Today was a pretty exciting day…if you are a bankruptcy attorney in Arizona.  In fact, if you are needing to file bankruptcy and you live in the great state of Arizona you should be excited as well.  Or at a minimum slightly interested in what the Arizona legislature did.

They raised the exemption limits.  When we strip it all away what this means for people in Arizona who are going through the bankruptcy process is that they will be able to keep more of their stuff as they go through the Chapter 7 bankruptcy process.

Why You Need Exemptions

When you file a chapter 7 bankruptcy you are required to list not only all of your debts but all of your assets.  Chapter 7 is known as a ‘liquidating’ bankruptcy – meaning that if you have non-exempt property there is a real possibility in a chapter 7 bankruptcy that it could be seized and sold at auction with the money going to your creditors.

However, in Arizona there are laws known as exemptions that protect your property.  Most people have heard of the homestead exemption that protects your home, but most are unaware that there are numerous other exemptions in Arizona that protect everything from your car to your bible to your shotgun.

The Big Changes!

Each of the exemptions have a dollar limit.  For instance in Arizona the homestead exemption will allow you to keep a home with up to $150,000 in equity.  Recently the state legislature updated the exemption laws in Arizona and increased the limits on several of the exemptions.  Here are a few of the big changes:

Household Furniture & Appliances

The old law allowed you to keep various household items and even itemized what you could keep.  For instance the old law said you could have one couch, three lamps, one rug, etc.  Further, the old law said the value of all of your household items could be no more than $4,000 ($8,000 for couples).

The new law does away with the annoying breakdown of specific furniture items and refers generally to ‘household goods’ and even better now includes ‘consumer electronic devices’, so your iPad is safe!  Further, the exempt amount has been raised to $6,000 ($12,000 for couples) of value that is protected.

Wedding Rings

The old law protected your wedding or engagement ring so long as it was worth no more than $1,000.  The new law doubles this and protects up to $2,000 of value in your wedding ring.

Typewriter

How long as it been since the Arizona exemption laws where updated? Well, the old law specifically protects your typewriter (thank goodness…what would you do without your typewriter?).

The new law now protects not only your typewriter but your computer as well – with up to $1,000 in value.

Cars

For my clients and bankruptcy attorneys all over the state of Arizona, this is the big one.  One of the biggest issues in many chapter 7 bankruptcy cases is protecting your car.  Under the old law you could have one vehicle with a value of no more than $5,000 (two cars worth no more than $10,000 for couples).

With the passage of the new law you (and your spouse) each get an exemption of $6,000.  This may not seem like a big deal, but it is amazing how many cars are worth $5,250 bucks.

Horses, Cows, Chickens, and Your Beloved Fido

Arizona also has an exemption that will protect your animals.  The old law protected your critters so long as they weren’t worth more than $500.

I know what you are thinking…my dog is priceless.  Well, then you may have a problem with your bankruptcy filing in Arizona.

But if you have a normal mutt like most of us, the new law will protect up to $800 in value.

There are several other amendments.  You can check them out by clicking HERE.

In the end, this means that you will likely be able to keep more of your stuff and proceed through the chapter 7 bankruptcy more smoothly.

I, like most bankruptcy attorneys here in Arizona, offer a free consultation for those wanting to learn more about the process of filing a chapter 7 bankruptcy.  The bankruptcy consultation is a great time for you to understand the basics of what is involved in a chapter 7 filing and what you can expect from the bankruptcy process.

Often when people come in for the consultation I can tell they are stressed out, nervous, angry, depressed, etc. and I can tell that they aren’t absorbing very much of what I am saying.  It is with that scenario in mind that I thought I would do an audio version of an initial consultation for a chapter 7 bankruptcy.

By no means do I cover every possible situation in a chapter 7 filing, but I do give you a general idea of what the bankruptcy process is like here in Arizona.  As I have mentioned before, if you have specific questions on your case you should contact an attorney.  But if you are looking for some general information go head and click on the audio player above!

