Bankruptcy

Should I File A Bankruptcy in Arizona?

By Joseph McDaniel, Esq.

Well, here's a pretty precise answer.

I don't know for sure.

When I get an email asking me if somebody should file a bankruptcy, it makes me a little hinky because it seems to me that it isn't a legal question: it's a personal, economic, and practical question.

On the one hand, there's the Joseph C. McDaniel Rule of Bankruptcy Inevitability, which I change on days ending with "y", which holds generally that if your unsecured debt (like credit card debt and mortgages that are underwater and medical debt) is greater than your yearly net income, there's probably a bankruptcy in your immediate future, partly because there's a lawsuit and a trustee's sale or mortgage foreclosure or debtor's exam in your immediate future.

Then there's another consideration: if you are pulling money out of a savings account, like a 401(k) or an IRA, in order to pay ordinary credit card debt minimum interest payments, I WANT YOU TO GET OFF YOUR DEAD BEHIND AND FILE A BANKRUPTCY TO STOP THE BLEEDING!!!! Unless there's some great reason to wait, like the preference payment of $70,000 to mom, which just means that you'll be waiting to file for a year and a day or so after the date when mom cashed the check, or got the lien, or whatever.

Unless you don't like mom very much. In which case, how quick can you fill out the forms for me?

There are other considerations.

Some people have a moral revulsion when they year the word "bankruptcy".

I get it.

But do you know what they do to men who have prostate cancer? I have a moral revulsion to that as well, but I'll be right there in the take-a-number system if my PSA ever looks bad enough, you know?

And moral revulsion or no, there was a Jubilee Year in Leviticus where debts were forgiven without the asking, and that (along with the seven-year period) sounds a lot like a public, institutional bankruptcy to me. Although we're too darn good for the Bible, so we have an eight-year cycle in bankruptcy law now.

And sometimes you just gotta cowboy up and do what you gotta do.

And then there are a thousand mechanical details: No, you shouldn't file a bankruptcy until you pass the means test. No, you shouldn't file a bankruptcy until this is the right venue for you. No, you shouldn't file a bankruptcy until you spend your tax refund on milk and cookies and your Arizona bankruptcy lawyer.

But DO NOT SPEND THE RETIREMENT FUNDS YOU TOOK THIRTY YEARS TO BUILD UP MAKING MINIMUM PAYMENTS ON CREDIT CARD DEBT AFTER YOU LOSE YOUR JOB, unless a lawyer you have paid for advice tells you it's a great idea for you, after he understands everything about your situation!

In general, though, IT'S STUPID, AND PUTS A BURDEN ON YOUR CHILDREN, WHO WILL NEED TO SUPPORT YOU WHEN YOU ARE FINISHED THROWING YOUR RETIREMENT DOWN THE TOILET!!

On the other hand, that's just a personal opinion, and not a legal opinion in any way, manner or shape.

Note: there are a fair number of folks who think they need to file a bankruptcy and really don't. There are far more people who need to file (I'll plug in the study when I find it again) a bankruptcy and do not, instead spending themselves into beggary.

That's a bad thing, for future reference.

And if you already spent yourself into beggary, and you are finally ready to file a bankruptcy now that you have no money and all your non-exempt assets have all been seized by creditors, I will have to tell you the same thing that psychologists say to their patients: "My love is free. My time will cost ya."

But I won't point and jeer because you goofed up.

Because I get it.

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NOTHING IN THIS BANKRUPTCY BLOG CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY ATTORNEY WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on September 04, 2010 (boomark / email).