Washington Chapter 7 Bankruptcy Lawyer
Serving Chapter 7 bankruptcy clients throughout King and Snohomish Counties
Struggling to pay your bills every month?
Wondering if you can qualify for a Washington Chapter 7 bankruptcy?
Talk to an experienced and knowledgeable Washington State Chapter 7 Attorney today!
Washington Chapter 7 bankruptcy lawyers. Need to qualify for a WA State Chapter 7? Talk to a Washington Chatper 7 bankruptcy attorney serving Everett, Seattle, Edmonds, Lynnwood, and Marysville.
A Chapter 7 bankruptcy is the easiest and cheapest form of bankruptcy, but because it is a “liquidation” bankruptcy you have a greater risk of losing your property than in a Chapter 13. Also, because there is no repayment plan involved, you usually cannot restructure payments on mortgages or car loans.
As with a Chapter 13, you must take a credit counseling c lass before you file a Chapter 7. This is just a two hour class that can be taken on-line or over the phone. The purpose is to take a look at your financial situation so you can consider all your choices of solutions to your financial problems. In both Chapter 7 and 13, you have to take a second class after you file, which is also about two hours over the phone or on line. This class is designed to help you avoid getting back into financial trouble.
In both types of bankruptcy, the only hearing you are likely to attend is called a Meeting of Creditors or 341 Hearing about one month after you file your case. In a Chapter 7, you meet a Trustee who is appointed to administer your case. The trustee is not a judge. He or she works for the Office of the US Trustee, which is part of the US Department of Justice. The final decisions in your case are made by a bankruptcy judge.
Even though this hearing is called a Meeting of Creditors, creditors rarely appear. An attorney should be present with you – of course, when you hire our office, you can be assured you will have an experienced attorney working for you. The trustee will ask you a series of questions, mostly about whether there are any assets of the “bankruptcy estate”, which includes your property and some property that has been recently transferred out of your name that could be recovered. The trustee is also there to be sure that your bankruptcy documents are accurate and that the law is being followed. These hearings are very informal but they are federal court proceedings and your testimony is under oath – so you should take them seriously. They usually only last about 10 minutes.
About 60 days after your meeting of creditors, you receive a discharge. The discharge basically cancels most of your debt. Credit cards, payday loans, medical bills, deficiencies from car repossessions, debts to former landlords, damages from uninsured accidents (where there is no bodily injury or death as a result of the use of drugs or alcohol) are all dischargeable, for example.
Student loans are not discharged and you have to pay them after your bankruptcy unless you can prove that it would be an undue hardship to pay them. That means filing an “adversarial proceeding” in your bankruptcy, which could be expensive, and proving that you can’t pay the student loans without undue hardship on you and your family, that this situation is likely to continue indefinitely and that you have made a good faith effort to pay your loans in the past.
You will probably be worried about what property you might lose. The property you can keep in a Chapter 7 is covered by “exemptions”, is the dollar value of certain kinds of property that is protected. Sometimes you can combine exemptions. Most people who file Chapter 7 do not lose any property, especially in Washington where the exemptions are fairly generous and you can choose between Federal and Washington state exemptions according to what is best for you.
Usually your car is totally exempt from being taken by the trustee. If you are making payments on a car loan, there probably isn’t enough equity in your car for it to be at risk in your bankruptcy. You just need to keep making the payments. If you can’t afford the payments you can walk away from the loan and surrender the car. Your creditor may ask you to sign a “reaffirmation agreement” which puts you back on the hook for the loan, but if you sign it and stay current on the loan, they can’t repossess your car. Another option is “redeeming” your car, which allows you to pay off the car loan at the value of the car. If you don’t have enough money to pay the car’s value, sometime s you can get a loan to pay it off – this usually only makes sense if the loan is significantly “upside down” (the car is worth a lot less than the loan).
The furniture of most people who file bankruptcy is exempt. Furniture falls under a “household goods” exemption which is $2,700.00 in Washington and $11,525.00 under the state exemptions. If you are making payments on furniture, you can reaffirm the debt just like with a car loan. However, you can often negotiate much better payment terms when you reaffirm a furniture loan. Many creditors will lower the balance for you and slash the monthly payment and interest rate.
Almost all employer supported retirement plans are 100% exempt under Washington and Federal exemptions. IRAs are also 100% exempt.
Under the state exemptions, you can protect up to $125,000 in equity in your home. Federal exemptions protect $21,625 in equity ($43,250 in a joint case). If the equity in your home is less than the amount you can keep by law, then your main worry is whether you can make the mortgage payments. In a Chapter 7, you cannot change the terms of a mortgage in bankruptcy. You can remove judgment liens if they are secured by exempt equity (if they cut into equity you would have and would be exempt if there was no judgment lien). After you get a fresh start in a Chapter 7, it should be a lot easier for you to afford your mortgage payments after totally eliminate a lo t of debt. However, if you can’t afford your home or it just doesn’t make sense to hold on to it, Chapter 7 gives you the opportunity to just walk away from the house and the debt without paying any more on it.
If you have a vacation home or a rental home, you cannot use the homestead exemption to protect the equity. The homestead exemption only applies to property you live on or intend to move to. If you have enough income to pay for a mortgage on a vacation home, it is likely you have too much income for a Washington State Chapter 7 bankruptcy. Any rental income you receive could put you over the income limit for a Chapter 7 but only the amount you net (rent minus mortgage and expenses) is counted as income. If you are losing money on a rental property, it might not make sense for you to keep it and a bankruptcy would be your chance to surrender it and walk away from the mortgages.
After your Washington Chapter 7 bankruptcy is over, you are still able to borrow money if a creditor is willing to lend to you. There are many car finance companies that lend to people right out of bankruptcy. You should be careful about borrowing money in the future, of course. A bankruptcy is supposed to give you a fresh start and with this fresh start, you will eliminate a lot of monthly bills and should be able to live within your means. Though a bankruptcy will stay on your credit report for ten years, by improving your cash flow, your credit rating should improve. Many mortgage companies will not consider lending to your until two years have passed since your bankruptcy was filed, but that isn’t always true. Basically, if you can’t pay your debts, a bankruptcy should help your credit rating improve faster than not doing anything.
To make sure bankruptcy is right for you, you should contact an experienced Washington Chapter 7 bankruptcy attorney. Bankruptcy is often the cheapest and more effective way to get out of financial trouble. A discharge is a federal court injunction and there is a lot of certainty in that. To get the most of your fresh start and to save time and worry, you should hire a lawyer rather than trying to go it alone. There is a lot at stake and, though the procedure is usually fairly painless, you want someone with experience who can guide you through it because unforeseen issues often appear that you might not be able to handle yourself.