Chapter 13 Bankruptcy

The decision to file for bankruptcy isn’t always easy. However, it can provide you with a way to restructure your debt in Wenatchee and regain some financial stability.

The first step is taking the time to understand what a Chapter 13 bankruptcy is, what you need to do to qualify, and the laws in place to protect you as a debtor. For all these reasons and more, having a qualified Wenatchee bankruptcy attorney in your corner can make all the difference in your bankruptcy case.

Chapter 13 is also commonly referred to as the wage earner’s plan. It lets those with a steady income restructure debts and pay them off over a three- to five-year timeframe. Unlike Chapter 7, which involves liquidating assets, Chapter 13 is a structured payment plan that allows you to pay while keeping your property.

For residents of Wenatchee and Chelan County struggling with overwhelming debt, Chapter 13 bankruptcy might be the most suitable solution. You can work with a skilled bankruptcy attorney who can help ensure you meet all legal requirements while also maximizing the benefits of filing.

When filing in Wenatchee, you will typically follow these steps:

1. Check Your Eligibility: Your secured and unsecured debts have to be within the limits set by federal law. You must also have a reliable source of income so you can make the monthly payments.
2. File the Petition: Your bankruptcy attorney will file a petition with the US Bankruptcy Court for the Eastern District of Washington, which covers Chelan County.
3. Create the Repayment Plan: In this plan, you will detail how you will repay your creditors over three to five years, and the court will then review and approve it.
4. Make Payments: Now you will make monthly payments to a bankruptcy trustee who will then distribute the funds to your creditors.
5. Discharge Remaining Debt: After you complete the repayment plan, all your eligible remaining debts are discharged so you can have a fresh start.

Chapter 13 bankruptcy offers several benefits:

• Stop Foreclosure: You can catch up on your mortgage arrears and prevent home foreclosure.
• Prevent Vehicle Repossession: Reorganize your car loan to make the payments more manageable.
• Protect Your Co-Signers: Unlike Chapter 7, Chapter 13 can shield your co-signers from collection efforts.
• Lower Debt Payments: Unsecured debts like your credit card balances can be reduced or discharged after you complete the repayment plan.

Since bankruptcy is primarily governed by federal law, Washington follows the United States Bankruptcy Code (Title 11, U.S. Code). However, there are state laws that can also affect exemptions and procedures.

• 11 U.S. Code § 1301-1330: This is what governs Chapter 13 bankruptcy. It outlines eligibility, repayment plans, and debt discharge.
• 11 U.S. Code § 362: This is what establishes the automatic stay, which stops all creditor collection actions once you file for bankruptcy.
• 11 U.S. Code § 1325: This outlines all the requirements for confirming a Chapter 13 repayment plan with the court.
• 11 U.S. Code § 727 & 1328: This lists all the conditions under which your debts are discharged in bankruptcy.

When you file for bankruptcy, you can choose between federal and state bankruptcy exemptions.

(RCW 6.13.030)

• Protects up to $125,000 of home equity from your creditors in bankruptcy
• Applies only to your primary residence

(RCW 6.15.010)

• Vehicles: Up to $3,250 in equity for one motor vehicle
• Household Goods: Up to $6,500 total for items like furniture and appliances
• Wages: Up to 75% of disposable earnings or 35 times the federal minimum wage per week, whichever is less
• Retirement Accounts and Pensions: Typically protected under federal law but are also recognized under Washington statutes

• This exemption allows up to $3,000 for any personal property not covered by other exemptions.

• The Means Test determines Chapter 7 vs. Chapter 13 eligibility.
• If your income exceeds Washington’s median income, then you need to file under Chapter 13.

(RCW 6.27.150)

• Limits how much money your creditors can garnish from your wages before and after your bankruptcy.
• Typically, up to 25% of your disposable earnings can be garnished unless bankruptcy protection applies.

For those in Wenatchee facing financial hardship, Chapter 13 bankruptcy can provide you with a very structured way to regain control. Consulting a qualified bankruptcy attorney like those in our Wenatchee offices can help ensure you get through the process as smoothly as possible while also securing a favorable outcome for your financial future.