Busy times for bankruptcy lawyers
“Normally I’m setting up businesses, and right now, nobody is opening any,” said bankruptcy attorney Lisa Thompson. “So I started doing consumer bankruptcy here in
In 2007, Thompson opened a practice in
“The economy hits attorneys in law,” Thompson said. “When people can’t pay, people aren’t litigating.”
Along with bankruptcies, foreclosures are currently at an all-time high. According to a report by the Mortgage Bankers Association, more than 900,000 homes are in the foreclosure process across the country, up 71 percent from last year.
With home mortgages and credit card debt, some people see bankruptcy as one solution.
“In situations like the ones I see, you’re not going to dig yourself out unless you win the lottery,” said Thompson. “Declaring bankruptcy allows you to have a fresh start.”
It may be a fresh start for some, but there are different types of bankruptcy.
Chapter 7 bankruptcy is commonly referred to as liquidation because individuals collect their belongings and sell them in order to pay off their creditors. However, the reality is, selling property from an individual’s estate doesn’t always eliminate their debt.
“I might have paid a lot for an item, but you’d give me $5 for it at a garage sale,” Thompson said. “Most people don’t have the Hope Diamond just sitting around.”
The most recognized form of bankruptcy for individuals is Chapter 13, where people come up with a five-year-plan on how they’re going to pay off their debt. Chapter 13 is most widely known because people are able to keep assets such as their house or car if it falls under the exemption.
According to state and federal exemption tables, individuals filing Chapter 13 in
Katie Ryan is a Tucson-based freelance writer.