Allegrucci Law Office Local, Bankruptcy Attorney, General Practice (623) 412-2330
Note: The Articles below are for informational purposes only. Said articles are not intended to provide legal advice, nor should they be used as such, as there is no intended audience for this information.
The term Debt” in this article refers to money received in a credit or loan transaction. “Debt” herein does not refer to court fines, criminal fines or restitution, or support obligations. There was an ancient practice, if a person could not repay their debts, they would be thrown into prison until they somehow figured out how to repay their debts. This concept is so ancient it is mentioned as a fact in the Gospels.
Therefore is the kingdom of heaven
likened unto a certain king, which
would take account of his servants.
And when he had begun to reckon,
one was brought unto him, which
owed him ten thousand talents.
But forasmuch as he had not to pay,
his lord commanded him to be sold,
and his wife, and children, all that he
had, and payment to be made.
The servant therefore fell down, and
worshipped him, saying, Lord, have
patience with me, and I will pay thee
Then the lord of that servant was
moved with compassion, and loosed
him, and forgave him the debt.
But the same servant went out, and
found one of his fellow-servants,
which owed him an hundred pence:
and he laid hands on him, and took
him by the throat, saying, pay me
that thou owest.
And his fellow-servant fell down at
this feet, and besought him, saying,
Have patience with me, and I will pay
And he would not: but went and cast
him into prison, till he should pay the
Mt. 18:23-30 (KJV)
The foregoing passages indicate that a king (the government) could sell a debtor, his family, and all that he owned, to repay his obligations to the sovereign. Lesser people could only have their debtors cast into prison until they repaid their debts. Quite harsh treatment for enforcing repayment of debts.
Debtor prison actually survived enactment of the U.S. Constitution and was part of American legal proceedings until well into the 19th Century. This practice, of using incarceration to enforce unpaid debts, was eventually abolished as too barbaric a process for 19th Century America.
Over time, some judges have had occasion to reflect on the process of debtor prisons in cases before them.
The policy of allowing a fresh start
[bankruptcy] does not license debtors
to lightly rid themselves of the burden
of their indebtedness without an
honest attempt at repayment. Yet
neither does that policy compel
debtors, in Dickensian fashion, to
labor for the rest of their lives under
the crushing weight of gigantic debt;
under our law, the world is not to be
made a debtor's prison by a lifelong
sentence of penury.
In re Young, 237 F.3d 1168, 1178
(10th Cir. 2001)
The foregoing quote, artfully expresses the interplay of the U.S. Bankruptcy Court system, with the finality of having to repay debts at some point. The U.S. Bankruptcy Code sets forth the standards a debtor must meet if they can no longer repay all of their debts. If a debtor meets those standards, they are relieved of the prospect of paying on their debts, for a lifetime.
As everyone knows, bankruptcy is an
act of grace, having for its purpose
and object the highly remedial one of
doing away with the burdens and
disabilities which in the olden days,
before its passage, followed a man's
heavy involvement in debt, some-
times sent him to debtor's prison,
and, even after imprisonment for
debt was abolished, broke and
destroyed the lives of persons whose
chief fault was that they had dared to
take a chance in the business world.
v. Browder, 291 F.2d 34, 41 (5th Cir.
Another interesting view of bankruptcy as a means of resolving a debtor’s inability to repay all of their debts. In this passage, a Federal appellate judge viewed bankruptcy relief as “an act of grace.” Bankruptcy as “an act of grace,” instead of prison, for debts lawfully obtained and honestly unable to be repaid. This judge also recognized, in a capitalist economy, business owners are risk takers. If the business failed, their debts could ruin their future, but for the “grace” of the U.S. Bankruptcy Court system.
If you find yourself considering bankruptcy as an option for relief from an unpaid debt burden, consider why the U.S. Bankruptcy Code was created, and then whether it is the correct option for your situation.
We are a debt relief agency that assists people to file bankruptcy.
[April 23, 2021]
March 15, 2019
Before an individual or married couple files a bankruptcy petition they have to qualify for the relief they seek based upon their annual income and family size. The process for an individual or married couple to qualify for bankruptcy relief is beyond the scope of this article. However, once an individual or married couple initially qualifies for bankruptcy relief that is not the end of the inquiry.
Bankruptcy relief is not available to everyone who qualifies for bankruptcy. Bankruptcy relief is intended for "the honest but unfortunate debtor." Bankruptcy courts that have dealt with this issue have made it clear that a bankruptcy discharge relieves a debtor from the legal obligation to repay their debts. A bankruptcy discharge is a legal injunction that bars creditors from collecting on a debt subject to a completed bankruptcy case. However, the moral obligation to repay debts is not discharged in a bankruptcy proceeding. This dichotomy is contained within the U.S. Bankruptcy Code. "Nothing contained in ... this section prevents a debtor from voluntarily repaying any debt." 11 U.S.C. §524(f).
Voluntarily repaying a debt after discharge should not be confused with making a new agreement with a prior creditor to repay an old debt. If you make a new agreement to repay a debt, after it was discharged, you may be contractually responsible to repay that debt. There is an old line of bankruptcy case law that held as much. That case law has been abrogated by statute. However, it is best to avoid this grey area by paying pursuant to your conscience and nothing more. Moral obligations do not require contracts.
