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Chapter 7, 11, 13         



Chapter 7 Bankruptcy Information


The following information is provided to give the reader a general understanding of Chapter 7 bankruptcy law and procedures. The information provided is not intended as a  comprehensive discussion on Chapter 7 Bankruptcy Law upon which a debtor may reasonable rely.  Each fact situation is different, thus each bankruptcy case is different and must be addressed accordingly. Bankruptcy law and procedure is very complicated and a debtor is strongly urged to seek professional legal advice before filing a bankruptcy petition.


           Bankruptcy is a Federal process and is based on the Federal Bankruptcy Code 11 U.S.C 101 et al, as well as various Arizona Statutes. The goal of a Chapter 7 bankruptcy case is to discharge those debts that are in fact dischargeable as noted in the Code and Statutes. Dischargeable debt includes, but is not limited to; most credit card debt, business and personal loans, medical bills, and deficiencies arising from repossessions. However, debt incurred within 90 days prior to the filing of a bankruptcy petition is presumed to be non-dischargeable.


           As there is dischargeable debt, there are some financial liabilities that are not dischargeable.  Types of non-dischargeable debts include, but are not limited to; alimony/child support obligations, DUI/DWI damage awards, criminal fines and/or restitutions, most taxes, and school loans.


          The fact that a debtor files for bankruptcy protection does not mean the Bankruptcy Court or creditors will come to your home and take away your assets. In Arizona, debtors have the benefit of statutes that exempt from attachments certain assets up to specific dollar amounts. The largest exemption is for a personal residence called the homestead exemption and it exempts $100,000 in equity from attachment. Other examples of allowable exemptions available (the amounts differ as applied to a single person or married couple filing a joint petition) include; $5,000 equity in a vehicle, $4000 in household goods, and $2500 in tools of the trade. There are other exemptions available for things such as wedding rings, family bible and pictures, a watch, typewriter, bike, even cemetery plots and of course your pets. Since there are numerous exemptions available it is critically important that you provide the Court with a detailed accounting and basic evaluation of value for ALL your assets.


The flipside to exempt property is that certain assets may not be exempt (non-dischargeable) and thus are subject to attachment and sale to pay creditors.  Examples of non-exempt assets include, but are not limited to; real property that is not a personal residence, stocks, bonds, annuities, if someone owes you money, business interests, valuable collections, sports’ season tickets, personal injury lawsuit settlements, motorcycles, ATVs, quads, boats, motors, RV vehicles, and of course tax refunds including a prorate claim against any refund you may receive for this years’ taxes (filed next year). 


           Now a little about the bankruptcy process after the bankruptcy documents are prepared and filed with the Bankruptcy Court. The Chapter 7 filing fee is $209.00 and is generally paid when the bankruptcy documents are filed, although debtors may request a payment plan. 


The day a debtor files his/her bankruptcy documents the “Automatic Stay” goes into effect.  Practically the Automatic Stay means creditors must, by federal law, cease and desist any and all collection efforts they are currently engaged in against debtor.  Creditors are notified by the Bankruptcy Court that a bankruptcy case has been filed, however, the notice may take several weeks resulting in inadvertent violations of the automatic stay. Intentional creditor violations of the automatic stay is an actionable violation of federal law. 


Approximately six weeks after your bankruptcy Petition is filed the debtor will have a mandatory appearance before the Bankruptcy Court called a “341/Meeting of Creditors”. The 341 has two essential purposes.  Per the Bankruptcy Code; the Court must actually see the debtor and determine proof of identity. To this end the debtor must bring to the 341 a picture ID and proof of his/her Social Security number.   The 2nd purpose of the 341 is that the Code requires that the debtor verify under oath that the information contained in their bankruptcy documents is in fact true and accurate to the best of their knowledge. Generally creditors do not attend the 341 however they have the right to appear and question you under oath as does the Trustee who presides over the 341.   


Approximately ninety days after the 341/Meeting of Creditors hearing you will receive your discharge letter in the mail and your case is essentially over at that point. However, post-discharge issues can and do occur and must be addressed. 


Let me reiterate, bankruptcy law and procedure is very complicated and filing a bankruptcy case should be considered only after all other available options are exhausted. If, upon careful consideration, bankruptcy protection is warranted it is imperative that a debtor seek professional legal advice so as to avoid the many bankruptcy pitfalls awaiting the unwary.  The old adage of being "pennywise and pound foolish" could not be more appropriate in the bankruptcy case context.  Retaining an attorney will usually result in savings that far outweigh the fee charged. 


The author maintains a statewide practice in all Arizona Courts, including the U.S. District Court, District of Arizona. The Law Office of DAVID W. REICHEL serves Maricopa and surrounding counties, conveniently located in Mesa at 86 W. University Drive, Suite 101C. 

Frequently Asked Questions  (FAQ)


United States Bankruptcy Court, District of Arizona


Bankruptcy Code - Title 11


Official Bankruptcy Forms

Where to File Bankruptcy in Arizona

World Bankruptcy Law

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