Individuals may qualify for Chapter 7 or Chapter 13 bankruptcy depending on their debt. Qualifying for consumer bankruptcy protection is an individual determination based on the requirements of federal bankruptcy laws.
We know that overwhelming debt can creep up on you. It can start with extra expenses for some unexpected events. Then an illness or injury temporarily prevents you from working. On top of it all, the increasing cost of everything continues to outpace an income that keeps falling further behind. Over time, debts can become too great to manage, leaving honest, hard-working people virtually crushed under the weight of their financial burdens.
Symmes Law Group is a Seattle law firm that helps individuals and small businesses regain financial stability through bankruptcy or other available debt relief options. Our consumer bankruptcy attorneys in Seattle, WA can go over the unique details of your situation and offer tailored solutions to meet your goals. Below is some general information about eligibility for bankruptcy.
Who Can File Bankruptcy in Washington State?
Federal law governs bankruptcy in Washington. The Bankruptcy Code is found in Title 11 of the United States Code. It authorizes the following persons and entities to claim bankruptcy protection:
- Individuals (Chapter 7 or 13)
- Businesses or Individuals (Chapter 11)
- Family Farmers or Fishermen (Chapter 12)
- Municipalities (Chapter 9)
Neither the states nor the federal government is eligible for bankruptcy. To file bankruptcy under any chapter, bankruptcy eligibility requirements must be met.
Consumer Bankruptcy Eligibility Requirements in Washington: Chapter 7 or Chapter 13
Consumer bankruptcy refers to the bankruptcy options for individuals. Chapters 7 and 13 of Title 11 address individual bankruptcy options. For qualifying individuals:
- Chapter 7 bankruptcy authorizes the liquidation of non-exempt property and the discharge of remaining debt without the obligation to repay creditors
- Chapter 13 bankruptcy is the option for individuals who have the means to repay a portion of their debt
Assessing Your Income
Monthly income and the ability to pay are the bases for determining which type of bankruptcy an individual can qualify for. Known as the Chapter 7 Means Test, an individual’s monthly income is calculated based on thedebtors’ prior 6 months of income and compared to Washington’s median income for their family size . For instance, in 2026, the state median monthly income for a family of four yearly income gross income is $152,553 as of March 2026 and monthly that would be $12,712.75. The median incomes are adjusted about twice per year for inflation
Income can include wages, investments, support payments, and other income sources. Social Security, and VAdisability payments are generally not considered income. Income is averaged over the six months immediately preceding a bankruptcy filing.
If an individual’s average monthly income is less than the state’s median income, the first means test hurdle is cleared, and there is a presumption that Chapter 7 bankruptcy is appropriate.
If an individual’s average income is greater than the median or the individual possesses significant amounts of non-exempt property, monthly expenses must be analyzed to determine the ability to pay debts and whether a Chapter 13 repayment plan is the correct option.
Your Ability to Pay Your Debts
Only individuals who can demonstrate the ability to fund a repayment plan with a reliable source of monthly income and whose debt does not exceed the established debt ceiling will meet the bankruptcy requirements for Chapter 13.
The debt limits for Chapter 13 cases filed between April 1, 2025, and March 31, 2028, are $526,700 for unsecured debt and $1,580,125 for secured debt. Repayment plans are typically for three to five years.
Circumstances That May Disqualify You from Bankruptcy
Bankruptcy is a tool for people who have fallen on hard times and who need a second chance. The system is not for routine use to avoid paying debts or for those unwilling to abide by the legal requirements.
The following circumstances can disqualify a person from bankruptcy protection:
- Too much income (Chapter 7)
- Failure to complete credit counseling (within 180 days of filing)
- Recent prior bankruptcy
- Too much debt (Chapter 13)
- Failure to file income tax returns
- Dishonest or fraudulent conduct
Consulting an experienced Washington consumer bankruptcy attorney can help you avoid disqualifying pitfalls and determine which debt relief option is the best fit for your individual situation.
How Often You Are Allowed to Discharge Debts in Bankruptcy
Bankruptcy protection is not available for those who would use it too frequently. Individuals who try to file another bankruptcy too soon after discharging debts will be disqualified from debt relief until sufficient time has passed:
- Individuals can only use Chapter 7 once every eight years
- Chapter 7 is available six years after a discharge in Chapter 13
- Chapter 13 is not available if a debtor received a discharge in Chapters 7, 11, or 12 within the preceding four years
- Chapter 13 can be used again two years after a discharge in Chapter 13
Deciding which bankruptcy chapter to file should include an assessment of the availability of future debt relief options.
If I File Bankruptcy in Washington, How Much Property Can I Keep?
When a person files for bankruptcy, they are allowed to keep certain property up to specified values. Federal law exempts particular property from creditors’ claims. Washington also has its own property exemption laws. Individuals who file bankruptcy in Washington and have lived in the state for the previous two years can choose whether to apply the federal or state property exemptions.
Choosing which set of property exemptions is most beneficial requires evaluating the properties owned and the debts associated with them. The Washington exemptions are generally more favorable for married couples who own their residence.
A comparison of similar properties highlights key differences (and one similarity) between the federal exemptions and Washington’s personal property and homestead exemptions in 2026.
Federal Bankruptcy Exemptions
- Homestead – $31,575
- Motor vehicle – $5,025
- Household goods – Per item $800, aggregate $16,850
- Tools of the trade – $3,175
- Retirement plans – Employer sponsored 100%, individual $1,711,975 (adjusted periodically)
Washington Bankruptcy Exemptions
- Homestead – $125,000 or the county median sale price of a single-family home in the preceding calendar year, whichever is greater. In King County the median income is $968,300 based on 2025 valuations and adjusted every year for inflation. To claim more than $214,000 in equity, a debtors must reside in the home and have owned it for more than 1,215 days.
