Phoenix Bankruptcy Law Blog

In late 2012, Wells Fargo conducted a survey of 300 Phoenix area residents, gauging their comfort levels with money and other financial matters. Interestingly, while at least 53 percent of people indicated that they were comfortable financially, at least 41 percent indicated that they had debt levels with which they were altogether uncomfortable.

According to recently released figures from the U.S. Bankruptcy Court in Phoenix, these people who were uncomfortable with their debt levels are not alone, as the number of personal bankruptcies filed in Phoenix and throughout the state reached a new high in April.

According to the bankruptcy court, there were approximately 1,645 bankruptcy filings in the Phoenix area and 2,234 bankruptcy filings throughout Arizona. While these numbers marked the highest totals yet 2013, it should be noted that bankruptcy filings declined by 18 percent and 17 percent respectively on a year-over-year basis.

Now that the real estate market here in Arizona and across the nation is officially on the mend, more people are feeling confident about the prospect of selling or even buying a new home. However, a recent survey by the online real estate company Zillow reveals that some of these prospective buyers may want to do a bit of research before hitting the market.

The survey, administered to over 1,000 current and prospective homeowners last month, asked a series of questions about basic mortgage terms and other key concepts that someone interested in buying a home would probably benefit from knowing.

The results were somewhat eye opening.

To the relief of people across the globe, the U.S. economy is finally showing some signs of improvement. However, financial experts are growing increasingly concerned that this recovery will ultimately stagnate thanks to the large number of young people currently saddled with student loan debt.

Specifically, they fear that the sheer volume of outstanding student loan debt -- which currently exceeds $1 trillion nationally -- coupled with limited lending/restricted credit standards, a still difficult job market and diminished earning prospects will cause many young people to divert the lion's share of their already limited incomes toward these debts. This, in turn, will stifle the nation's long-term economic recovery as they aren't making major life purchases (homes, cars, etc.) and limiting their consumer spending (clothes, restaurant meals, etc.

Those people looking to get started with their long overdue spring cleaning may have plans to head to the local Oreck store to shop for a new vacuum or a few essential cleaning products. What they may not realize, however, is that their favorite vacuum manufacturer is in “a precarious financial position.”

Specifically, the Oreck Corp. and eight associated entities have filed for Chapter 11 bankruptcy, citing falling sales, lost revenue and an inability to generate sufficient cash flow to cover expenses.

For the uninitiated, Chapter 11 bankruptcy is a form of bankruptcy in which a business proposes a reorganization plan that outlines how it plans to keep its operations running smoothly and pay off creditors over the course of time.

It’s been a relief -- especially here in Arizona -- to see the real estate market finally show signs of improvement as foreclosures have dropped, home prices have recovered and home sales have improved.

Furthermore, it’s also been a relief to see some of the outrageous legal issues associated with the foreclosure crisis come to a conclusion, particularly the robo-signing scandal.

To recap, federal officials and five major mortgage lenders (Wells Fargo, JPMorgan Chase & Co., Bank of America, Ally Financial and Citigroup) reached a historic $25 billion settlement with the attorneys general of more than 40 states in 2012 concerning widespread abuses in the mortgage industry and fraudulent foreclosure practices.

Here, the $25 billion settlement represented the culmination of a lengthy investigation by federal officials and state attorneys general into whether the aforementioned banks relied upon faulty procedures -- improper document review, falsified signatures and use of robo-signers -- to foreclosure upon thousands of homes.

The unfortunate reality, however, is that while these abuses in the mortgage industry may have come to an end, they are alive and well in the debt collection industry.

If you or a family member suffers some sort of medical emergency, it can prove to be a truly frightening experience. More than likely you will be rushed to an area hospital where you will undergo multiple rounds of tests and examinations by physicians over the span of several days before being released. In fact, it might surprise you to learn prior to your release from the hospital that you were never actually admitted, but rather placed on something called observational status.

While you may not think much of this at the time, it can actually have a profound financial impact further down the line. The reason? Insurance companies view observational status and hospital admittance as two very different things, proving far less willing to cover the former than the latter. This means that you, the patient, may be stuck with a much higher medical bill than you anticipated.

When it comes to dinner party discussions and other social encounters, most people stick to the topics otherwise deemed acceptable by polite society, including family, the weather, sports and movies. Furthermore, most people also make a conscious effort to avoid potentially controversial topics such as religion and politics.

A recently completed telephone poll of 1,005 Americans by the website CreditCards.com, however, revealed that there is actually a conversation topic that many people now find even more taboo than the church you attend or your stance on government spending: credit card debt.

Specifically, the poll found that people were either "somewhat unlikely" or "very unlikely" to address the following topics with someone they just met:

1. Credit card debt (85 percent)
2. Your love life (84 percent)
3. Your income (80 percent)
4. Your mortgage payment/rent (71 percent)
5. Your health issues (71 percent)

Back in March, our blog discussed how Arizona lawmakers were considering legislation -- House Bill 2325 -- calling for a significant overhaul of the state statutes governing bankruptcy exemptions.

If you are unfamiliar with the concept of bankruptcy exemptions, they essentially safeguard certain property from both creditors and bankruptcy trustees. To illustrate, if you file for Chapter 7 bankruptcy, you will have to liquidate (sell) property in order to secure a fresh financial start. However, exemptions serve to prevent certain property (i.e., car, personal belongings, etc.) from liquidation.

In general, there are two sets of exemptions: state and federal. The majority of states have created their own set of exemptions that are used in place of the federal exemptions, while a few others give debtors the choice between using their exemptions or the federal exemptions.

Here in Arizona, we have our own set of exemptions that all parties filing for bankruptcy must utilize, meaning the federal exemptions are not allowed and we can amend our exemptions as we see fit.