For those who need bankruptcy relief, but do not want to file for such relief because of the moral obligation to repay their lawful debts, understanding that the moral obligation remains after entry of a bankruptcy discharge can resolve this quandary. Most people cannot survive a 25% garnishment of their pay after a creditor obtains a judgment against them. If a family's home is in foreclosure, because of a loss of income, a Chapter 13 reorganization can stop the foreclosure from going forward and allow the home-owner up to 5 years to cure the arrears on their mortgage that lead to the foreclosure. There are sensible reasons for a person or family to file a bankruptcy petition other than merely a desire not to repay their creditors.
If you find yourself under threat of a 25% reduction of your wages because of a garnishment, or the loss of your home through foreclosure, you can pursue bankruptcy relief to stop the loss of your home or the inability to pay your living expenses. Once the financial threat has been addressed through a bankruptcy filing, then you can review your finances and decide how to meet the moral obligation to repay your debts. After filing bankruptcy and the discharge of your debts such creditors cannot force you to repay them. This allows you the time to decide whom and how to best repay your moral obligation to past creditors.
If you find that you were unable to repay your creditors, after filing bankruptcy and receiving a discharge of your debts, then bankruptcy was a necessary remedy to address garnishment or foreclosure. Failing to address financial issues for moral reasons, when the money was not available to pay your creditors, could result in falling behind on your utility bills, repossession of a vehicle, or being homeless.
Filing a bankruptcy petition may not be the remedy of choice but it has been an option since the foundation of our country as it is provided for in the U.S. Constitution.
We are a debt relief agency we assist people in filing for bankruptcy.
 Grogan v. Garner, 498 U.S. 279, 286 (1991).
[March 15, 2019]
November 22, 2018
A wage earner receives a packet from their employer notifying them their wages will be garnished, and this is the first such notice they received, the first step is to look at the name of the creditor that served the notice of garnishment. If the judgment debtor recognizes the name of the creditor garnishing them, and were aware that creditor had previously filed a legal action against them, then move to the bottom of this article dealing with reducing the amount of the garnishment percentage of wages.
If the notice of garnishment was the first notice that a creditor had filed a legal action against the wage earner, then the judgment debtor should telephone the clerk of the court where the request to garnish the wages was filed. The judgment debtor should ask the clerk to read to the method of service made in the case against the Defendant in that case. In small claims actions service has to be made by certified mail return receipt signed by the Defendant or personal service by a process server. In justice court service generally has to be personal service by a process server. In the Superior Court service also generally has to be personal service by a process server.
Service by a licensed process server is to be made upon the Defendant personally or at their "dwelling or usual place of abode with someone of suitable age and discretion who resides there." Service can also be made by court order for alternate service by posting and mailing the summons and complaint to the address where the Defendant resides. If service was alleged to have been made at an address other than where the Defendant resided at that time, the judgment debtor can file a motion with the court to vacate the judgment giving rise to the garnishment, as being invalid from improper service. The judgment debtor will have to provide the court proof that they were residing elsewhere at the time service was alleged to have been made upon them.
Service can also be made by publication when "the serving party, despite reasonably diligent efforts, has been unable to ascertain the person's current address; or the person to be served has intentionally avoided service of process." Again, if the judgment debtor believes their residential address was readily ascertainable by a creditor or were not avoiding service, they can file a motion with the court to vacate the judgment giving rise to the garnishment as being invalid for improper service. The judgment debtor will have to provide the court proof they were residing at a known location when service was alleged to have been made upon them and/or were not avoiding service.
If the judgment giving rise to the garnishment is vacated for improper service, the judgment debtor can file an answer in that action and defend against the creditor's claim against them, or try to make payment arrangements (a "settlement") with that creditor.
If the garnishment of wages is based upon a valid judgment, the creditor is allowed to receive "twenty-five per cent of disposable earnings for that week or the amount by which disposable earnings for that week exceed thirty times the minimum hourly wage prescribed by federal law in effect at the time the earnings are payable, whichever is less." The foregoing limitation does not apply to deductions for support payments. This limitation on deduction from wages is after "those amounts required by law to be withheld."
Most working people cannot afford to have 25% of their after tax income garnished. It is possible to ask a court to reduce the garnishment amount to 15% if one can show, "based on clear and convincing evidence, that the judgment debtor or the judgment debtor's family would suffer extreme economic hardship as a result of the garnishment." Within the garnishment packet is a form to request a hearing from the court issuing the Writ of Garnishment. It is unlikely that form will contain a specific option to request a hearing for the purpose of reducing the garnishment percentage. Such a request is made at the end of the hearing options pursuant to the heading "Other." Like all motions brought before a court the burden is upon the party seeking relief to prove they are entitled to that relief. At a minimum the judgment debtor would need to present the court judge or commissioner evidence of their monthly income, housing expenses, transportation expenses, and other daily and monthly expenses justifying a reduction of the garnishment percentage. The " clear and convincing" standard above is the highest standard to meet in a civil court proceeding. This heightened burden of proof, upon the judgment debtor, indicates the reduction of the garnishment percentage is not automatic nor a right but has to be proven by the judgment debtor.
