Personal Bankruptcy (Chapter 7 & Chapter 13)
Are you drowning in debt or facing foreclosure? Making the decision of whether to file for bankruptcy is one which will affect you not just now, but for many years to come. Your financial wellbeing and often your personal relationships may hang in the balance, and as such it is crucial that you make the decision which is truly best for you.
When you work with me, you have the benefit of a compassionate and knowledgeable legal professional to give you the information, advice and guidance you need. I currently handle cases for individuals and married couples filing a Chapter 7 "liquidation" or Chapter 13 "reorganization."
Why a Bankruptcy Lawyer?
Individuals are not required to work with a lawyer when they file for bankruptcy. However, there are a number of advantages in doing so. First and foremost, bankruptcy is a complex legal process. Improperly filed, you may lose your chance to file again for a set period of time. Fraudulently filed, you may find that you are facing serious federal charges for bankruptcy fraud. A skilled bankruptcy lawyer will also be able to advise you on your rights and options as they relate to your unique financial situation. This gives you the very valuable opportunity of having the information you need in order to make a decision that is right for you. Filing for bankruptcy is not always the best option. With knowledge of its advantages and disadvantages, you can make the choice that will benefit you now and in the future.
Filing Bankruptcy Under Chapter 7
Chapter 7 is a legal process designed to quickly (usually within a few months) eliminate unsecured debt, including credit cards, department store cards, medical bills, payday loans, some personal loans, parking bills, utility bills, and more. Chapter 7 filers often are unemployed or work jobs that leave them with little money to pay their bills each month. The Chapter 7 process is often complete in only a few months.
Filing Chapter 7 bankruptcy may also include the strong protections of the Automatic Stay and Chapter 7 exemptions. These two programs are part of the bankruptcy code in every state and help you protect your home, car, wages and other important possessions from creditors, and may prevent foreclosure. Typically, Chapter 7 bankruptcy works best for people who:
- - Owe lots of credit card and medical debt. Bankruptcy is designed to completely eliminate unsecured debts like credit card and medical bills. Typically, it works quickly, meaning you don’t have to wait years for a fresh start.
- - Are getting collection calls and notices. Bill collectors usually don't just go away. In fact, as your debt becomes older, they sometimes get more aggressive in their collection efforts. Once you file Chapter 7, collectors are legally prohibited from contacting you. They must deal with the bankruptcy court instead. Finally, those calls and letters will stop!
- - Do not own much property. Chapter 7 property protections vary according to state laws, but, generally speaking, Chapter 7 offers less protection for your property than Chapter 13 bankruptcy. However, Chapter 7 exemptions may allow you to keep your home, car and other valuable items like work tools, furniture, clothes, appliances, photos and books.
- Do not have much income to pay off bills. In order to qualify for Chapter 7 bankruptcy, you must pass the means test. A local bankruptcy lawyer can help you with this test, which looks at your income and debts to determine true need. After you pass the test, you will also need to complete a credit counseling course.
- Already have below-stellar credit. It's true that bankruptcy affects your credit score. But if you already have a low credit score, that may not matter much. It usually stays on your report for 7-10 years, but after you discharge your debt, you can work to improve your score during that time. It is certainly possible to get auto or home loans during that 7-10 year period.
Filing Bankruptcy Under Chapter 13
Chapter 13 was designed to stop to foreclosure, repossession, wage garnishments, lawsuits and creditor harassment. Chapter 13 bankruptcy works with the courts to consolidate, prioritize, repay, and, in some cases, reduce or eliminate old debts. This type of bankruptcy allows you to make one lower, interest-free monthly payment to a trustee. That trustee then prioritizes your debts and deals directly with your creditors. The duration of your bankruptcy repayment plan typically lasts three to five years. During this time, the bankruptcy automatic stay allows most people to stay in their home and keep their possessions. After filing bankruptcy, creditors are legally prohibited from contacting your or threatening you any longer.
Should I File Chapter 13 Bankruptcy?
Unlike Chapter 7 bankruptcy, which only lets certain people file, most are allowed to file bankruptcy under Chapter 13.
If you can relate to any of the points below, it may be time to examine the Chapter 13 bankruptcy option if you:
- - Are behind on paying your bills and are looking for extra time to repay them
- - Are facing foreclosure and want to keep your home
- - Are facing car repossession and want to keep your cars (cars in bankruptcy)
- - Have debt that is the result of a temporary financial setback, like a job loss, injury or illness
- - Have regular income so you can make the lower, interest-free monthly payment required under Chapter 13
If you live in Washington and are considering filing for bankruptcy, please contact me to set up a FREE consultation. I will be happy to see how I may assist you.