Bankruptcy protection provides federal protection for those people who have honestly but unfortunately fallen into very heavy debt. Many debtors use this as their last option to discharge their debts and begin their financial life anew, without being burdened by their financial mistakes. Chapter 7 and 13 are two main forms of personal bankruptcy for which an Arizona resident may be eligible, based on their income and assets.
Debtors filing for bankruptcy must usually compile a complete list of their income and their assets, as these assets and income may be liquidated and the proceeds used by the bankruptcy trustee to repay their debts. It is incredibly important to provide an honest account of these items, because if a judge finds out later that someone has fraudulently hidden or transferred assets in order to avoid repaying debts, the bankruptcy judge may not only deny a bid to discharge debts through bankruptcy, but also may give some other punishment, as well.
Even though 90 percent of bankruptcies are approved, those that have fraudulent filings may get denied. This is the case for an Arizona-based couple who filed forChapter 7 bankruptcy, but who were later shown to have transferred money and property to family members before the proceedings in order to avoid using those items to repay their debt. They also didn't mention the luxury cars they were driving or the hundreds of thousands worth of jewelry they owned in the bankruptcy filing. All of these were factors that the bankruptcy court considered before denying their bankruptcy filing.
It is possible to be mistaken about the assets owned and their worth. An experienced bankruptcy attorney may be able to guide Arizona residents through the process to ensure that they file the correct papers and are able to restart their financial lives without any complications.
Source: The Republic, "Judge: Bankruptcy Phoenix real-estate investor did not disclose assets," Catherine Reagor, May 5, 2014