit card knows that it seems almost impossible to actually pay one of them off. Interest and fees keep accruing and just one setback can you’re your promotional interest rate of 0% cancelled and monthly payments tripled. No one should have to worry about how to pay next month's rent because their medical bills, credit cards or payday loans are taking most of their paycheck.
The Constitution created a right to bankruptcy protection. The Congress came up with the Bankruptcy Code, most recently overhauled in 2005. A Chapter 7 bankruptcy in Yuma gives you the opportunity to start fresh, and make the most of life for you and your family. Not everyone qualifies for Chapter 7 bankruptcy.
Some folks filing bankruptcy in Yuma will be doing so under Chapter 13 of the Bankruptcy Code. Chapter 13 is a reorganization, where you propose a repayment plan. The repayment plan is based, in large part, on how much you can actually afford to pay, after paying your regular monthly expenses and buying groceries, gas and other necessities.
As with everything, there are pros and cons to Chapter 13; so, if your income isn't enough to comfortably pay for everyday necessities, Chapter 7 is likely the way to go for you. You don't even have to hire a lawyer if you don't want to; you can file on your own ("pro se") with or without Upsolve's help. There are also legal aid organizations that may be able to assist you with how to file a Chapter 7 bankruptcy in Yuma.
Yuma Bankruptcy Lawyers - Estimated Cost
Just because you don't have to hire a lawyer to help you file bankruptcy in Yuma doesn’t necessarily mean you don't want to. If you are able to afford the help of a competent lawyer who you're comfortable with, then doing so may actually save you money in the long run. Most bankruptcy lawyers offer free initial meetings to people looking for help filing a Chapter 7 bankruptcy in Yuma. These consultations are a great opportunity to get some ideas of what course of action might be best for your situation. So, come prepared with questions, and don't forget to find out the cost of the bankruptcy lawyer's services for a case like yours.
How to File Bankruptcy in Yuma, Arizona for Free
After meeting with a few lawyers, many unfortunately realize that they can't afford to hire one for their really straight-forward Arizona bankruptcy case. If you're in that position, remember that you don't have to hire a lawyer; we'll show you how to file bankruptcy in Yuma on your own, without a lawyer, in 10 steps.
Collect Your Yuma Bankruptcy Documents
The good thing about filing bankruptcy in Yuma without a lawyer is that you're on your own clock when it comes to getting ready and preparing everything. Of course, if you're facing a foreclosure or are about to have your wages garnished, it would be best to move quickly. What many don't realize is that the more time you invest getting ready to file your Chapter 7 bankruptcy, the smoother the process will likely be. With that in mind, get ready to go through some paperwork. You'll need your last 6 months of paystubs to properly calculate your income. You'll also need the last two federal income tax returns you filed. Hopefully you kept track of your copy. If not, and you don't have a way of getting another copy, you can order a tax return transcript from the IRS. Even though it's not a true "tax return," it's sufficient when filing bankruptcy in Yuma. Another document that will likely be very useful throughout this process is your credit report, which you're entitled to get for free once per year.
Take Credit Counseling
While a Chapter 7 bankruptcy in Yuma may be the exact right course of action for one person, that's not automatically true for everyone. That's why the Congress wanted to make sure that consumers were informed about the debt relief options available to them. To accomplish that goal, everyone filing bankruptcy in Yuma has to take a credit counseling class in the 6 months before their case is filed. It's important that the course you're taking is through an approved provider, otherwise it won't count. If you want to take the class in person, you'll have to travel, as there are no approved in-person options in Yuma. Most folks take the course online or over the phone from the comfort of their own home instead. The course will help you figure out whether bankruptcy really is the best option for someone in your situation. Don't worry, you won't be graded at the end, but you will get a certificate confirming that you successfully completed the class. Make sure you hang on to that as you'll need it again later.
