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Arizona Bankruptcy Questions & Answers
3 Answers | Asked in Bankruptcy, Divorce and Family Law for Arizona on
Q: Is 401K money protected in a chapter 7 bankruptcy from creditors. I am owed 401K money from my ex, and haven't received

I was told to contact bankruptcy lawyer. It was ordered in separation agreement and divorce, but he has not done the QDRO for me to receive my portion. Can I begin QDRO while the bankruptcy is in process? Will I lose the money? Thank you.

Diane L. Drain
Diane L. Drain
answered on Dec 29, 2023

When a bankruptcy is filed, it should be planned ahead. The goal is to make the debtor and their transactions as boring as possible. You can do this with an experienced bankruptcy attorney who cares about their clients.

As to your questions, first you have to determine which exemptions you...
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3 Answers | Asked in Bankruptcy, Divorce and Family Law for Arizona on
Q: Is 401K money protected in a chapter 7 bankruptcy from creditors. I am owed 401K money from my ex, and haven't received

I was told to contact bankruptcy lawyer. It was ordered in separation agreement and divorce, but he has not done the QDRO for me to receive my portion. Can I begin QDRO while the bankruptcy is in process? Will I lose the money? Thank you.

James L. Arrasmith
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answered on Dec 31, 2023

In Arizona, 401(k) funds are generally protected from creditors in a Chapter 7 bankruptcy. This means that these retirement assets are typically exempt and cannot be used to pay off bankruptcy debts. However, your situation involves a divorce decree and a Qualified Domestic Relations Order (QDRO),... View More

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3 Answers | Asked in Bankruptcy, Divorce and Family Law for Arizona on
Q: Is 401K money protected in a chapter 7 bankruptcy from creditors. I am owed 401K money from my ex, and haven't received

I was told to contact bankruptcy lawyer. It was ordered in separation agreement and divorce, but he has not done the QDRO for me to receive my portion. Can I begin QDRO while the bankruptcy is in process? Will I lose the money? Thank you.

Martha Warriner Jarrett
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answered on Dec 29, 2023

Once you receive the money, so long as you leave the money in the 401(k) (or rollover IRA) and don't withdraw it, the funds will be exempt (protected). You should consult a local attorney (preferably one with both bankruptcy and Arizona family law experience) about the timing and procedure for... View More

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3 Answers | Asked in Bankruptcy for Arizona on
Q: Does bankrtupcy annul unpaid Decree ordered, joint-child expenses (medical & extracurricular) that are in arrears?

I filed bankrtupcy and have completed my hearing. My ex spouse has several years of unpaid *Decree Ordered* joint-child expenses. Specifically outlined as "Medical and extracurricular", as agreed in writing. Now he claims he no longer owes those arrears because of the bankrtupcy. I... View More

Martha Warriner Jarrett
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answered on Nov 20, 2023

Your bankruptcy does not affect amounts that are owed to you, whether pursuant to a court order or otherwise. It discharges amounts that you owe, but not the ones that are owed to you. Further, all amounts that you receive in the form of child support or spousal support are exempt (they cannot be... View More

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3 Answers | Asked in Bankruptcy for Arizona on
Q: Does bankrtupcy annul unpaid Decree ordered, joint-child expenses (medical & extracurricular) that are in arrears?

I filed bankrtupcy and have completed my hearing. My ex spouse has several years of unpaid *Decree Ordered* joint-child expenses. Specifically outlined as "Medical and extracurricular", as agreed in writing. Now he claims he no longer owes those arrears because of the bankrtupcy. I... View More

W. J. Winterstein Jr.
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W. J. Winterstein Jr.
answered on Nov 20, 2023

The long-standing key issue about domestic relations payments in the bankruptcy context is whether the (divorce) required payments are in the nature of property division (which are dischargeable) or for spousal or child support (not dischargeable).

In many states, the divorce section of the...
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1 Answer | Asked in Bankruptcy and Collections for Arizona on
Q: Arizona: creditor won't repossess or release lien on motorcycle of deceased ch7 filer

The executor/beneficiary lives in NC and does not ride motorcycles. The bike is at a dealer in AZ and they want to get rid of it. The creditor has stated no interest in repossessing but will not release lien. In some states that is a violation of bankruptcy code. There is no money in the estate to... View More

James L. Arrasmith
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answered on Nov 5, 2023

If the creditor refuses to repossess the motorcycle or release the lien, and assuming the debt was discharged in the Chapter 7 bankruptcy, you may need to reopen the bankruptcy case to file a motion to compel the creditor to act. It’s also possible to negotiate with the creditor, explaining that... View More

2 Answers | Asked in Bankruptcy for Arizona on
Q: Would we be able to file for an Arizona homestead exemption in a bankruptcy filing if we have relocated to C CO in Aug

I relocated to Colorado at the middle of August, with my husband spending time in both CO and in Arizona since July. We did so (renting a house in CO) so that we could sell our Arizona home and use the equity to pay off all of our unsecured debt. Since moving we have lost two contracts on the... View More

