All businesses have ups and downs. Business owners know that there are inevitable cases of financial struggles and monthly income losses. These kinds of unforeseen situations may lead to the inability to pay financial obligations. Thus, filing for bankruptcy might be your only option to solve this problem. This will allow you to pay off all your debts and have a fresh start after bankruptcy. This is also a great opportunity to rebuild your credit and stay out of debt.
Among the different types of bankruptcy, Chapter 7 and Chapter 13 are considered the most common chapters. Since bankruptcy laws vary from state to state, a reliable Washington bankruptcy lawyer can help you understand these laws depending on the jurisdiction. Before you choose the chapter that you will file, it is important to know if you can meet the income requirements and if you can protect your assets using bankruptcy exemptions.
Your income will be measured using the means test. The results of this test will determine the most appropriate bankruptcy chapter that will suit your financial situation. In Chapter 7 bankruptcy, you will pass the means test if you meet the standard income requirements. If your income is lower than the state’s median income, then you are qualified to be granted a discharge from the Chapter 7 case. On the other hand, if your income exceeds the state’s median income, you may still be qualified to pass the means test after you deduct the allowable expenses.
In Chapter 13 bankruptcy, you may pay back some or the full amount of what you owe under a repayment plan if your income exceeds the limits of Chapter 7. The most important factor to consider in filing Chapter 13 is sufficient monthly income to wipe out your debts. The bankruptcy payment for Chapters 7 and 13 are calculated similarly. You are required to pay the non-exempt property value and the amount of your non-dischargeable debt. In case you want to make amendments to your choice of bankruptcy chapter, it is possible to change from Chapter 7 to Chapter 13 as long as you can reduce the length of the payment plan down to three years.
Before you file for bankruptcy, you need to know the rules on how you can protect your assets and properties from liquidation. Bankruptcy does not automatically imply that you will lose all the assets that you have acquired. According to the Washington bankruptcy exemption law, there are certain assets that you can protect from being liquidated depending on the bankruptcy chapter. However, some assets cannot be protected and these are classified under non-exempt property.
If you file Chapter 7, your bankruptcy trustee will be responsible for selling your non-exempt properties. The proceeds will be allocated to your creditors based on the payment plan. On the contrary, filing Chapter 13 bankruptcy will allow you to keep and save your property; however, you need to pay back the non-exempt property value to your creditor under the repayment plan guidelines within three to five years.
In Washington, there are several commonly used bankruptcy exemptions. You have the option to file for a homestead exemption that allows you to protect $125,000 worth of equity. The exemption amount is reduced to $15,000 if there are other personal properties used as a residence. Moreover, a motor vehicle exemption worth $3,250 can be applicable for one vehicle that you own. If you will file it jointly with your spouse, you are allowed to exempt one vehicle each.
As part of the bankruptcy procedure, you need to take two financial courses from accredited credit counseling agencies. It is mandatory to take credit counseling sessions before bankruptcy filing and a debt education course after the bankruptcy filing.
You may start your bankruptcy filing by accomplishing the free and official online bankruptcy forms from the website of the United States Bankruptcy Court. You need to fill out the form with the complete details of your present financial status. You need to declare all your assets, liabilities, monthly income, living expenses, bank account information, credit card debt, loan debt, and property transactions. A competent Washington bankruptcy attorney can assist you in such filing. You need to ensure that all the details written on your paperwork are accurate before you file your case to the local court and pay the filing fees.
Bankruptcies will affect your credit report for seven to ten years, depending on the chapter that you have filed. Chapter 7 bankruptcy will stay on your report for ten years from the filing date, while Chapter 13 bankruptcy will remain for seven years. The effect of bankruptcy in your credit report will gradually fade with time as you think of ways on how to improve your credit score
Bankruptcy is a progressive process that will help you solve your financial problems one step at a time. It entails hard work and effort for you to succeed. For legal help in filing bankruptcy, do not hesitate to contact us at Northwest Debt Relief Law Firm and schedule a consultation with our experienced Washington bankruptcy lawyers. We will assist you throughout the whole bankruptcy process as you aim for debt settlement and financial freedom