When you feel like you are financially underwater, the future seems bleak. These situations may be caused or compounded by sudden life changes resulting in amassed debts you cannot repay. A bankruptcy attorney serving Vancouver, WA can provide a path toward financial relief. We can help you navigate the legal process one step at a time.
Symmes Law Group understands how hopeless the future may seem when you are dealing with excessive financial difficulties. To help you regain control over your life, we make it easier to resolve your outstanding financial issues. Our consumer bankruptcy attorneys will compassionately walk you through your options and enable you to determine what avenue will help you the most. With a knowledgeable team and a dedication to exceptional services, we help you reach your financial goals faster.
What Is Bankruptcy?
For many individuals with consumer debts (e.g., medical bills), mortgage arrears, and credit cards, bankruptcy allows you to eliminate the looming burden of foreclosure and debt, regain your financial stability, and get a fresh start.
Understanding the Chapters of Bankruptcy
The U.S. Bankruptcy Code devotes different chapters to different types of bankruptcy, which are how they are usually referred to.
Individuals, businesses, municipalities, and other specific groups may be eligible to apply for bankruptcy depending on their situation. The type of bankruptcy you file for depends on what category you fall into.
For most consumers, Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two primary options for resolving outstanding debts. Businesses may file for Chapter 7 and Chapter 11 bankruptcy, while municipalities file for Chapter 9. Additionally, Chapter 12 provides options for family farmers and fishermen, and Chapter 15 governs bankruptcy proceedings if parties represent more than one country.
When to Consider Filing for Bankruptcy in Vancouver, WA
People file for bankruptcy for many reasons, and oftentimes their circumstances dictate when they file. Life events can happen unexpectedly and cause enormous financial strain that can make it challenging for individuals to recover from.
Some common reasons why people file for bankruptcy include:
- Losing a job or earning capacity
- Medical expenses
- Credit card debt
- Divorce
- Foreclosure
- Unsecured loans
- Business failure
- Student loan debt
- Tax debt
When any one of these reasons becomes overwhelming and beyond your capability, it may be time to consider bankruptcy or other legal financial options that can provide monetary relief.
Our bankruptcy attorneys serving Vancouver, WA can counsel you on what may be the most effective options moving forward. They will also answer your questions and provide support and advocacy to ensure you are not left to deal with this financial burden on your own
How Filing for Bankruptcy Can Provide Relief
Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code allow consumers to either discharge or restructure their outstanding debts. As soon as you file a bankruptcy petition, your creditors must stop trying to collect your debts. You are protected by the “automatic stay” provision of the Bankruptcy Code until your bankruptcy is resolved.
The automatic stay in Washington not only protects you from adverse actions by creditors, but it also means that no legal or other actions may be taken against you at this point in time in regards to your debt. The stay is lifted once your case has been resolved and all bankruptcy decisions have been made.
Additionally, bankruptcy can help you create the proverbial game plan for how to tackle and settle your outstanding debts. These actions can provide clarity on how to proceed and help the situation feel more manageable by comparison. Whether you have your debts discharged or choose to repay them, bankruptcy can provide the opportunity to move forward in better standing.
What Is Chapter 7 Bankruptcy and What Does It Involve?
A bankruptcy petition under Chapter 7 turns over all your assets and debts to a trustee. In most cases, you will be able to keep a reasonable vehicle, the equity in your home, some personal items, insurance and pension plans, public benefits, and some tax credits or incentives. Your other assets are sold and distributed to your creditors.
If there’s not enough to fully satisfy what you owe at the end of the process, your debts are discharged. Below is a closer look at what the process involves.
Eligibility for Chapter 7 Bankruptcy
Eligibility for Chapter 7 bankruptcy is determined by first completing a means test. It evaluates your monthly income and expenses and compares them with the median size of similar households in the state.
If your income falls below the state average, you qualify for Chapter 7. If it is above the state average, you must provide documentation of your need and what you may be able to repay.
Timeline for Chapter 7 Bankruptcy
From start to finish, Chapter 7 bankruptcy may take anywhere between three and six months to fully resolve. During that time, the automatic stay remains in effect, so no additional debts or adverse actions are added to your situation.
Your Vancouver bankruptcy lawyer will also negotiate with creditors to settle everything as quickly as possible to keep the bankruptcy timeline as short as possible.
How Chapter 7 Bankruptcy Affects Your Credit Score
Filing for Chapter 7 bankruptcy can impact your credit report and score considerably. However, the extent to which it changes may also depend on your situation and the makeup of your various credit factors.
Your credit score could drop by as much as 200 points, or it could go up if you have a lower score. When you file for Chapter 7 bankruptcy, a record of your filing remains on your credit report for 10 years. In the meantime, you can work to build your credit score backup through good financial habits.
What Is Chapter 13 Bankruptcy and What Does It Involve?
In a Chapter 13 plan, your attorney negotiates a plan for you to make manageable payments on your existing debts until they are fully satisfied and discharged. The plan may involve negotiating lower interest rates, a different payment schedule, or other more favorable terms.
