Olga Zlotnik
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Bankruptcy

Olga_Zlotnik_profileNavigating the Bankruptcy Tide:
Tips to Help You Stay Dry and Steer Clear of Bankruptcy

When people are being hounded by creditors and going through tough financial times, they come to me for help.  In listening to, advocating for, and helping my clients, I have had the privilege of learning some financial do’s and don’ts.   The truth is that financial trouble can happen to anyone.  For example, job loss, which often times means that there is no longer enough money to pay the bills, is one common reason why someone you know may be forced to file for bankruptcy.  The loss of a job usually is the type of financial hardship in life that is out of our control.  But, some financial issues can be avoided with help and guidance.  In prior issues, I introduced you to the first ten tips to staying out of bankruptcy. Here are the next two tips:

Tip 11: Do Ensure You Are Protected in a Short Sale Situation. 

Can the lender come after you for additional funds after you short sell your home?  It can if you are not careful.  In the event of a foreclosure, Arizona law usually protects homeowners from being sued for additional funds or a “deficiency” (a deficiency is the difference between what was owed on the home loan and the value of the home or what the home sold for at the foreclosure). But, the same protection does not expressly apply to short sales.  So, when you short sell your home and there is nothing in the short sale paperwork to explicitly state that the lender waives any claim against you for additional funds, then there is a good chance that the lender can still sue you for additional funds after the short sale is done.  Simply put, in the case of short sales, careful negotiations are necessary to protect you from deficiency liability and it is strongly advisable to seek legal advice and review of the short sale documentation.  Otherwise, the lender may have a right to sue you for a deficiency and after it does, you may be headed for bankruptcy.

Tip 12: Do Address Separate Debt Issues Prior to Marriage.

Debts that you may have had prior to marriage can continue to haunt you well into your marriage.  In Arizona, creditors usually cannot collect from marriage or community assets for debts incurred by a spouse prior to the marriage.  While a creditor cannot take any community assets, the creditor can continue to collect to the extent of the indebted spouse’s contribution to the marriage (assuming a bankruptcy has not been filed).  This means that a creditor can still garnish wages of the spouse who owed the debt even if the debt is on something that the spouse owed prior to the marriage.  If the spouse who incurred the debt is no longer working, then this rule will not be a big issue.  But if the indebted spouse has a good paying job, then a looming wage garnishment lies ahead.  And if your wages are being garnished, you may start thinking about bankruptcy, as a bankruptcy will stop the wage garnishment.

Stay tuned for next month’s issue on additional tips to help keep you dry and out of bankruptcy.  For more information on bankruptcy, debt, and litigation-related issues, please visit www.olgazlotniklaw.com

If you are feeling overwhelmed with debt and need peace of mind, please contact me for a FREE bankruptcy consultation at 480-788-7011 or info@olgazlotniklaw.com, www.olgazlotniklaw.com

DISCLAIMER

Please note that the information provided is for informational purposes only and does not constitute, and should not be considered legal advice. Transmission of the information contained here and receipt by the reader is not intended to create and should not be construed as creating an attorney-client relationship. The only way to create an attorney-client relationship with us is through a written and signed agreement with us.  The bankruptcy law services described herein are with respect to bankruptcy relief under the Bankruptcy Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.