In Arizona, it isn’t uncommon to own a condo in Rocky Point or other Mexican property near the border. Who wouldn’t want a convenient and familiar retreat, especially if it’s near the beach? But owning property in a different country can make matters difficult if that person ever needs debt relief through bankruptcy. Their options may be more limited if they don’t wish to lose that property. That shouldn’t stop that person from learning more about the massive benefits that can be derived by filing for bankruptcy. Want to protect assets all over the globe while clearing debts that put a strain on your monthly budget? Want to take the guesswork out of bankruptcy so you can file with confidence? You deserve representation from a trustworthy attorney who cares about the outcome of your case. And that type of high-quality legal service doesn’t have to come with a cost outside of your price range. Schedule your free consultation with a dedicated Arizona bankruptcy professional from Atlas Bankruptcy Lawyers today by calling 602-649-4949.
The Global Bankruptcy Estate
Many people enter bankruptcy with misconceived notions about how certain issues will play out in their cases. Some believe that only property located within the United States is subject to the jurisdiction of bankruptcy courts. But bankruptcy laws are written to give trustees access to assets located anywhere in the world. When a debtor files for bankruptcy, the bankruptcy court has jurisdiction over all of their property, wherever located and by whomever held. That means that property owned in Mexico would be treated just like non-exempt property held in Arizona or another state.
A crafty debtor might try to conceal the fact that they own property in Mexico or another foreign country. But this can have serious negative repercussions if the trustee does uncover concealed property of any type. Property being located in another country won’t protect it from the trustee’s grasp. Some of the tools the trustee can review to look for undisclosed properties include:
- International wire transfers
- Tax returns
- Verification during the 341 Meeting of Creditors
- Mexican public registry search, or Registro Público de la Propiedad
There is a restricted zone in Mexico measuring 50 km from the coast and 100 km from the border. In the restricted zone, foreigners can only own residential property through a bank trust known as a fideicomiso. Some debtors mistakenly believe that property held in a fideicomiso is safe from a United States bankruptcy case or bankruptcy trustee. But the trustee views a fideicomiso like any other asset that should be declared in Schedules A/B of their bankruptcy petition. If it can’t be protected, the trustee can hire a Mexican attorney to liquidate the property or sign over a transfer of ownership. But failing to list a Mexican property on your bankruptcy schedules could be viewed as an act of bankruptcy fraud. The court may find it appropriate to dismiss your case. In some situations, the debtor could even be charged with bankruptcy fraud. This is a serious felony that can carry hundreds of thousands of dollars in fines and years in prison. If you are considering bankruptcy and own real estate in Mexico, we recommend discussing your situation with an experienced attorney before filing your petition. Schedule your free phone consultation with Atlas Bankruptcy Lawyers today or call us at 602-649-4949.
Chapter 13 Bankruptcy to Protect Mexican Property
Chapter 7 bankruptcy is far and away the most commonly-filed form of bankruptcy in Arizona and the United States as a whole. But it might not be the best for those who own property in Mexico, because debtors can only protect limited assets in chapter 7 bankruptcy. Arizona doesn’t have a wildcard exemption to be applied to any asset, such as Mexican real estate, and a debtor can’t use the homestead exemption on Mexican property, or else they wouldn’t meet the residency requirement to file for bankruptcy in Arizona. However, property isn’t at the same risk of seizure by the trustee in chapter 13 bankruptcy, making it a better option for Mexican property owners struggling with debt.
Chapter 13 bankruptcy pays off debts in either 3 or 5 years rather than clearing unsecured debts like in chapter 7 bankruptcy. While the notion of paying off debt instead of clearing it may sound disadvantageous, chapter 7 won’t address secured and priority debts like chapter 13 bankruptcy can. And property that can’t be protected by exemptions just changes payment plan obligations- in chapter 7, the trustee will auction off non-exempt property to pay bankruptcy debts. A debtor is protected from their creditors by the automatic stay as long as their chapter 13 payment plan is in good standing. The length of the payment plan depends on if the debtor earns more or less than their state’s median household income. At the end of the payment plan, the debtor should be entirely debt-free.
The Timeshare Dilemma
Some travelers are aware that they can only spend so much time in a vacation destination, and therefore purchase a timeshare instead of a condo, house, or other traditional piece of real estate. But timeshares come with their own disadvantages versus outright ownership of a property. There are annual fees and additional fees associated with each time the person uses the property, and they may be fighting with several other people for more desirable time slots. Once a family has locked in with a timeshare, it can be highly difficult to find a buyer for their spot. It can also be extremely expensive to cancel the timeshare. Bankruptcy provides a solution to this issue.
Debtors can surrender their portion of a timeshare without the typical associated penalties in both chapter 7 and chapter 13 bankruptcy. However, in chapter 13 bankruptcy, the debtor may have to pay some of those penalties depending on how much flexibility is in their payment plan. Once the timeshare has been surrendered, the trustee will sell it by auction. Most of the proceeds will go to creditors, but the trustee also gets to keep some of it as payment. If the debtor wants to keep their timeshare, they will likely need to complete a reaffirmation agreement.
Need Debt Relief in Arizona but Own Property in Mexico? Consult with an Experienced Professional About Your Options Today.
Your property in Mexico may be your most treasured asset, or it could be a burden you’d like to unload. Either way, the best way to make sure your bankruptcy turns out as intended is by hiring professionals to help you get the job done right. There are significant financial risks associated with filing for bankruptcy. A reputable bankruptcy firm can help you navigate them so you get the most out of your case. Too many debtors make the mistake of thinking that filing without an attorney will help them save money, which is a reasonable assumption during tough financial times. But this can backfire if the debtor has assets seized and sold, funds clawed back, or debts excluded from their bankruptcy discharge. Atlas Bankruptcy Lawyers makes it easier to retain high-quality bankruptcy counsel by offering Zero Down payment plans to eligible clients.