It has been a long time since I released an episode of the Consumer Warrior Podcast!  I began this podcast about a year ago in connection with my Consumer Warrior website.  My goal was to provide some valuable information for people that didn’t need or couldn’t afford an attorney.  As time went on it was clear that I was just doubling up on my efforts between that site and the Skiba Law Group website.

So, I have decided to combine the two and my plan is provide not only a lot more information on bankruptcy and debt lawsuits on the blog but to provide more audio as well where I will be able to expound on the subjects in a little more detail.

I look forward to gearing up the content and hope that you find it helpful.  If you do, I would really appreciate it if you would click on the link below and leave me a review in iTunes!

Leave a Review or Subscribe to the Consumer Warrior Podcast in iTunes!

Your credit score rules your world.  But how much do you really know about it?  In this podcast episode I interview Debbie Oliver of ICleanUglyCredit.com.  After meeting Debbie I knew I had to have her on the show.  In the interview she gives great tips and advice on dealing with creditors and how to increase your credit score.

Credit scores.  They rule our world but so little is known about how they are calculated and how we can make them better.  In my law practice I have been looking for someone I can refer clients to who can help them as they try to increase their credit score and deal with bad credit.  I have found that person.

Debbie Oliver is the owner of I Clean Ugly Credit and knows her stuff.  After meeting with Debbie I knew I had to have her on the show to discuss the ins and outs of credit and credit repair.  Tons of great information in this episode.

Resource of the Week:  This week’s resource is CreditKarma.com .  This website will give you a free credit score and give you advice on not only how to improve your credit score but what steps you can take now will have the biggest impact.

As I have said before, no one wants to file for bankruptcy.  And because of that one of the first questions people ask me is if a debt settlement would be a better alternative to bankruptcy.  In this episode of the Consumer Warrior podcast I discuss three questions that you need to ask yourself in determining if debt settlement is a viable alternative to filing for bankruptcy.

If you are thinking about bankruptcy you have no doubt thought about debt settlement.  In this episode of the Consumer Warrior I go over the pros and cons of both bankruptcy and debt settlement and when each remedy is appropriate.  I will go over the three questions I ask every client to determine if debt settlement is a good option for their debt problems.

Resource of the Week:  This week I discuss the website Bankruptcy Law Network.  It is a great site/blog that provides tons of information on bankruptcy and related issues from bankruptcy attorney around the country.

I have a new episode of the Consumer Warrior podcast out that helps you in your fight against Midland Funding.

When you get sued by a debt buyer like Midland Funding you often feel like it is you against that world – that you don’t know how to deal with it let alone win your case.  In this podcast episode I go over three advantages that you have as a consumer that can help you not only survive your debt collection case but make it go away.  Here are the three advantages you have over Midland Funding (and all the debt buyers):

1.  Size

It is not the size of the dog in the fight, but sometimes, when the dog is just flat out too big, it is clumsy.  That is how many of these debt buyers and the law firms that represent them are.  They have thousands or tens of thousands of cases going on at one time, and virtually all debt buyer cases are exactly the same.  And when I saw exactly, I mean exactly.  Due to the large volume and high case-to-attorney ratios mistakes happen.  And if they do happen the court will often hold them accountable.  You need to make sure you are in a position to capitalize.

2.  The Law is on Your Side

I have beat this one to death, but you really should win your case.  The lawsuit that the debt buyer filed against you usually not legally sufficient to justify a judgment being entered.  That being said, over 90% of debt buyer lawsuits end up in a default judgment.  This means that Midland Funding doesn’t have to prove a thing and they get judgment in full.  But if you act, and press them on it, you may just win your case.

3.  Bankruptcy

The nuclear option.  When all else fails, you can always file bankruptcy.  And bankruptcy will completely eliminate your debt buyer lawsuit.  Even if they already have a judgment you can likely eliminate it and the underlying debt completely.

Resource of the Week

This week’s resource is Google Scholar.  It used to be that the only way to get information on how courts had ruled in prior cases (called “case law”) was to to go a law library and look it up in the books or to have a very expensive subscription to a company like Lexis or Westlaw.  With Google Scholar you can get access to most cases and numerous other legal documents.  You can find it at www.scholar.google.com .

