Chapter 7 is the Most Common Form of Bankruptcy
Chapter 7 bankruptcy allows you to discharge all or most of your debt and get a fresh financial start in life. Before filing, you’ll need to determine whether you qualify and whether you’ll be able to keep all or some of your property. Most people who file chapter 7 can keep their assets. Once your forms are completed and filed, and the documents sent to the bankruptcy trustee appointed to your case, you will attend the meeting of creditors, and complete a second debtor education course. You’ll receive the bankruptcy discharge wiping out your debt after 3-4 months.
In order to qualify for Chapter 7, you’ll need to meet the income requirements. If you do qualify for a Chapter 7, you will be able to get rid of most of your debt. If you have excess income, you won’t qualify for a Chapter 7 but may still be eligible for a Chapter 13 bankruptcy.
In addition to getting rid of your debt, you typically can keep all or some of your property. As long as your car and mortgage payments are current, creditors usually offer reaffirmation agreements which allow you to keep the property and continue to make the scheduled payments on the loan. We can explain the process to you during your first consultation.
Put a Stop Creditor Harassment
If creditors are bothering you at work, harassing your family, friends, and neighbors, or calling at all hours—we can help. We’ll keep the creditors off your back. Though you may want to keep paying some debts, like your home or car, you can stop paying most creditors immediately. Call (509)921-9500 now and schedule an appointment to discuss your particular case. Or submit our Free Consultation form.
Eliminate Repossession Debts
After a vehicle finance company repossess your car, they auction it to reduce their loss. You’re still responsible for the balance after the sale proceeds are deducted, called a ‘deficiency balance’. A Chapter 7 bankruptcy can eliminate your liability for the entire deficiency balance. Remove the risk of lawsuits and garnishments by filing a Chapter 7 bankruptcy.
A Chapter 7 bankruptcy is one of the most effective ways to immediately stop garnishments. Garnishments can diminish your hard-earned income making it nearly impossible for you to afford basic necessities. By filing a Chapter 7 bankruptcy and stopping the garnishment, you’ll be able to use your income for more important necessities in life and start saving for your future.
End Lawsuit/License Suspensions
Many states have imposed laws that allow the state to suspend your license if you failed to maintain liability insurance at the time of the accident. We can help you get your license reinstated if it is suspended due to an uninsured car accident or unpaid parking tickets. Our attorney can also stop lawsuits related to those car accidents. If you’re being sued, and you own a home, we strongly urge you to speak with an attorney as soon as possible about filing bankruptcy. A bankruptcy will stop a lawsuit immediately and prevent your creditors from placing a lien on your home or garnishing your hard-earned wages.
Rebuild Your Credit After Bankruptcy
One of the most common concerns that we hear from clients has to do with the stigma related to bankruptcy. The stigma against debtors has greatly diminished over the last 20 years, and there is no indication that debtors will be treated less favorably in the future. In fact, the ability to reestablish your credit after a bankruptcy is better than it has ever been. Though, bankruptcy can remain on your credit report for up to 10 years, you can start reestablishing your credit immediately.
What Chapter 7 Does Not Eliminate
Filing for Bankruptcy will stop most collection actions and can get rid of many debts, but it does not get rid of all obligations. Debts that remain are:
- Student loans, except extreme hardship cases
- Debts for most taxes
- Debts for alimony, maintenance or support
- Debts for fines, penalties or criminal restitution
- Debts for personal injuries caused by driving intoxicated
- Debts incurred fraudulently
Basic Steps to a Chapter 7 Bankruptcy
1. Analyzing Your Debt
Some debts, such as child support, student loans, and recent tax debt, are not dischargeable in a Chapter 7 bankruptcy. If you have property that you’ve put up as collateral for a loan, such as a car or a home, the creditor can take the property if you’re not current when you file and if you don’t remain current after your case.
2. Property Exemptions
Every state has exemption laws, which dictate what types of property you’re entitled to keep. Under Washington state law, homeowners may exempt up to $125,000 of their home or other property covered by the homestead exemption. If you’re not living in the home, you must file a homestead declaration. You can also protect up to $15,000 of unimproved property, but first, you must file a homestead declaration. Most people can retain household furnishings, retirement accounts, a modest car, and some equity in a home. You’ll want to be sure you can protect everything you want to keep before filing.