- Motor vehicle – $15,000
- Household goods – Per item $750, aggregate $6,500
- Tools of the trade – $15,000
- Retirement accounts – Same as federal exemptions
When a married couple files for bankruptcy, each spouse typically gets to claim the exemption amount, effectively doubling it. The exception is the Washington homestead exemption, when based on a median sales price that is often well over $250,000.
It’s important to keep in mind that property exemptions don’t remove debts on exempt property, such as mortgages or car loans. Payments to lenders must continue, or the property can be foreclosed or repossessed. If the equity in the property exceeds the exemption amount, the property can still be sold, and creditors can be repaid from the proceeds in excess of the exemption amount.
Alternative Debt Relief Options if Bankruptcy is Not Right for You
Bankruptcy will not be the right debt relief solution for every individual. It is more beneficial for some people to negotiate with creditors and resolve the debt without resorting to bankruptcy.
Debt Settlement
Debt settlement is an option for individuals with substantial amounts of unsecured debt. Debtors (or their representatives) negotiate with creditors to reduce the amount owed in exchange for a lump-sum payment or to restructure payments so they are manageable.
Lump-sum debt settlements can reduce debt balances by 20% to 60%. The faster the debt can be paid, the larger the debt reduction is likely to be. Unsecured creditors are often willing to come to the table because they will at least collect something in a settlement, whereas if a debtor files bankruptcy, creditors may not recover anything.
There are potential downsides to debt settlement that debtors need to consider:
- Debt settlement can negatively impact a credit score
- The amount of forgiven debt may be considered “taxable income” by the IRS
- Debt settlement can take several years to complete
- Creditors may continue debt collection activities, including a lawsuit, while settlement negotiations are underway
Debt settlement is best used strategically when the potential for debt reduction and resolution is high, and the potential for negative impacts is low or manageable.
Foreclosure Fairness Mediation
Washington law allows homeowners facing foreclosure by certain lenders to request a mediation meeting with their lender to learn about available options, including a loan modification, which might prevent the foreclosure from proceeding.
An attorney or housing counselor can request mediation after the Notice of Default has been received and must do so at least 90 days before the sale date in the Notice of Trustee Sale. The mediator facilitates a discussion between the homeowner and the lender to encourage a voluntary agreement.
Homeowners requesting a loan modification must be meticulous when collecting the documents and preparing the paperwork necessary for the lender. Failure to provide the required information will delay the process and may prejudice a homeowner’s chances of receiving favorable consideration.
How the Bankruptcy Process Works in Seattle, WA
The roadmap for navigating bankruptcy in Washington begins with selecting the appropriate type of bankruptcy and filing a petition with a designated federal court. The petition must include a schedule of assets and liabilities, as well as income and expenses.
A considerable advantage of filing a bankruptcy petition is that it triggers the automatic stay, which almost instantly halts most creditor attempts to collect on the debt. The collection efforts halted by the automatic stay include:
- Foreclosure
- Eviction
- Wage garnishments
- Debt collection lawsuits
A meeting with creditors is required, and creditors must submit a proof of claim stating the amounts owed. Depending on the type of bankruptcy selected, assets are either liquidated and remaining debts discharged, or a repayment plan is approved, and any remaining debts are discharged upon completion.
After completing the bankruptcy process, the debtor receives a discharge order and a fresh start. However, it does take a while to rebuild credit scores. Chapter 7 bankruptcy stays on a credit report for 10 years. Chapter 13 bankruptcy stays on a credit report for seven years.
Will Bankruptcy Ruin My Credit Score Forever?
No, bankruptcy or any debt relief will not impact your credit score forever. Those with high or low credit scores before bankruptcy will be affected differently. Higher credit scores will be negatively affected. Those with low credit scores may see their scores improve as a consequence of debt relief.
A credit score in the 600s is not uncommon after a bankruptcy, and people can begin rebuilding their credit immediately. Although bankruptcies can remain on credit reports for seven to ten years, depending, lenders are generally willing to extend credit again within about two years, and some have no waiting period.
Debts that Can and Can’t Be Discharged in Bankruptcy
Personal responsibility for most consumer debt can be discharged in bankruptcy. Unsecured debt can be eliminated entirely without recourse by creditors. The obligation for secured debt is also eliminated, but creditors are still entitled to foreclose on or repossess the property securing the debt.
Dischargeable debt includes:
- Credit card debt
- Medical bills
- Utility debt
- Personal loans
- Lease obligations
Non-dischargeable debt includes:
- Student loans (unless for extreme financial hardship)
- Child support and alimony
- Most current tax debts
- Secured debt (house, car) if the property is to be kept
- Fines/fees associated with criminal activity
- Loans from retirement plans
While individuals must still pay non-dischargeable debts after bankruptcy, the debts are often restructured to make the payments manageable.
How to Decide if Bankruptcy Is the Right Solution for Debt Relief
Look, life happens. You may not want to face your debt, but it’s often less painful in the long run if you do. If you have incurred a substantial amount of debt, you owe it to yourself to learn about the options available to help you out from under this burden and give you a way to move forward.
At Symmes Law Group, we’re here to help residents of Washington State get control of a common hardship so they can get on with their lives. Nobody thrives under the weight of unmanageable financial responsibilities. The law gets it. There are workable solutions. To learn about your options during a free consultation with the Seattle bankruptcy attorney, contact Symmes Law Group online.
