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How Proposition 209 Could Affect Bankruptcies in Arizona

Bankruptcy laws are constantly evolving, and the latest development in this area is Proposition 209. This proposition has the potential to benefit average Arizona citizens who are filing for bankruptcy, and it could help people get out of poverty and deal with increased living costs. But the Proposition has sparked a fierce debate, and it is no longer clear whether it will be allowed to continue. Multiple lawsuits have been filed in response to the proposed changes, and the decisions seem to be going back and forth as of this writing. This is despite the fact that the majority of Arizona citizens voted in favor of Proposition 209 in a democratic election. But how could Proposition 209 affect your bankruptcy in Arizona, and will these changes ever actually occur? Let’s find out.

Proposition 209 Explained

Proposition 209 is designed to help Arizona families deal with medical debt. The Proposition seeks to achieve many goals, including:

  • Protecting your home from being seized due to medical debts
  • Preventing your car from being seized due to medical debts
  • Allowing you to keep more protected household goods when declaring bankruptcy
  • Allowing you to keep more money in your bank account during a bankruptcy
  • Banning creditors from garnishing more than 10% of your wages
  • Banning creditors from charging an interest rate of over 3%

For those who are planning to declare bankruptcy in Arizona, these changes are welcome. It means that you can keep more of your wages and assets without being trapped in an endless cycle of debt. Although wage garnishment is capped at 10%, it can be lowered even further by courts in certain situations. The Arizona government states that these changes would wipe out untold millions of “unpayable” debt for Arizona families.

Why Is Proposition 209 So Controversial?

Despite the fact that the majority of Arizona citizens voted in favor of Proposition 209, it is not without controversy. On December 8th, it was reported that a judge in Arizona had put part of the proposition on hold. Unsurprisingly, creditors represented the main force that pushed back against the changes, complaining of several issues:

  • Too much vagueness and ambiguity
  • Alleged violations of both the US and Arizona Constitutions
  • Not clear whether it applies retroactively to old debts
  • Immediate and irreparable injury and loss of rights for creditors

Supporters of the proposition immediately called for these groups to “accept the will of the people” and stop fighting it in court. At the same time, authorities recommended that Arizona residents delay filing for bankruptcy until after these legal issues are resolved. The problem is that many residents file for bankruptcy without getting advice from a lawyer, and they may not be aware of the fact that the state’s bankruptcy laws are in a state of flux.

On December 19, 2022, it was reported that Healthcare Rising Arizona was still pushing back against the effort to halt Proposition 209. They effectively used the exact same argument as the creditors, pointing out that the lawsuit was vague, with no real evidence of the new laws causing harm.

This put Arizona residents in a state of limbo as they waited to see whether Proposition 209 would move forward – not an ideal situation when the bills start to pile up. This is another reminder of why it is so important to speak with a bankruptcy attorney before you make any hasty moves. You may be completely unaware of recent changes in bankruptcy laws, and it might be better to wait for a more opportune moment.

Where Can I Find a Qualified Bankruptcy Attorney in Tucson?

If you have been searching the Tucson area for a qualified, experienced bankruptcy attorney, look no further than Eric Ollason, Attorney at Law. Over the years, we have helped numerous Arizona residents file for bankruptcy. We keep close tabs on changes in Arizona’s bankruptcy laws, and we can help you navigate these potentially uncertain waters effectively. If you are not sure about how Proposition 209 will affect your bankruptcy, book a consultation and speak with us directly. Remember, internet research can only get you so far. Reach out today to get started.

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