Most people will need to take and pass the means test in order to qualify for a discharge in Chapter 7 bankruptcy. Excluded individuals are those with primarily business debt and some military personnel. To qualify your average gross income during the six months before you file must be equal to or less than the median income for a family of your size in Washington state. If not, you’ll subtract allowed expenses from your income to determine whether or not you’ll be allowed to use Chapter 7 bankruptcy.
4. Redeem, Reaffirm or Surrender
If you have property as collateral for a loan, you’ll need to continue to pay the creditor if you want to keep the property. When you file for bankruptcy, you’ll be asked to decide whether you want to:
- redeem the property—pay the creditor the current replacement value of the property in a lump sum
- reaffirm the debt—agree to continue paying per the contract with the creditor (usually under the same terms)
- surrender the property—let the creditor take it
5. Filling Out Forms
You’ll complete a few dozen pages of forms where you’ll inform the court about all your property, debts, income, expenses, and prior transactions. You’ll:
- list the names of all your creditors, property, and income
- decide what you want to do about each of your secured debts
- disclose property transactions that occurred up to ten years before your case
6. Mandatory Credit Counseling
All individuals who file for bankruptcy must complete a credit counseling course by an approved agency within 180 days prior to filing for bankruptcy. This counseling will help you to determine if bankruptcy is an appropriate option, and which one is right for you.
7. Filing Your Petition
Filing your petition, which includes the main bankruptcy form, schedules, and other forms, is the official start of your case. Normally all forms are filed at once, but if you’re pressed for time, you can opt for an emergency filing by completing a few required forms. The remaining forms must be filed within 14 days.
8. Payment of Filing Fee
A filing fee is required when you file your forms. When you file for bankruptcy you must pay a filing fee to the Clerk of the Court. Filing fees can increase at any time, but currently are $335.00 for a chapter 7 and $310.00 for chapter 13.
You can apply to have the Judge waive the filing fee if your household income is 150 percent of the federal poverty guidelines, or less, and you don’t have sufficient income to pay in installments. We usually recommend to our clients to not apply for fee waiver unless they have very dire circumstances since the application is reviewed strictly.
You’ll need to provide documentation that proves the accuracy of the information you gave in your bankruptcy forms. This will include bank statements, paycheck stubs, profit and loss statements, tax returns and any other documents the trustee requires.
10. Creditors Meeting
The creditors meeting, known as a 341 hearing, will require you to go to court. In most cases, you’ll only need to appear in court once for a short meeting with the trustee. Though it’s unusual for creditors to appear, one or two may show up as well. The bankruptcy trustee appointed to your case will:
- check your identification
- ask standard questions required of all debtors
- ask specific questions about the information in your forms
11. Filing Objections or Motions
If you have a dispute with a creditor’s claim against you or you want to eliminate certain liens, you’ll need to address these matters before your bankruptcy case is closed. If you forget to handle a lien, most courts will allow you to reopen the case at a later date.
12. Secured Debts
When you file your bankruptcy forms you’ll include a form in which you state how you intend to handle any secured debts. Before your case is closed, you’ll need to follow through with your bankruptcy agreement. For example, if you indicated that you’d return a car, you’ll want to be sure to make it available to the lender. It’s recommended that vehicles being surrendered to the creditor be returned to the creditors or be made available to the creditors to pick up within 45 days of filing of the bankruptcy.
13. Debtor Education Course
After you file your bankruptcy petition, you’ll need to complete the Debtor Education Course before you’ll receive a discharge. If you fail to submit your certificate on time, the court will close your matter without a discharge. Fixing this problem can be expensive because you’ll likely have to file a motion and another filing fee to reopen the case.
Congratulations, you’re done. At the end of a successful bankruptcy, the court will issue an order discharging your qualifying debts. Once discharged, you no longer have a legal obligation to pay it, and the creditor has no right to collect it.
Our firm will provide you with a range of fair fees right over the phone. We’ll give you a low attorney fee and allow you up to six months to pay the remaining fees, in amounts which fit your budget. Under this payment plan, you can hire us with as little as $100, which will allow you to refer any creditors or collection agencies to our office. Once the fees are paid in full, your case will be filed. Call (509)921-9500 to schedule an appointment today or submit our no free no-obligation consultation form.