Home -> Law Blog Directory -> Bankruptcy Blogs -> Arizona Bankruptcy Attorney Blog

Bankruptcy

: Arizona Bankruptcy Attorney Blog

The Top Three Per Cent of Chapter 7 Bankruptcy Cases in Phoenix

By Joseph McDaniel, Esq.

If you're in school, and you score in the top three per cent of class, there's a good chance that your parents will be happy with you.

If you weigh as much as the top three per cent of the population, on the other hand, you'll probably have serious health problems.

The consequences of being an overachiever are different in different contexts.

And so it is with Chapter 7 Bankruptcy Cases in Phoenix, Arizona, or Chandler, or Gilbert, or anyplace else in Arizona.

The vast majority of bankruptcy cases in Arizona are called "no-asset" cases, because they have assets that, if squeezed, would produce less than eight hundred dollars in value. That is, all of the assets in the case are either fully encumbered, over encumbered, worthless, or exempt.

Exempt simply means that it's listed on the laundry list of exemptions in Arizona. I've cut and pasted that laundry list from the U.S. Bankruptcy Court Website below, using a tool called "scribd".

But the core of today's bankruptcy lesson is this: there are consequences to all of the decisions you will make in connection with your bankruptcy case, and explaining fully all of the consequences of all of those decisions will probably take me another thousand posts or two.

One decision you may make is to sell your non-exempt vehicle prior to filing, and to use that money to buy food, make a mortgage payment, and to pay your bankruptcy lawyer.

You may instead decide that it's too much trouble, and you just don't care about the extra thousand or three thousand dollars you'd get from selling your extra car, or non-exempt motorcycle.

That decision also has consequences, although they are different consequences from the decision above.

A decision to leave assets in a bankruptcy case (that is, to decide not to sell your non-exempt assets to buy food, fuel and provisions, and for other similar purposes) simply means that you are going to be in the top 3% of Bankruptcy Filers!

And your case will get as much attention from your appointed Bankruptcy Trustee as all of the 97% of no-asset cases put together.

That's not in any way fatal; but a bankruptcy trustee is motivated by both virtue, and by economic consequences, like most people in our culture. Therefore, a bankruptcy trustee will work hard to determine whether to stamp your file "no-asset", so it's off their desk, or to determine whether the total amount that can be squeezed out of the non-exempt assets in the estate will bring at least $800 or $1,000.

If so, expect your case to be open for administrative purposes for four years or so, as opposed to a "no-asset" case, which will probably be open for administrative purposes for a year or less.

A debtor's personal involvement with either sort of case is often done with in the first 100 days of the Chapter 7 Bankruptcy Case, but it ain't over till it's over.

And then it's not over, either, because in some cases, a trustee will discover unlisted assets and move to reopen the case.


Arizona Exemptions

Full post as published by Arizona Bankruptcy Attorney Blog on February 22, 2011 (boomark / email).