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Do You Need an Emergency Bankruptcy?

Often times debtors will file an emergency bankruptcy file as a quick method for invoking an automatic stay. Often times a debtor will need the protection of an automatic stay immediately, and thus not have the time to wait to complete the majority of necessary bankruptcy forms. In these instances, an emergency bankruptcy can help desperate debtors.

Filing an Emergency Bankruptcy

An emergency bankruptcy can be filed by filling out the following forms: Form 1 – Voluntary Petition, the Mailing ­Matrix, and Form 21, which is a Statement of Social Security Number. A debtor might also be required to fill out Order Dismissing Chapter 7 Case. This form is processed if a debtor fails to file the remainder of the bankruptcy forms within 14 days.

If the 14 days expires, a debtor is able to file again. Additionally, a debtor will need to ask the court to keep the automatic stay in effect once 30 days have passed following the filing

Steps of an Emergency Bankruptcy Filing

  • Consult with the court or a bankruptcy attorney to ensure that you have all the forms needed for an emergency filing.
  • Fill out the correct forms
  • List all creditors. This includes: collection agencies, sheriffs, attorneys, and all others that are seeking to collect.
  • Make copies of all paperwork for yourself.
  • File the originals and any required number of copies along with the set fee and a self-addressed envelope with the bankruptcy court.
  • Ensure that you have filed all other required forms within 14 days of your emergency filing.

Why File?

Extreme debt can feel overwhelming, but can be made even more stressful when people are seeking to collect money from you. In these situations, bankruptcy might be the best option. And if you are facing collection of funds because of a lawsuit, or are faced with losing your car to repossession, or any other number of reasons, you might want to consider an emergency bankruptcy.

Reasons for an Emergency Bankruptcy

There are some reasons that you might choose to file an emergency bankruptcy. Mostly, this is done because a debtor does not have the time to fill out all the necessary paperwork, and includes the following:

  • sale of a home through foreclosure
  • car repossession
  • eviction
  • wage garnishments, and
  • lawsuits

It should be noted that an emergency bankruptcy will still require a debtor to fill out all the necessary paperwork to fully, accurately, and honestly disclose all assets, debts, income, expense and various financial information. While a filing does initiate an immediate automatic stay, it also requires that all the remaining paperwork be filed within 14 days. If a debtor does not submit all the necessary forms within that 14 days they might face a dismissal of the bankruptcy.

Because bankruptcy law is very detailed and requires many steps, it’s always advised that you work with a bankruptcy attorney. They might advise that an emergency bankruptcy is not required, or they might suggest that a debtor files immediately. When you work with a bankruptcy attorney, they will review your debt and the debt you are facing and then be able to advise you on what steps you should take.

Bankruptcy Myths

Bankruptcy is often painted in an unfair light, but there is little truth to the bankruptcy myths that you might have heard. Keep in mind that a phoenix chapter 13 bankruptcy lawyer can also help advise you on any questions you might have.

Myth #1: You Are Able to Declare Bankruptcy Just By Announcing it in Public

Filing for bankruptcy is not just as easy as announcing it. Bankruptcy filing requires steps such as: paying a fee, completing credit counseling, and also submitting legal paperwork and financial disclosures.

Myth #2: You Are Only Allowed to File Bankruptcy Once

While there are laws regarding the frequency in which you file for bankruptcy, the following is true:

  • You can receive a discharge from a chapter 7 bankruptcy once every 8 years
  • You can receive a discharge from a chapter 13 bankruptcy every 2 years
  • If you discharge debt through a chapter 7, you must wait 6 years before getting a chapter 13 discharge
  • If you discharge debt through a chapter 13, you must wait 4 years to obtain a chapter 7 discharge.

Myth #3: A Bankruptcy Affects Your Spouse

If you’re married and have separate debt, filing bankruptcy does not automatically affect your spouse’s credit. If the debt is in both your names, then it’s advised by a phoenix chapter 13 bankruptcy lawyer that you file together. Otherwise, a creditor will demand payment for the entire debt from the non-filing spouse.

Myth #4: You Can Go to Jail for Debt Owed

It is not against the law to owe money. This means you cannot go to “debtor’s prison” in the United States.

Creditors are able to sue you for debt, as well as take you to court, put liens against your property, and garnish your wages, but they are not legally able to send you to court.

Myth #5: Filing for Bankruptcy is Expensive

Filing fees for chapter 7 and 13 bankruptcies vary from state to state, but are no more than $300. While hiring an attorney can add to this, it’s always advised that you work with a bankruptcy lawyer because bankruptcy laws are complicated.

It’s much safer to hire and pay for a lawyer than pay penalties in bankruptcy court.

Always Weigh the Pros and Cons

As with any major decision in your life, there are pros and cons of filing bankruptcy. Below we discuss the advantages and disadvantages of filing for bankruptcy. As always, it’s advised you work with a phoenix chapter 7 bankruptcy lawyer that can help advise you.

Pros of Filing Bankruptcy

One immediate advantage that helps debtors when they file for bankruptcy is the “automatic stay.” This motion alerts creditors that they must stop their efforts to collect money from debtors. This stay is what stops creditors from calling you! Under an automatic stay, creditors are not allowed to call, send collection letters, file lawsuits, garnish wages, or seize assets – except for in specific situations such as the collection of alimony and child support payments.

The biggest “pro” of filing bankruptcy is that a court discharges your debts. That means that certain debts will not need to be repaid. This of course is dependent on the form of bankruptcy you file: either chapter 7 or chapter 13.

Cons of Filing Bankruptcy

One “con” of bankruptcy is that while it will discharge most debt, it does not discharge certain debt, such as mortgages, student loans, taxes, alimony, or child support. While student loan debt has been forgiven in extreme cases, for the most part, it is never discharged in bankruptcy. Additionally, a debtor can lose certain nonexempt property in a bankruptcy filing because a court orders it to be sold.

Bankruptcy will also have an affect on your credit score. While your credit might already be low because of delinquent payments, once a bankruptcy is filed, it’s required by the national credit reporting agencies that it appears on your credit report. A chapter 7 bankruptcy will stay on your credit report for 10 years and a chapter 13 will stay for 7 years.

The impact on your credit can hurt your future ability to qualify for a future loan or credit card. It might also affect your ability to be hired or secure living arrangements. Some employers and future landlords evaluate a persons credit score to determine if they are good candidates.

Working with a Bankruptcy Attorney

Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix chapter 11 bankruptcy that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.

AZBK Lawyers

668 N. 44th St., Ste 320, Phoenix, AZ 85008

(602) 648-3274

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