Kennewick Bankruptcy Attorney
It can be far easier than we would like to fall into extreme debt. Sometimes it is out of necessity, such as owing heavy medical bills. Sometimes it is because of a downward spiral that has built up over several years, such as with credit card debt. Whatever the case, extreme debt can ruin your ability to provide for yourself.
When you are struggling with massive debts, you do not need to go it alone. There is another way: bankruptcy. If you need help getting out from under your debt, contact skilled Kennewick bankruptcy attorneys. Symmes Law Group can help you with your debt problems.
The Purpose of Bankruptcy
Bankruptcy is a legal process under federal law that is meant to give people in too much debt a second chance or a fresh start. The Supreme Court said about bankruptcy that “it gives to the honest but unfortunate debtor a new opportunity in life.” The goal of releasing debtors from their debts is accomplished by a bankruptcy discharge.
The bankruptcy discharge is unique in the law in that it is one of the few ways that the government can simply forgive privately held debt. Normally, this is something that the government does not do, but the glaring exception is bankruptcy.
If you are in a situation where you feel like you have more debt than you could ever pay off, you should consider filing for bankruptcy. When you are drowning in debt, enlist the help of a skilled bankruptcy lawyer who can help you get out from under your debt.
Chapter 7 Bankruptcy
Chapter 7, or liquidation bankruptcy, is a court-supervised procedure by which a court-appointed federal employee, called the Trustee, may take control of some of your assets, sell them, and distribute the cash to your creditors. With that said, most of your assets will be exempt from sale, meaning that they will not be sold. Because of this, most Chapter 7 bankruptcies are “no asset” bankruptcies, meaning that there is nothing to be sold.
Only certain people qualify for Chapter 7 bankruptcy because of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This law requires debtors seeking Chapter 7 bankruptcies to earn below the Washington State median income for their household size or apply a “means test,” which shows that the debtor has no disposable income to pay creditors. Consumers can also qualify for chapter 7 bankruptcy if 51% or more of their debt is non consumer debt which can be business or tax debt.
This is because of the forgiving nature of Chapter 7 bankruptcy. It is meant for the individuals who need help the most, but many debtors who file can also be gainfully employed. Your Kennewick bankruptcy lawyer will go through your financials with you to see if you qualify.
Chapter 13 Bankruptcy
Chapter 13 is a less forgiving but still helpful bankruptcy. Chapter 13 bankruptcies differ from Chapter 7 bankruptcies in the sense that you may have to actually pay back a lot of your debt. However, you also may be able to keep all of your property as well.
Chapter 13 bankruptcy is a process by which you will make a plan to pay a portion of your debts in equal payments over the course of 3 to 5 years. To qualify for Chapter 13 bankruptcy, your unsecured debts (the debts that are not attached to collateral, such as medical debts or personal loans) must be less than $2,750,000.00.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy is a very rare type of bankruptcy that is only available for family farmers or family fishermen. Very few people qualify for this type of bankruptcy, but essentially, it is meant to be a less complicated version of Chapter 13, with a much higher debt limit ($11,097,350 for farmers and $2,268,550 for fishermen).
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is mostly for businesses, but individual debtors can file them as well. Most individuals choose to file Chapter 13 bankruptcies over Chapter 11s because they are similar, but Chapter 11s are more expensive and do not allow debtors to dismiss the case after filing it without court approval.
However, there are good reasons for filing for Chapter 11 bankruptcy. For example, there is no means testing in Chapter 11 bankruptcies, the anti “cram-down” provision from Chapter 13 does not apply in Chapter 11, and there is no limit to how long the plan can last under Chapter 11, while Chapter 13 plans must be finished in 5 years or less. There are also no debt limits under Chapter 11.
While all of this can seem very complicated, knowledgeable bankruptcy attorneys can guide you through this process. If you are considering filing for bankruptcy, make sure that you have the help of skilled and professional Kennewick bankruptcy lawyers.
Under certain circumstances, some of your debt might be non-dischargeable, meaning that. If one of your creditors believes that one of your debts is not dischargeable, they can sue you in a process called an adversary proceeding, in which the bankruptcy court will determine if your debt can be discharged or not.
There are several reasons why your debt may not be able to be discharged which are laid out in Federal law, such as:
- If the debt is a result of you committing fraud
- If you did not list the debt on your bankruptcy schedules
- If the debt is a result of you committing embezzlement
- If the debt is child support, or a domestic support obligation
- If you got the debt by willfully injuring your creditor’s finances
- If the debt is a fine to the government
- If the debt is a student loan
- If the debt is a verdict against you after you injured or killed someone while driving drunk
- If the debt is back taxes
- If the debt is restitution under the criminal penal code
If your creditors do bring an adversary proceeding against you, hope is not lost. Some of the bullet points above are very difficult to prove. Your Kennewick bankruptcy attorneys will be able to defend you against any such lawsuit and make sure that your debt is still able to be forgiven.
Effect of Bankruptcy on Credit Score
One of the only downsides of bankruptcy is that it can damage your credit score. The amount that your credit score will decrease is based on both the type of bankruptcy that you file and how high your credit score currently is.
For example, someone with a great credit score of 780 can expect their credit score to fall by up to 240 points, while someone with an average credit score of 680 can expect their credit score to go down up to 150 points. On the other hand, however, someone with a poor credit score of between 400 and 500 can actually see their credit increase by up to 50 points.
Chapter 7 bankruptcies, while very forgiving, will negatively affect your credit score for 10 years. Chapter 13 bankruptcy, because it involves at least some repayment, negatively affects your credit score for 7 years. However, sometimes this negative credit effect is very worth it, especially if your credit is already poor.
Discharging Student Loans in Bankruptcy
Although student loans can typically not be discharged, there is an exception to this rule. That exception is if repaying the student loan would cause you “undue hardship.” This is a very vague and undefined term, but courts have created a fairly standard 3-step test known as the Brunner test.
The 3-step Brunner test for proving “undue hardship” is this:
- You cannot pay for basic expenses that you or your family need to pay, such as rent, food, utilities, car payment, etc.
- It is very doubtful that you will ever make more money than you are currently making. (This can be proven by showing that you are disabled or by an expert testifying about your future career prospects)
- In the past, you have made a good-faith effort to attempt to pay your student loans.
While this is a very demanding and difficult-to-meet test, it is possible. For example, if you are 50 or older and likely have a lower income for the remainder of your life, you might be a good candidate for student loan discharge. Your Kennewick bankruptcy lawyers will sit down with you to discuss the likelihood of having your student loans discharged.
Contact a Kennewick Bankruptcy Lawyer
Trying to get out from under crippling debt can feel like trying to lift a car off of yourself. Extreme debt can make you feel hopeless – like there is no way out. This is not a fight that you have to undertake alone. There are skilled bankruptcy attorneys who are here to help.
When you need the assistance of highly skilled and professional bankruptcy lawyers, contact Symmes Law Group. The bankruptcy lawyers at Symmes Law Group are highly skilled, knowledgeable, and compassionate attorneys who will get you the help that you need and deserve.