Will I Qualify To File Bankruptcy?
Chapter 7 Bankruptcy In Washington State:
Wipe Out Your Debts
Experienced WA State Chapter 7 Attorneys
Get Debt Relief Now.
For a Free Attorney Consultation
What Debts Can I Get Rid of In Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy Wipes Out Unsecured Debt.
What are Unsecured Debts?
Unsecured Debts include Credit cards, Medical bills, Collections, Negative Equity in a Respossesed or Surrendered Motor Vehicle or House, Payday Loans, Personal Loans, and any other debts that do not have property attached (secured) to them.
A successful Chapter 7 Bankruptcy completely discharges (wipes out) all of your unsecured debts so you no longer have any legal obligaton to repay them. This discharge will provide you with a fresh financial start and independence.
There are a few exceptions to discharging unsecured debts in a Chapter 7 Bankruptcy. The most common exceptions are unpaid taxes, court fines, and student loans.
The Automatic Stay: Your Protection From Creditors
Filing a Chapter 7 Bankruptcy petition triggers what is commonly known as an "automatic stay." An automatic stay is a shield between you and your creditors. It protects you from any further collection activity, phone calls from creditors, lawsuits, garnishment, or foreclosure proceedings.
Income Requirements for Chapter 7 Bankruptcy
The New Bankruptcy Laws enacted in late 2005 prohibit some filers with higher incomes from qualifying for Chapter 7 Bankruptcy. However, most people will still qualify.
Step #1: Your Household Income
The first step in figuring out whether you can file for Chapter 7 is to measure your "current monthly income" compared with the median income for a family of your size in Washington state.
Your "current monthly income" is not necessarily your income at the time you file. It is your average income over the last six months before you file.
If your income is less than or equal to the median, you can file for Chapter 7 if you have have less than $100 per month disposable income after reasonable and necessary monthly expenses.
However, if you household income is higher than the median, you must pass "The Means Test" in order to file for Chapter 7.
Step #2: The Means Test
If you are above the median household income for your family size, you may still qualify for Chapter 7 Bankruptcy if you pass a ormula called "The Means Test."
The purpose of the means test essentially dictates that you are have any disposable income to pay back a portion of your unsecured debts after average monthly income for your household size. This is based upon an IRS standard of typically monthly expenses.
If you have expenses that are greater than average for your household based upon an IRS standard of monthly expenses, you may qualify for Chapter 7 bankruptcy under the Means Test. For example, child support, daycare expenses, a high mortgage payment and high back taxes debt can qualify you for Chapter 7 Bankruptcy Under the Means Test even when your household income is above the state medianin Washington State.
If your total monthly disposable income after subtracting order and necessary household expenses is less than $100 per month, you pass the means test, and will be allowed to file for Chapter 7. However, if you have more than $100 per month disposable income, you will have to pay back a portion of your unsecured debts in Chapter 13 Bankruptcy.
Can I Keep My House In Chapter 7 Bankruptcy?
Yes, in Washington State, so long as you have no more than $125,000 of equity (after deduction about 10% for cost of sale) and you are current on your mortgage payment(s), you can keep your house in Chapter 7 Bankruptcy.
Can I Keep My Personal Belongings in Chapter 7 Bankruptcy?
Yes, most people can keep all of their personal property in a Chapter 7 Bankruptcy, furniture, books, sporting goods, fire arms, jewelry, etc.
Cars are also almost protected in Chapter 7 Bankruptcy.
How Long Will My Case Last?
In general, the Chapter 7 Bankruptcy process is relatively short and typically lasts approximately three to four months from filing to discharge. You will typically only need to attend one brief hearing with your bankruptcy attorney about one month after your bankruptcy petition is filed.
Call Now for a Free Phone or Office Consultation.
One of Our Experienced Washington Bankruptcy Attorneys Will Answer All of your Questions.
(206) 357-8500 Seattle
(425) 455-2040 Bellevue/Eastside
(253) 852-1661 South King County