How bankruptcy protects when filing a Washington State bankruptcy

How does a Washington bankruptcy protect me? What happens to my creditors when I file a WA State bankruptcy? Talk to a Washington bankruptcy lawyer.

What happens to my creditors when I retain an attorney and file for bankruptcy

Your legal bankruptcy protection doesn’t start until you actually file a case. The second you file, all collection activity stops dead in its tracks – lawsuits and garnishments, foreclosures, repossessions, phone calls all end immediately. The creditors then have to deal with the bankruptcy court to see if they are going to get paid anything. Most creditors will finally be “discharged” – they simply won’t get paid.

The “discharge” is the final court order in your bankruptcy. It’s an injunction that prohibits creditors from trying to collect from you ever again. Some debt cannot be discharged – examples include alimony and child support, student loans and taxes. Liens survive bankruptcy. (Liens give creditors a right to repossess property if you don’t pay, as with car loans or mortgages). In some cases, liens can be removed without payment or with a lower payment.

You should discuss this option with an experienced attorney. Though you don’t receive official bankruptcy court protection until you actually file your case, when you hire our law office, we can immediately help you with your creditors. We will tell your creditors that you have hired us and that you will be filing bankruptcy soon.

They have little reason to continue trying to collect the debt if you are going to file bankruptcy before they succeed. Debt collection can be a costly and frustrating process for them and they would rather move on to accounts that are likely to pay than waste time with someone who is on the eve of filing a bankruptcy.

Debt collection can be very competitive for creditors too. If you cannot pay your debt or can only pay part of it, naturally your creditors will compete with each other to get the most they can. Bankruptcy lets a creditor know once and for all whether they will get paid. Most do not receive anything but in some Chapter 7s and in Chapter 13s, they get their fair share of whatever is available.

In a Chapter 7, they might be able to share some money if you have property that will be sold. In most Chapter 7s this is not the case. In a Chapter 13, creditors get a fair share of the debt based on what you can afford to pay through a repayment plan. Whether you end of paying nothing or just part of your debt, the part you do not pay is discharged.

When a debt is discharged, a creditors simply must accept they won’t get paid. They figure in this risk as a cost of doing business. The interest they charge covers the risks they take. A bankruptcy at least lets them share fairly if any money is available and lets them know for sure what the status of their accounts are.

In this way, bankruptcy not only provides relief for people who are facing financial hardship, it allows for an orderly way of dealing with the situation and provides some finality to the situation and lets creditors move on to dealing with accounts they can collect.