Your Tax Refund in Chapter 7 Bankruptcy

In Chapter 7 bankruptcy in Arizona, a tax refund is considered to be an asset that is held by another party but owed to you. The tax refund is counted as part of the bankruptcy estate. Just like a savings account or other bank account, your tax refund must be listed among your assets.



An anticipated tax refund could affect the timing of filing for Chapter 7 bankruptcy in Arizona. If you are not sure, then it is wise to consult with a team of experienced bankruptcy attorneys, such as The Frutkin Law Firm, PLC, in Phoenix, AZ. These bankruptcy lawyers can help you determine the best timing for filing for bankruptcy in Arizona.

Be Careful Paying Creditors before Chapter 7 Bankruptcy

If you are considering filing for Chapter 7 bankruptcy in Phoenix, Arizona, consult with a qualified bankruptcy attorney. Before the filing it is important that you make payments to all of your creditors or to none of them. Paying just some of your debts means showing preference for one creditor over another. It is the court’s job to make sure that all creditors are treated equally in a Chapter 7 bankruptcy filing.





Within a 90 day period of your Chapter 7 bankruptcy filing, any payments that you make to creditors can be taken away from that creditor and returned to the trustee of your Chapter 7 bankruptcy case. That period is up to one year for payments made to an “insider,” such as a relative or friend. This rule does not apply to regular and necessary expense payments such as car payments, house payments, rent, and utilities.

An experienced bankruptcy law firm, such as The Frutkin Law Firm, PLC, in Phoenix, AZ, should be consulted about how to handle debt payments prior to filing for Chapter 7 bankruptcy.

What if My Wages have been Garnished?

Filing for Chapter 7 bankruptcy can invoke a legal provision known as the automatic stay. This stay immediately stops all creditors’ attempts to collect a debt during your case. This stay will immediately stop a wage garnishment - or keep one from being started in the first place. There is an exception, however, if the garnishment if for child support payments or similar debt that cannot be discharged in Chapter 7 bankruptcies.

The automatic stay stops garnishment or levies of wages or bank accounts, collection attempts through harassing phone calls or letters, starting or continuing any lawsuits, repossession of assets, and foreclosure on property.

Both Chapter 7 bankruptcy and wage garnishment are serious situations. The bankruptcy attorneys at the Frutkin Law Firm, PLC, in Phoenix, Arizona, have decades of experience in handling bankruptcies cases. They can help you determine the right path for your circumstances.

Can I Get A Lien Strip in Chapter 7 Bankruptcy?

No. Lien strips can only be sought with a Chapter 13 bankruptcy filing or Chapter 11 bankruptcy filing. Furthermore, lien stripping is a complicated procedure with many variables and it is important to consult with a knowledgeable bankruptcy lawyer. The Frutkin Law Firm in Phoenix, Arizona, has decades of experience with all types of bankruptcy filings.

A lien is a debt, and a secured lien is a debt that is tied to an asset such as your home. A lien strip means to have a lien, such as a second mortgage, reclassified as unsecured. During Chapter 13 bankruptcy payments, secured liens are paid first, and unsecured liens are paid later or not at all. This can amount to a huge difference in how much repayment must be made.

An Overview of Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type of bankruptcy filed by individuals in Phoenix, Arizona. Also known as the liquidation bankruptcy, the fresh start bankruptcy, and straight bankruptcy, chapter 7 bankruptcy allows an individual to get out from under crushing debt.

All non-exempt property is sold and the proceeds are divided among creditors in amounts decided by the bankruptcy trustee. Most of the debts that are not repaid will be discharged (except for tax debt, child support and alimony debt, and school loans).

For individuals that do not have much property to lose, Chapter 7 bankruptcy is a good solution. This type of bankruptcy filing is straightforward and relatively simple. There are some exemptions for property, but most of your assets will be lost. Even without the exemptions, a chapter 7 bankruptcy is still a viable solution to serious debt problems.

Discuss your decision to file for bankruptcy with a qualified bankruptcy attorney in AZ, such as The Frutkin Law Firm. There are a number of bankruptcy provisions in the law, and experienced bankruptcy attorneys will be able to help you determine which is the right classification, and how exactly the bankruptcy filing will affect your financial situation and your property.

How Long After Chapter 7 Bankruptcy Before My Credit Score Improves?

After a filing for Chapter 7 bankruptcy, your credit score will likely be at 500 or below which is considered, “poor.” But after a Chapter 7 bankruptcy discharge, your credit scores are effectively reset and within about one year you could see that score improve if you take some positive steps.

Good debt, or positive credit activity, can help bolster your credit score. By paying regular obligations on time each month – such as utility bills, rent, etc – you will begin to see improvement in the score. When you are able to secure new credit and you continue to use and repay that credit responsibly, you will also see improvement.

A bankruptcy will stay on your credit report for 10 years, but the negative effects on your ability to secure new credit should not last beyond the first couple of years. Before you decide to file for bankruptcy, consult with experienced bankruptcy lawyers at The Frutkin Law Firm in Phoenix, Arizona.

What is Straight Bankruptcy?

Straight bankruptcy is another term for a Chapter 7 bankruptcy, also known as liquidation or fresh start. In Chapter 7 bankruptcy, all non-exempt assets are collected and sold. All proceeds from the sale are distributed to creditors in amounts deemed appropriate by the bankruptcy trustee assigned to the case.

While it is possible to file for Chapter 7 bankruptcy without a bankruptcy attorney, it is not advisable. Having an experienced bankruptcy lawyer on your side can help you understand and navigate the bankruptcy codes, including what amounts and types of assets can be exempted from sale.

A great bankruptcy law firm, like Frutkin Law Firm, PLC, in Phoenix, Arizona, can also help you navigate the aftermath of bankruptcy and set you on a course for solid financial recovery.