Bankruptcy law refers to the legal principles and statutes that provide relief to debtors facing overwhelming financial distress in Arizona. Generally, these principles and statutes are enacted at the federal level. However, the Arizona legislature has the prerogative to make laws that apply to the administration of bankruptcy petitions filed in the state. Unlike other civil cases, the Arizona judiciary does not have jurisdiction over bankruptcy petitions. Instead, the Arizona federal district bankruptcy court handles these cases.
Types of Bankruptcies in Arizona
There are six Chapters of bankruptcy in the United States. An individual may only file for one at any time. And as established by law, every Chapter has its rules, requirements, process, and implications for the debtor. The Chapters of bankruptcy an individual may file in Arizona are:
- Chapter 7 (Liquidation);
- Chapter 9 (Adjustment of debts of a municipality);
- Chapter 11 (Reorganization);
- Chapter 12 (Adjustment of debts of a family farmer or family fisherman with regular annual income);
- Chapter 13 (Adjustment of debts of an individual with regular income); and,
- Chapter 15 (Ancillary and other cross-border cases).
According to a report from the American Bankruptcy Institute, Chapter 7 and Chapter 13 are the most common types of bankruptcy filed in Arizona. Both chapters are open to persons and businesses faced with overwhelming debt.
Federal Bankruptcy Laws in Arizona
Generally, federal laws on bankruptcy laws are codified in Title 11 of the United States Code. The Bankruptcy Code highlights the process of each Chapter of bankruptcy and the implications of bankruptcy administration for a debtor. These laws are binding on every individual who files for bankruptcy regardless of state. Of importance is the Federal Rules of Bankruptcy Procedure, a more detailed body of systematic instructions on commencing a bankruptcy action, the obligations of the debtor, as well as the rights and privileges of debtors and creditors.
Furthermore, Congress regularly enacts legislation on the administration of bankruptcy in the country. These include the Fair Debt Collection Practices Act and the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCA). Other bodies of relevant federal statutes that influence bankruptcy include the Internal Revenue Code (about taxes during bankruptcy) and the Judiciary and Judicial Procedure (about the bankruptcy courts and judges).
Arizona State Bankruptcy Laws
The Arizona legislature may only enact laws that affect requirements, exemptions, and privileges that Arizona residents may enjoy when filing for bankruptcy. These statutes are found throughout Az. Rev. Stat. 33, and include specified domicile requirements, homestead exemptions, and bankruptcy fraud.
To check exploitation of Arizona bankruptcy laws by out-of-state debtors, the legislature mandates that every debtor making a petition for relief must meet domicile requirements. Generally, intending petitioners must have resided in Arizona for at least 730 days before submitting a petition.
Bankruptcy often involves the liquidation of the debtor’s valuable assets to pay creditors. Arizona made provisions for homestead exemptions to prevent debtor destitution. This deals with the exclusion of real estate and personal property worth under a specified amount from liquidation. Thus, the debtor gets to keep the exempted property.
Arizona Bankruptcy Law and the Debtor
Bankruptcy law is equitable to both debtors and creditors. An individual who intends to file for bankruptcy may retain the services of a reputable bankruptcy attorney. But it is no news that bankruptcy can be expensive. Thus, persons who wish to file bankruptcy without an attorney may use self-help resources available from official websites.
Given how nuanced the process can be, a rule of thumb is to at least consult a bankruptcy lawyer before starting the process. First consultation sessions are generally free for intending debtors. Stil, confirm the attorney’s billing policy before scheduling a session.