James L. Arrasmith
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answered on Nov 5, 2023

The ability to claim an Arizona homestead exemption in bankruptcy depends on several factors, including the timing of your relocation and your intent to return to the home. Generally, to claim the exemption, the property in question must be your primary residence. If you've moved to Colorado... View More

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2 Answers | Asked in Bankruptcy for Arizona on
Q: Would we be able to file for an Arizona homestead exemption in a bankruptcy filing if we have relocated to C CO in Aug

I relocated to Colorado at the middle of August, with my husband spending time in both CO and in Arizona since July. We did so (renting a house in CO) so that we could sell our Arizona home and use the equity to pay off all of our unsecured debt. Since moving we have lost two contracts on the... View More

Diane L. Drain
Diane L. Drain
answered on Nov 5, 2023

I wish your question had a simple 'yes' or 'no' answer, but the answer depends on timing. There are specific time periods that apply to the filing of any bankruptcy and which exemptions can be used. Your unique situation makes it extremely important that you talk to an... View More

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2 Answers | Asked in Bankruptcy and Collections for Arizona on
Q: Arizona: creditor won't repossess vehicle of deceased ch7 filer

A person passed in Aug of 2022. He had completed ch7 but there was a secured loan on a motorcycle. The creditor won't repossess and the estate can't sell because they also won't release the lien. The estate does not have money to pay the loan off. Is what the creditor is doing legal... View More

James L. Arrasmith
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answered on Nov 5, 2023

In Arizona, creditors are not obligated to repossess collateral such as a motorcycle. If they choose not to repossess or release the lien, this is within their rights, although it can be frustrating for the estate handling the deceased’s affairs. The estate has a few options: One is to negotiate... View More

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2 Answers | Asked in Bankruptcy for Arizona on
Q: I am filing chapter 7, pro se, no assets case, but wish to keep my car which I owe $4500 with a blue book value of only

…$2800. I am current on my $150 monthly car payments and can easily afford to continue it with my monthly budget. I don’t mind being upside down on it because it’s super reliable & I’ve put a lot of parts/labor into it. Please inform me of the PROPER procedure to request at the... View More

Diane L. Drain
Diane L. Drain
answered on Aug 13, 2023

The following assumes you are filing in Arizona. A denial of the reaffirmation is NOT bad. It means you can keep the vehicle so long as you are current on payments at the time of the reaffirmation hearing, and that you stay current. Also, the vehicle needs to be insured. The judge denies the... View More

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2 Answers | Asked in Bankruptcy for Arizona on
Q: I am filing chapter 7, pro se, no assets case, but wish to keep my car which I owe $4500 with a blue book value of only

…$2800. I am current on my $150 monthly car payments and can easily afford to continue it with my monthly budget. I don’t mind being upside down on it because it’s super reliable & I’ve put a lot of parts/labor into it. Please inform me of the PROPER procedure to request at the... View More

James L. Arrasmith
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answered on Sep 8, 2023

In a Chapter 7 bankruptcy, you are indeed given an opportunity to reaffirm debts; reaffirming your car loan would mean that you agree to continue making payments on the car and keep it. When you attend the reaffirmation hearing, you can express to the judge your desire to have the reaffirmation... View More

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2 Answers | Asked in Bankruptcy, Tax Law and Identity Theft for Arizona on
Q: I’m filing chap 7 bankruptcy pro se & am listing all my debts. I have a 2020 overdue tax of $4K from someone who…

…stole my identity. Should I still include this in my list of debts since ‘technically’ it’s filed under my identity? Or not include it? I don’t want to delay the process or worse have my petition denied based on omission. On the other hand, if I list it, won’t that be considered as... View More

W. J. Winterstein Jr.
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W. J. Winterstein Jr.
answered on Jul 15, 2023

If you look at the Official Bankruptcy forms, you will see that there is a column to note whether the CLAIM is disputed, contingent or unliquidated. Your obligation is to list all CLAIMS against you, and the holders of those claims, whether you agree with the claim or not (unlisted creditor's... View More

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1 Answer | Asked in Bankruptcy, Estate Planning and Foreclosure for Arizona on
Q: An irrevocable trust, property as an asset in that irrevocable trust, and collection of delinquent HOA fees in Arizona.

I and my wife are the beneficiary of an irrevocable trust (the settlor is deceased). After speaking with the trustee/attorney, we chose to not transfer the title out of the trust until my wife and I felt comfortable. In addition, my wife and I live in the home (and have since before the trust was... View More

W. J. Winterstein Jr.
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W. J. Winterstein Jr.
answered on Jul 13, 2023

Have an experienced attorney in AZ examine your HOA covenants with a title examination of the residential property. Most probably, The Homeowner's Association enjoys written covenants in the real estate records that apply to each property and give it a right to impose the debt with priority... View More

2 Answers | Asked in Bankruptcy for Arizona on
Q: Can I convert my chapter 13 bankruptcy to a chapter 7 bankruptcy? I live in Arizona.