Complete the Bankruptcy Forms
One of the trade-offs for getting bankruptcy protection and relief is that a filer's finances, including their income, assets, liabilities, and past transactions are reviewed by others to make sure that they are actually eligible for Chapter 7 relief. Another reason for this review is that as part of a Chapter 7 bankruptcy in Yuma, the filer agrees to liquidate (give up) certain unprotected assets for the benefit of their creditors. To do your part, you have to put together a complete picture of everything that matters to the bankruptcy court and your creditors by filling out the bankruptcy forms. There are more than 20 forms you'll have to complete before filing bankruptcy in Yuma. If you're working with Upsolve, we'll do the heavy lifting for you by having you answer simple questions online. If you're filling everything out yourself, keep in mind that the forms available for free online, along with a detailed instructions manual.
Get Your Filing Fee
Yes, there is a filing fee to declare bankruptcy. It may not make sense at first blush but keep in mind that not every case involves someone just barely scraping by. Toys R Us filed bankruptcy. And just recently a large coal company filed for bankruptcy protection. They are paying their lawyers tens of thousands of dollars to represent them; they can pay some filing fees. The courts need money to operate the bankruptcy system, so they charge a $335 filing fee for a Chapter 7 bankruptcy in Yuma. If your income is below 150% of the federal poverty guidelines, you are eligible to apply for a waiver. If you're not eligible for a waiver, take a couple of pay periods to gather the fee. If you can't wait because of something a creditor is doing, like starting a garnishment or holding a foreclosure sale, you can ask the court to pay the fee in installments after filing bankruptcy in Yuma. The automatic stay will go into effect as soon your case is filed, which means the creditor has to stop whatever it is they were about to do. This will give you some room to breathe and pay the court fees in 4 months or less.
Print Your Bankruptcy Forms
Even though you don't have to have a lawyer to help you with your Chapter 7 bankruptcy in Yuma, you have to make sure everything is properly signed before it's submitted to the Arizona Bankruptcy Court. The federal court system has not yet adopted a system allowing for electronic signatures for bankruptcy filers, so that means printing every single page of your bankruptcy petition and signing it all in ink, then submitting it to the court clerk for processing. The packet may be more than 60 pages and you can't print anything double sided, so make sure you have enough paper stocked. Thankfully the bankruptcy forms needed when filing bankruptcy in Yuma are designed to be printed on regular 8.5" x 11" paper, so you won't have to figure out how to print on legal sized paper. If you don't have access to a printer at home or at work, see if your local library has any printing options for patrons or visit a local Staples of UPS store.
Go to Court to File Your Forms
Yuma has its very own bankruptcy courthouse, right near the park on First Street. You can't mail anything to the courthouse in Yuma (all mail needs to go the Phoenix location of the Arizona Bankruptcy Court), but you can file your case in person by dropping off your forms and your credit counseling certificate. If you're not applying for a fee waiver, make sure you let the clerk know that you're mailing the fee for your Yuma bankruptcy to the court's Phoenix address, as the Yuma location doesn't accept any payments. They may give you specific instructions about putting your case number on the cashier's check or money order. If you remember to bring your own set of forms, ask the clerk to stamp or "endorse" your copy with all the important details about your case. That way, you know that the set you have at home matches the set you submitted to the court when filing bankruptcy in Yuma.
Mail Documents to Your Trustee
Once a trustee is assigned to your case, they'll get a copy of the bankruptcy forms you submitted to the court when you filed your Chapter 7 bankruptcy in Yuma. In addition to reviewing those, the trustees also typically want to review your recent paycheck stubs, your tax returns from the last couple of years, and documents like bank statements or payoff statements for your secured debts. If you haven't received anything from the trustee handling your case a couple of weeks after filing bankruptcy in Yuma, make sure to send them a copy of your most recent federal income tax return (with your social security number blacked out) and recent paycheck stubs at least 10 days before the date set for your 341 meeting. You may also consider giving their office a call to find out whether there's anything else they need and to let them know that you didn't receive any instructions they may have sent.
