There are two different types of Washington State bankruptcy: Chapter 7 and Chapter 13 bankruptcy. Chapter 7 Washington State bankruptcy is often referred to as liquidation. It brings financial relief to hundreds of thousands of people each year. People with high medical, credit card and other unsecured debts will find Chapter 7 especially helpful. As a general rule, filing a Chapter 7 Washington State bankruptcy will immediately place a stay on all attempts to collect on your debts. This means that you can almost immediately expect a break from creditors’ and bill collectors’ calls.
Qualifying for Washington State bankruptcy – Chapter 7
The reason why Chapter 7 Washington State bankruptcy is referred to as liquidation is because the process will convert your non-exempt assets to cash and use those to pay off some of your outstanding debt. Though this is the first part of the process in a Chapter 7 bankruptzy, the majority of people who apply for Chapter 7 do not actually have any non-exempt assets. For this reason, there is actually no liquidation.
Choosing a Chapter 7 Washington State bankruptcy usually means that your discharge will be received within a few months. There are certain debts that cannot be discharged. These include child support, student loans and certain tax debts. Debts that will be discharged are credit cards, medical, personal loans, judgments regarding car accidents, money owed for repossessed vehicles, some older tax debts, payday loans and wage or other garnishments.
To qualify for Chapter 7 bankruptcy in Washington State, you must go through the means test. Though there has been some negative hype in the media regarding this process, it turns out that the vast majority of bankruptcy petitioners successfully qualify. If you are not qualified, you may still be able to file Chapter 13 bankruptcy.
The means test consists of two sections. First you compare your monthly income to the median monthly income of other families in your state with the same makeup as yours. This is called the median income comparison. If the median income is equal to or greater than your monthly income, you qualify. The second step for Chapter 7 Washington State bankruptcy qualification is establishing the difference between your disposable income (any income you do not use on bills are basics) and your unsecured debts. Currently if your disposable income is less then $6,000 over the next 5 years then you qualify for Chapter 7 bankruptcy. You may still qualify for Chapter 7 Washington State bankruptcy if your disposable income is less than $10,000, but this depends on your allowed expenses.
The Washington State Bankruptcy Process – Chapter 7
There are many calculators online to help you determine if Washington State bankruptcy is the correct choice for you. There are some questions you can ask about your situation to see if you might qualify for Chapter 7 bankruptcy and if it is the right choice for you:
- Do I Have No or Low Income?
- Do I Have Very Little or No Money left each month after paying your living expenses?
- Do I have few or no assets aside from my clothing, furniture and other necessities?
- Do I rent or have little equity in my home?
After you have determined that you want to file for Chapter 7 Washington State bankruptcy, you are required to go through a credit counseling briefing before action can begin. This counseling session must be presented by a certified credit counseling agency. The idea behind this is to discuss alternatives to bankruptcy and go over your personal budget before the Chapter 7 bankruptcy process begins. If you fail to go through the briefing step, your case will most likely be dismissed. However, there are certain exceptions to the rule that can be made based on hardship.
The next step in your Chapter 7 bankruptcy process is to actually file your papers. You will at this point have an attorney assess your financial situation and draft a Washington State bankruptcy petition. You will need to present all of your income, asset, expense and debt information as part of the petition. Whether intentional or not, not disclosing all of your debts during this process could result in negative actions taken against you. Bankruptcy fraud is taken very seriously and you can be prosecuted whether or not you intentionally left out details.
After your attorney has filed your Washington State bankruptcy case with the local courts, you will most likely be given an immediately stay. All credit collections calls should cease. The very last step is for you to complete a Washington State-approved debtor education course. According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This course will teach you how to better manage your personal finances so that you do not end up in the same situation again. These classes are designed to help those who have filed for Washington State bankruptcy have a healthy financial future.
Though it is a process that you should seriously consider before beginning, Chapter 7 bankruptcy may be the right avenue for you to give you a fresh start financially. You can rebuild your credit after the Washington State bankruptcy and live a healthier financial life by following the tactics and tips you have learned during your debtor education course.