There are times when dealing with your debt issues seem totally overwhelming.  You get sick of the phone calls, you get sick of the worry, you get sick of wondering if fighting the debt collection lawsuit is the right way to go.

Other times, even if you are up for the battle and ready to fight on, you need to take step back and evaluate whether it makes financial sense to continue down the road you are heading.

The point is, sometimes the best tactic is to invoke the nuclear option and just file for bankruptcy.  Here are three things to consider before throwing in the towel:

#1 – How Bad is Your Overall Debt Picture?

If you win your current debt collection lawsuit, and you have a good chance of doing that, will it be replaced by three other creditors waiting in line?  Do you have serious credit card or medical debt?  Have you recently had a repossession or foreclosure?  All of these things should play into your decision on whether you continue the good fight or seek out the fresh start of bankruptcy.

#2 – Do You Qualify for Bankruptcy?

Before you give up on defending your debt collection lawsuit it may be a good idea to meet with a bankruptcy attorney and get some idea of whether you qualify to file a chapter 7 bankruptcy.  Back in 2005 the bankruptcy laws where changed and now if you make more money than the average family of your size in your state you may not qualify for a chapter 7 bankruptcy.  If you don’t qualify you need to research out alternative chapters of bankruptcy or continue fighting your debt collection lawsuit.

#3- Are you a Good Candidate for Bankruptcy?

Let’s say you qualify for bankruptcy.  Great.  But that is just the first step.  You need to a bankruptcy lawyer to evaluate the big picture of your finances and determine if you are at risk of losing assets.  There are other potential bankruptcy landmines that you need to be aware of such as have you paid any family members back in the last year?  Have you transferred any assets out of your name in the last couple of years?  If you answered yes to either of those questions you should meet with a bankruptcy attorney to determine if it is a good option for you.

Sometimes people jump too quickly into bankruptcy when if they stood their ground and fought the debt buyer they could make that lawsuit go away.  However, sometimes bankruptcy is necessary.  In the end, you end goal is the same, you are just taking different routes to get there.

In this latest episode of the Consumer Warrior podcast I go over four things you should consider as you evaluate whether to represent yourself in court.

When dealing with a debt collection lawsuit most people would love to be represented by a lawyer.  The problem is that many times the amount you are being sued for is relatively small and/or the attorney you want to hire is simply outside of your budget.

In this podcast episode I go over four things you need to consider when making the decision whether to hire a lawyer in your debt collection lawsuit or if you should go it alone.

Also, if you decide to hire an attorney two great resources for finding an attorney who handles consumer issues and debt collection lawsuits in your state is the National Association of Consumer Advocates  NACA and the National Association of Consumer Bankruptcy Attorneys NACBA.

Enjoy.

Unfortunately by the time I meet with many clients they already have a judgment against them by one of the debt buyers like Midland Funding.  Wages are being garnished or bank accounts attacked.  In this episode I answer two questions that were submitted by readers/listeners on how you can reverse a judgment that you didn’t know anything about and what can be done about a judgment entered against a married couple when the debt was only the husband’s prior to marriage.

Week in Review

In this week’s Week in Review segment I discuss how sometimes half the battle is just showing up.  I had an interesting experience at a Midland Funding trial where I showed up, Midland’s attorney showed up, and the judge was there and the judge dismissed the case because Midland’s attorney didn’t bring a court reporter.  I have no idea why they would need to bring a court reporter because typically in Arizona courts the proceedings are audio recorded, but this day the judge wanted a court reporter.  And because they didn’t have one, the court would not allow them to continue.

Persistence pays off, and sometimes, just showing up will carry the day!

Image credit: Mentalfloss.com

You are in debt.  A lot of debt.  You don’t know what to do, so you look into filing for bankruptcy.  But you don’t want to file for bankruptcy.  It hurts your credit, you think people will look down on you.  And worse, you may even feel guilty about filing for bankruptcy.