Take Bankruptcy Course 2
Congress was very focused on ensuring everyone filing bankruptcy would be given the best opportunity to make the most of their fresh start. That's why you have to take a debtor education course, often referred to as the financial management course, after filing bankruptcy in Yuma. The court won't actually grant your discharge without it. The course once again has to be taken through an approved provider, but be careful - there is a whole separate list for this class. Don't automatically assume that the company you took the prefiling course with is approved to offer this one as well. When you sign up for the course, make sure to find out whether the provider will file your certificate of completion with the Arizona Bankruptcy Court for you. If not, you'll have to make sure to mail a copy to the court clerk as soon as you're done.
Attend Your 341 Meeting
The 341 meeting, or creditors' meeting is usually the part that makes everyone the most nervous. You're going to court after all! The good news is that just about everyone walks out of their creditors' meeting about 5 - 10 minutes after it started, well on their way to their discharge and notably not stressed or nervous any more. Even though creditors are able come to this meeting, they hardly ever do. Most of the time it’s just everyone that filed Cahpter 7 bankruptcy in Yuma around the same time approximately a month earlier and one or more Chapter 7 trustees. Make sure you arrive on time and bring your government issued ID and proof of your social security number. Dress respectfully, you're going to an official court proceeding, after all, but don't worry about wearing a suit or dress. When your case is called, you'll provide the trustee with your IDs, then you'll be sworn in. Once that's done, the trustee will ask you the same question they've been asking everyone. If there is anything about your case that caught their attention, they may ask you about that as well. Answer loudly and honestly - you are under oath and being tape recorded as part of your Arizona bankruptcy.
Dealing with Your Car
When it comes to your car, a few things are in play. First, if you own it outright when filing bankruptcy in Yuma and have no payments, you'll have to make sure the available exemption protects its full value. If you're still making payments, on the other hand, you don't have to worry about the exemptions unless you have equity. You do have a decision to make about what to do with your car loan though. You can't keep the car without paying for it, and that's what the loan is for after all. If it makes financial sense to do so, you can choose to keep everything basically the same. The downside here is that you'll have to enter into a reaffirmation agreement with the lender. If the court approves the agreement, you'll be personally responsible to pay off the loan no matter what happens to the car. Some folks are able to get out of the continued personal obligation to pay the loan by redeeming the vehicle instead. This is done by paying the creditor the current fair market value of the car, not a dollar more. They get as much as the car is worth and you get to discharge the rest. Finally, if the car is not worth that much effort, or you can't find the funds for a redemption, you can surrender the car. The creditor gets your actual car instead of money and your Chapter 7 bankruptcy in Yuma protects you from the balance that's left on the loan.
Arizona Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Yuma
Arizona Means Test
Not everyone gets to walk away from their obligations by filing a Chapter 7 bankrutcy in Yuma. There are folks who can't afford to pay all of their debts, but they can definitely afford to pay some of them. The Arizona bankruptcy means test determines whether someone makes too much money to qualify for Chapter 7.
Median Income Levels for Arizona
Arizona Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Poverty Levels for Arizona
Arizona Fee Waiver Eligibility for Cases Filed On or After May 1, 2020
Eligible for fee waiver when under 150% the poverty level.
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Arizona Bankruptcy Forms
When you submit everything, you need for your Chapter 7 bankruptcy in Yuma, it will be a combination of documents. Most of it will be the federal bankruptcy forms (like your schedules and statements), some of it will be your paycheck stubs from the last 60 days. The rest of it will be Arizona bankrutcy forms created specifically for the Arizona Bankrutcy District.
As mentioned, creditors are only allowed to the proceeds of the sale of unprotected property. This of course means that some property is in fact protected. The laws that protect property are called exemption laws. The Arizona bankruptcy exemptions protect most necessities and personal property that folks own. You can even protect up to $150,000 of equity in a homestead if you own your home when filing bankruptcy in Yuma.