FREE Bankruptcy Consultation Seattle, WA

When consumers are researching their options to eliminate debt, they likely will want to know what is chapter 7 bankruptcy as it most likely will come up as one of a few possible options to help you become debt free.  Chapter 7 bankruptcy refers to chapter 7 of title 11 of the United States Bankruptcy code. A Chapter 7 bankruptcy refers to the process of a consumer or business filing a bankruptcy petition with the bankruptcy court in order to receive a discharge of debts or to liquidate a business as a business cannot receive a discharge under chapter 7 bankruptcy.

What is Chapter 7 Bankruptcy?

A chapter 7 bankruptcy requires debtors to list all assets, debts, income and expenses among other things and does have income limits to qualify based on household gross income for individuals filing for bankruptcy.  A chapter 7 case may be filed as an individual case or with a spouse and the income limits are based on each states median income for a family size.  If more than 50% of a debtors debt is business related, then the income limitations do not apply.  If somebody or a family makes too much and their gross income is above the median income for their family size, then those debtors would have to pass something called the means test in order to qualify for chapter 7 bankruptcy.  This can be difficult unless the debtors can show they have no disposable income left over due to other necessary expenses such as medical, child car, or child support or maintenance.

Can I keep My Assets in Chapter 7 Bankruptcy?

If a family or individual is below the median income for their household size or can pass the means test, the next thing to look out for is whether all of your assets can be protected through something called bankruptcy exemptions.  In Washington State bankruptcy cases we can choose to use Federal or State exemptions, however if you lived somewhere else 2 years ago, your exemptions will be based on that location most likely.  In chapter 7 bankruptcy, debtors can lose assets to a bankruptcy trustee if they are not exempted or otherwise protected.  Therefore if you have any major assets, it would be best to discuss your case with a bankruptcy attorney in your area to see if filing chapter 7 bankruptcy makes sense prior to filing a bankruptcy.  With that said, most debtors get to keep all of their assets including vehicles and a home if they don’t have more than $125,000 of equity in a primary residence in Washington State.

What Do I need to Do to file Chapter 7 Bankruptcy?

In order to file for chapter 7 bankruptcy, you will need to provide your Washington State bankruptcy attorney your last 6 months of paystubs, last 2 years of tax returns, complete a questionnaire and take 1 credit counseling class prior to filing for chapter 7 bankruptcy and one class on financial management after filing.  Your attorney will prepare a bankruptcy petition to file with the court which lists out all of the information you have provided to your attorney.  Once the petition is filed, your creditors will be notified and nobody can collect on a debt from that point forward as you will be protected by the automatic stay.  You will also need to attend one short bankruptcy court meeting with a chapter 7 bankruptcy trustee and your attorney if you have one which will happen in about 30 days after your case is filed.  The meeting may last over an hour, but your time with the bankruptcy trustee will likely be 5 minutes if you don’t own any major assets.  Once you complete the financial management class which you can take online and all your court fees are paid, you will receive a discharge of your debts after 90 days from when your case was filed.  The discharge order from the court will state that you don’t have to pay back your debts such as credit cards, medical bills, repossessions or evictions.  Some debts such as student loans, child supports, recent taxes or restitution will not be discharged and you will need to make arrangements to repay this debt after your case is closed.

What Happens to My Credit after Filing Chapter 7 Bankruptcy?

For debtors with good credit prior to filing, their scores will likely go down to the around the 600 range, while those with bad credit under 600 will likely go up to the 600 point range.  With that said results vary, but the good news is that you can may qualify for an auto loan and secured credit cards right after filing your bankruptcy case and you can even buy a home under most federal loan programs after 2 years from when your case is filed.  You may have heard that bankruptcy can affect you for up to 10 years, however most people don’t see any of the affects after 2 years.  The bankruptcy itself can show as a public record on your credit report for up to 10 years and some lenders may require you to show them your bankruptcy paperwork long after your case is closed, but it should not prevent you from getting credit in the future.

Call Today For A Free Consultation With A Seattle Chapter 7 Bankruptcy Lawyer From Symmes Law Group!

If you live in Washington State and want to know what more information about what is chapter 7 bankruptcy, give Symmes Law Group a call at 206-682-7975 or contact us to get the counsel you need.

  • Richard Symmes

    Hi, Richard here

    Book a time on my calendar to receive a calendar invite along the option to schedule a Phone, Office or Zoom consultation.

    You may also fill out the contact form to get in touch and get a copy of my free e-book Guide to Living Debt Free in Washington State, Bankruptcy and Other Alternatives.