Back in 2005 Congress changed the bankruptcy laws to make it more difficult for people to file chapter 7 bankruptcy.  The changes were made based upon a perceived abuse of the bankruptcy system.  I say perceived because as someone who works in the system nearly every day of his life, I just don’t see people trying to take advantage.  Every now and again you see someone who has a scheme in place to try and beat the system (they aren’t successful, don’t try it), but in my experience it is very rare.

For the most part I meet with families that have suffered through a job loss or gigantic medical bills or some other life altering problem that has resulted in a lot of debt.

And even when I meet with those families that are facing total financial ruin and who absolutely need to file for bankruptcy – people for whom the bankruptcy system was made in the first place – still pause and delay their bankruptcy filing  because they don’t believe it is the right thing to do.

And so they ask me: “I know I can file for bankruptcy, but should I?  I want to do the right thing and this doesn’t feel right.”  Most people simply want to pay their bills.  They don’t others to suffer because they can’t meet their obligations.  My clients want me to let them know that morally they are making the right decision.

So what do I tell them?  Well, I file bankruptcy cases all day long so I am sure you can guess where I come down on the issue.  But let me walk you through how I help people determine if filing bankruptcy is moral, or immoral.

Is there Bankruptcy in the Bible?

Many bankruptcy lawyers, when asked this question, will start by telling their clients “hey, don’t worry about it, there was even bankruptcy in the bible!”  That is kind of true.  There was debt forgiveness but it still doesn’t answer the question (at least I don’t think it does) of whether it is immoral to file bankruptcy.

Deuteronomy 15:1-2 provides that ever 7 years that your debts would be eliminated.  This was done under the law, not because your creditors agreed to forgive a certain debt.  While I don’t think this scripture answers the question of right or wrong when it comes to bankruptcy, I do think it shows that from the beginning of time all societies have seen the benefit of helping people start over.  The benefit of allowing people who are burdened down with debt to obtain a release and not suffer through life with debts that cannot be paid.

What Would the World be Like Without Bankruptcy?

No one wants to file for bankruptcy.  And if you are on the other end – the creditor end – bankruptcy is an extremely harsh penalty.  After all, you loaned money or provided services in good faith that you would eventually be paid back.  And now you won’t.

But if there were no bankruptcy, no chance to start over, how would that impact our society as a whole?

Without bankruptcy innovation would come to a standstill.  Think about it; what entrepreneur would want to take the risk of incurring a bunch of debt of a project that may or may not work?  The risk would be too high.  Most businesses are not successful.  And if you failed, without bankruptcy, you would be stuck with those debts for life, likely unable to ever recover financially.

But because there is a “do-over” button, entrepreneurs are willing to take risk and see if their idea or invention can take hold and help improve their life and many others.

Without bankruptcy, many great ideas would likely have never made it off the drafting table.

What I Tell My Clients

At the end of the day, here is what I tell my clients.  Bankruptcy is not a place people generally want to be.  It is typically not an experience most want to go through.  But…if you find yourself in a pit of debt, it can save your life.  It can give you something that many people on the brink of bankruptcy have lost…hope.  Hope that you can start again and that things will not be bad for the rest of your life.

Bankruptcy is the law of our land.  Debt forgiveness is a biblical principal and a principal of most societies.  It is necessary to spur production and innovation.

And when it is all said and done, here is what it boils down to for me.  There is a big difference between incurring debts that you intend to pay, but now can’t, and incurring debts that you have no intention of paying.  Rare is the person I meet that has run up a bunch of credit card debt with the thought in mind that they will simply file for bankruptcy and escape all liability.

It is not immoral to be broke.

After all of the stress, worry, work, and preparation, it is finally here.  D-Day.  Trial.  Your day in court.  In this podcast episode I discuss what to expect on your day of trial against the debt buyer, what the procedures are, and what you can do to put yourself in the best possible position to win your case.

In this episode I don’t go too deep into some of the technical legal arguments.  For that I refer you to Episode 8 of the podcast which you can access by clicking HERE.

One last thing, you can now access the Consumer Warrior Podcast through Stitcher.  You can access it by going to http://stitcher.com .

Good luck on your trial!