On behalf of Ellett Law Offices , P.C. posted in 1. Chapter 7 on Wednesday, September 26, 2012
When consumers owe large amounts of debt, they can easily fall behind on their payments. This can create serious problems and repercussions for consumers in Arizona and elsewhere. Along with damaging credit scores, falling behind on debt payments may prompt a creditor to file a lawsuit against those who owe past due amounts. However, one way consumers or businesses can remedy this is to petition for Chapter 7 bankruptcy, which puts an automatic stay on the lawsuit. This means that the lawsuit is halted and any legal actions against the petitioner is stopped while the bankruptcy is processed.
This is what one business, owned by a couple, decided to do recently when their bank filed a lawsuit against them for failure to pay debts owed. Their bank had attempted to put up the property, in which their business was located, for auction. However, when the couple filed for Chapter 7 a notice of a bankruptcy stay was sent to the court which took the property off the auction block. It also stopped the bank’s legal action against the couple pending the resolution of the bankruptcy proceeding.
Prior to the filing of the bankruptcy, the bank had loaned the couple $168,000. That was in October 2006. The couple agreed to repay the debt in 240 installment payments. The lawsuit alleges that the couple failed to make some required payments. The bank’s complaint asked for $150,790.87, which is the total unpaid balance. The bank also sought $2,000 for legal fees and interest.
A Chapter 7 bankruptcy petition in Arizona typically results in the appointment of a trustee by the court. That trustee is responsible for marshaling assets and overseeing their liquidation so that the proceeds may be applied to outstanding debt. Secured claims, such as those held by a mortgage lender, are considered ahead of unsecured claims.
By choosing to meet outstanding financial obligations through bankruptcy, individuals look to make good on their debt problems to the greatest extent possible while laying the groundwork for a return to financial stability.
Source: Republican Herald, “Deer Lake Inn owners file for Chapter 7 bankruptcy,” Amy Marchiano, Sept. 17, 2012
Tags: Chapter 7, bankruptcy protection, personal bankruptcy
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