Last year (in 2022), I filed a chapter 13 bankruptcy. At the time I filed, I did not qualify for a chapter 7 bankruptcy because the equity in my car was too high.

After I filed my chapter 13 bankruptcy, in November of 2022, the majority of voters voted yes on Arizona proposition 209 which... View More

Diane L. Drain
Diane L. Drain
answered on May 1, 2023

Mr. Denison's answer is not correct for Arizona, but it might be for his state. This is a much more complicated question than you realize. Prop 209 is being challenged. Plus Prop 209 (assuming it stands as is), will only apply to those bankruptcies filed after December 5, 2022. Depending on... View More

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2 Answers | Asked in Bankruptcy, Banking, Civil Litigation and Collections for Arizona on
Q: Is there anything I can do about a bank that allowed an LLC account to be closed despite a granted Charging Order?

I obtained the interest in a one member owned LLC by Charging Order. The LLC contained tens of thousands of dollars, but the the bank disregarded the Order and allowed the member to close the bank account. The Order specifically stated my interest in the money within the account. The member no... View More

David H. Relkin
David H. Relkin
answered on Apr 23, 2023

A common charging order issued against a Bank holding funds in a bank account of a judgment debtor can render the Bank liable when it allows the account to be depleted by anyone other than the Court or without the consent of the judgment creditor -- in this case, you. I have successfully collected... View More

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2 Answers | Asked in Bankruptcy for Arizona on
Q: I filed jointly for a CH 13 Bankruptcy in 2018. My spouse died in 2020 and I was still paying off his auto within the

plan. I asked to surrender the car and the creditor was informed. Creditor has not taken the car. Can I get the title from the creditor with lien release?

Diane L. Drain
Diane L. Drain
answered on Mar 27, 2023

Great question, but it would be necessary to gather a lot more information in order to help you determine your rights. First - contact your attorney. They should know why you filed the bankruptcy and what you want to accomplish. If you did not use an attorney (good job getting this far because... View More

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1 Answer | Asked in Bankruptcy and Real Estate Law for Arizona on
Q: I filed Ch.7 bankruptcy. Can my co-owner legally come after me for not paying the mortgage?

I filed Ch.7 bankruptcy in June 2022. I was able to keep my house. I was told I'm not liable for the mortgage/loan, but the bank can foreclose if it's not paid. I share the home with a co-owner. I want to know if I don't pay any of the mortgage, can the co-owner legally come after me... View More

Timothy Denison
Timothy Denison
answered on Jan 18, 2023

No one can take any action while the automatic stay is in place. Your co-owner should have been listed in the bankruptcy as a potential creditor which would preclude him from coming after you for the money although he may be within his rights to ask that it be sold.

3 Answers | Asked in Bankruptcy, Business Formation, Business Law and Contracts for Arizona on
Q: Two small business entanglement debt and liability question.

My employer (E) has two small businesses (A and B) both 100% owned by E. Business A owes business B a significant amount of money for services accumulated throughout the years. However, E wants to protect the assets of A from any happenings relating to B. If B goes bankrupt will the creditors of B... View More

W. J. Winterstein Jr.
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W. J. Winterstein Jr.
answered on Jan 16, 2023

A trustee in bankruptcy "steps into the shoes of the debtor". Consequently, a bankruptcy trustee is entitled to pursue and collect/liquidate any obligations to the debtor.

That's in a Chapter 7 case, where a trustee is automatically appointed.

In a Ch. 11, the debtor...
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3 Answers | Asked in Bankruptcy, Business Formation, Business Law and Contracts for Arizona on
Q: Two small business entanglement debt and liability question.

My employer (E) has two small businesses (A and B) both 100% owned by E. Business A owes business B a significant amount of money for services accumulated throughout the years. However, E wants to protect the assets of A from any happenings relating to B. If B goes bankrupt will the creditors of B... View More

Diane L. Drain
Diane L. Drain
answered on Jan 16, 2023

Your "employer" needs to talk with an experienced bankruptcy attorney in order to determine their best course of action. This is not a decision that should be made lightly. Do not rely on a "mass-production" law firm (one that pays for advertising on the Internet or TV).... View More

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1 Answer | Asked in Bankruptcy, Collections and Municipal Law for Arizona on
Q: Local court has sued my sister-in-law for credit card debt that I have incurred. They think she is spouse. Options?

-Received two certified letters, one addressed to me, one to sister-in-law.

-Certified letter indicating summary judgement refers to her as spouse, which she is not.

-The debt I have incurred is my own, I am disabled.

-I cannot pay at this time, how can I exonerate my poor sister-in-law.

Diane L. Drain
Diane L. Drain
answered on Sep 30, 2023

Your sister-in-law needs to file an answer stating that she is not your wife, nor is she liable to for the debt (unless she is).

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