A bankruptcy filing will stop a garnishment. Mr. Allegrucci has assisted clients with issues such as garnishment in Bankruptcy Courts since the year 1987. In so doing we are a debt relief agency assisting people to file for Bankruptcy.
 Ariz.Civil Rule Civ.Proc. 4.1(d)(2)  Ariz.Civil Rule Civ.Proc. 4.1(k)(2)  Ariz.Civil Rule Civ.Proc. 4.1(l)(1)(A)  A.R.S. §33-1131(B)  A.R.S. §33-1131(C)  A.R.S. §33-1131(A)  A.R.S. §12-1598.10(F)
[November 22, 2018]
August 7, 2018
A person retiring to a fixed income with credit cards and other credit debt may find themselves unable to pay this debt incurred while employed. It is then they may consider bankruptcy as an option to deal with their predicament. Generally, people file bankruptcy to prevent their wages from being garnished, to stop the foreclosure of a home, or repossession of a vehicle.
Garnishment is generally not an issue for a person who has retired on a fixed income. Social Security benefits are protected from garnishment. Likewise military disability benefits are exempt from garnishment. Most pension income is protected by Arizona law. Such pensions are generally referred to as "ERISA" qualified pensions. Annuity income, from a policy owned continuously for two (2) years by a person, is protected from garnishment under Arizona law. Income from an employer's disability or accident policy are also protected from garnishment under Arizona law. The assets within an IRA are protected from collection in Arizona and in a bankruptcy proceeding.
Arizona protects $150,000 of equity in a home in which a person resides from collection by creditors other than mortgage, homeowners associations, tax claims, and support claims. Arizona also protects $6,000.00 of equity in a person's vehicle and $12,000.00 in a vehicle for a person with a physical disability.
There are more laws that protect other property from collection by a person's judgment creditors. However, since most of a retired person's income and largest assets are protected from collection by judgment creditors, the question then becomes why would such a person need to file bankruptcy? The answer would be to stop the collection calls and letters.
Also if sued, and a creditor obtains a judgment against a person, the judgment creditor can obtain a court order from the court issuing the judgment for the judgment debtor to appear and produce detailed financial records to help the creditor determine if it can collect on its judgment. Filing bankruptcy can stop the necessity of appearing in a court and producing very detailed financial records for a judgment creditor. However, filing bankruptcy requires completion of schedules and statements that do require detailed reporting of various financial information for two (2) years previously and some financial questions seek information from a debtor beyond that time period.
Understanding, that most of what a retired person owns and their income are protected from collection by law, should keep the inability to pay on their credit debt in perspective. Within that perspective filing bankruptcy is an option but not a necessity for the financial wellbeing of a retired person. Allegrucci Law Office, PLLC has assisted many retired persons who have chosen bankruptcy as the final option to deal with the inability to pay their credit debts.
We are a debt relief agency that assists people to file bankruptcy.
 42 U.S.C. §407(a)  38 U.S.C. §5301(a)  A.R.S. §33-1126(B)  A.R.S. §33-1126(A)(7)  A.R.S. §33-1126(A)(4)  A.R.S. §33-1126(B)  11 U.S.C. §522(a)(3) and(a)( 4)(C)  A.R.S.§33-1101  A.R.S. §33-1125(8)
[August 7, 2018]
July 8, 2018
The answer is yes, if you have been delinquent in payment of your HOA assessments for one (1) year, or the amount of unpaid assessments is at least $1,200.00, whichever occurs first.[i] If your HOA chooses to foreclose upon your home it must file a civil action in the superior court of the county where the property is located. Because a foreclosure action requires the filing of a court action, you have the right to defend in that action, if you believe the HOA is incorrect for any reason it is pursuing the foreclosure of your home.
If your HOA does file a foreclosure action against your home, it can be awarded its court fees, costs, and reasonable attorney fees incurred in that litigation. The fees, costs, and attorney fees of a foreclosure action will likely exceed the amount of the unpaid assessments due the HOA and being foreclosed against your property. Once a foreclosure action has been instituted by your HOA, you can still try and arrange a settlement of its claims by making repayment arrangements with the HOA. You also have a right to pay the unpaid assessments in full plus the fees, costs, and attorney fees incurred by your HOA in the foreclosure action.
If you still want to keep your property, and have been unable to resolve your issues with the HOA, you can file a Chapter 13 bankruptcy reorganization to stop the foreclosure of your property.
A Chapter 13 bankruptcy reorganization stops the filed civil action for foreclosure from going through, gives you up to five (5) years to catch-up the missed HOA assessments, fees and costs, and allows you to resume monthly/quarterly assessment payments to your HOA during that period. You do have to have a regular monthly income, sufficient to allow curing the missed assessments, fees and costs over time, for this to work.
David Allegrucci has represented clients in filing Chapter 13 bankruptcy proceedings since 1987. As such we are a debt relief agency assisting people in filing for bankruptcy.
[i] A.R.S. §33-1807(A)
[July 8, 2018]
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