Bankruptcy allows an individual or business to get rid of some or all of its debt. Typically, bankruptcy should only be considered when the debt is completely unmanageable, impossible to pay off, and there are no other options. However, in some cases, the benefits of bankruptcy can substantially outweigh the costs. Bankruptcy is controlled by federal law and handled in federal courts, so the procedural and substantive rules involved in Washington are often the identical as everywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local Island County, Washington bankruptcy Attorney beforehand.
Chapter 7 Bankruptcy in Island County, Washington
In Island County, Washington, there are 2 common types of commonly-used consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 involves liquidation of part of a debtor's assets. It requires that a certain percentage of the debtor's property to be sold to pay off as much debt as possible. The majority of property that most people own, however, is exempt. This normally includes homes, vehicles, retirement accounts, and others. These are not available to creditors.
Once the qualifying property is sold, and the funds transferred to the creditors, the dischargeable debt is cleared. Some forms of debt, however, can't be absolved in Chapter 7 Bankruptcy in Island County, Washington. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be absolved, Chapter 7 may not be the best choice for you.
Chapter 13 Bankruptcy in Island County, Washington
Chapter 13 Bankruptcy in Island County, Washington differs substantially from Chapter 7. It might be a better option than Chapter 7, depending on the facts of your case. Chapter 13 bankruptcy does not discharge debt. Instead, it restructures it. This involves the bankruptcy court coming up with a new payment plan that supersedes the terms of the contracts that gave rise to the debt in the first place. This results in an altered payment plan that the debtor should find manageable, if he or she can make a few sacrifices.
Which Type of Consumer Bankruptcy Should I File in Island County, Washington
Chapter 13 is normally a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
Of course, you should always seek the counsel of an accomplished local Island County, Washington bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your individual situation.