In cases where your income is too high to discharge your debts under Chapter 7 or where you have debt that is not dischargeable, Chapter 13 restructuring can be best. Below is a closer look at what this process involves.
Eligibility for Chapter 13 Bankruptcy
Eligibility for Chapter 13 bankruptcy is also determined using a means test. You will provide information about all sources of income, including unemployment and retirement benefits, and compare it against the state average for a similarly sized household.
If your income is less than or equal to the state median, then you can proceed with setting up a three-year repayment plan. If your income exceeds the state median, you must submit additional documents showing your expenses and create a five-year repayment plan.
Timeline for Chapter 13 Bankruptcy
The timeline is significantly longer for Chapter 13 bankruptcy since you are responsible for making regular payments toward your debts. The estimated timeline is up to five years, given the two repayment options available.
How Chapter 13 Bankruptcy Affects on Your Credit Score
Chapter 13 bankruptcy also has an impact on the health of your credit. You are likely to see a similar drop in points as you would with Chapter 7 bankruptcy. However, a Chapter 13 bankruptcy will only stay on your credit report for seven years since you have made regular payments toward the debt. Your credit score can recover with steady improvements and healthy practices.
Chapter 7 vs. Chapter 13: How to Decide Which One is Right for You
When determining which type of bankruptcy is right for you and your situation, you must first assess your situation to determine what you are capable of and what the end goal is. When looking at the differences between Chapter 7 and Chapter 13 bankruptcy, the primary purpose of Chapter 7 is to liquidate assets and pay off debts quickly, while the purpose of Chapter 13 is to develop a repayment plan.
If you have a choice between these two types of bankruptcy, it is important to understand the pros and cons of each.
- With Chapter 7 bankruptcy, you could erase all or most of your debts within a few months. The drawback is that nonexempt property can be sold, and you could risk foreclosure on your home.
- Chapter 13 bankruptcy allows you to keep more of your property and catch up on mortgage or car payments, but you could be repaying debts for up to five years.
Assets Considered Exempt from Bankruptcy in Washington
The upheaval caused by bankruptcy can feel overwhelming. While it may feel like many of your possessions are being taken from you, the good news is that some personal property exemptions apply to what can be liquidated during bankruptcy.
Some common exemptions allowed by Washington include:
- Clothing and up to $3,500 in luxury apparel and accessories
- Personal electronic devices
- Tools, instruments, materials, and supplies needed for employment
- Tuition purchased two or more years prior to filing for bankruptcy
- Other select exemptions in a limited capacity
It is important to be aware that you can choose to use the exemptions Washington provides or apply federal bankruptcy exemptions. Because you may only select one, be sure to consult with your bankruptcy lawyer in Vancouver, WA to determine which option will benefit you the most. They can provide recommendations based on your circumstances so you reap the greatest benefit.
Understanding Non-Dischargeable Debts
While some assets are exempt from bankruptcy, there are some debts that cannot be eliminated in bankruptcy. These are known as non-dischargeable debts.
You remain financially responsible for paying off the balance of these debts yourself. Knowing how to handle non-dischargeable debts is important because it can impact the options available to you. Common debts considered non-dischargeable include:
- Student loans
- Tax debts
- Government fines
- Child support and alimony payments
- Debts related to fraud or willful misconduct
If you have significant outstanding debts in these areas, you should talk with your lawyer about alternative methods for handling these debts. They could impact your ability to file for bankruptcy or present complications in the wake of bankruptcy proceedings. Symmes Law Group provides other means of financial legal support in addition to bankruptcy.
What to Expect When Filing for Bankruptcy
Before you ever start the bankruptcy process, it is imperative that you talk with our experienced bankruptcy lawyers serving Vancouver, WA. They can help you determine if bankruptcy is the right option for you, and also assess your assets and debts to determine eligibility. If it is determined that you could benefit from filing for bankruptcy, then they will help you apply and guide you through the process.
To initiate bankruptcy proceedings in Washington, you will need to fill out and submit an application with the Western District of Washington court system. In your application, you must list all the property in your possession and all of your outstanding debts. You must also submit a statement of financial affairs, a statement outlining your monthly income, along with additional documentation. You must also pay all applicable application fees when you file.
Once you have filed for bankruptcy, the court will assign a case number to your application and issue a notice to all creditors that you have filed for bankruptcy. All creditors must attend a meeting to discuss or object to the discharge of debts. You must attend a Section 341 Meeting of Creditors and complete debtor education as well during the process.
Depending on the type of bankruptcy you are filing for, your debts will either be discharged or a payment plan will be created by the end of the proceedings.
Contact Our Bankruptcy Attorneys Serving Vancouver, WA
At Symmes Law Group, we can help you create a plan tailored to your unique circumstances so you can financially recover as soon as possible. Our team can help you with loan modification, credit counseling services, Chapter 13 bankruptcy, or Chapter 7 bankruptcy. Contact us today to schedule a complimentary consultation and learn more about how we can serve you.
