Should You Consider Bankruptcy?

We see far too many people overburdened by debt due to unexpected job losses, overwhelming medical expenses or other unforeseen expenses. In our experience, bankruptcy is not something that people rush into without thought. If you are pulling money from your retirement account or using credit cards for cash advances or to pay bills or buy groceries, it is time to consider filing for bankruptcy.

There are two main forms of bankruptcy for individuals: Chapter 7 and Chapter 13. There are benefits and drawbacks involved with each type of bankruptcy. Determining which type makes the most sense for you requires examining the type of debt you have, how far behind you are in payments and your income over the last six months.

How Chapter 7 Bankruptcy Works

To qualify for Chapter 7 bankruptcy, you must pass a means test showing that your household income is below the average Washington state median income for a household your size. If you qualify, a court-appointed trustee sells off your nonexempt property to pay off your creditors. (Exempt property includes things such as your home, a vehicle and your retirement account.) Even if the value of the property sold is less than your total debt, your medical bills, credit cards and other unsecured debt are considered paid off at the end of the bankruptcy process.

How Chapter 13 Bankruptcy Works

Chapter 13 bankruptcy provides a way to reorganize debt into a repayment plan similar to a debt-consolidation loan. The process involves negotiating down debt with individual creditors, combining the debt into a single payment and setting up a three- to five-year payoff plan. Unlike Chapter 7 bankruptcy, people filing for Chapter 13 keep all their possessions. However, Chapter 13 still affects credit scores for several years after filing.

If You Are Considering Bankruptcy, Contact Us

If you are overwhelmed by debt, contact Probate Attorneys of Washington to discuss whether bankruptcy is the right answer for you. Call 360-362-0857 or fill out our online contact form to set up a consultation. We can meet evenings and weekends outside of our office by appointment.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.