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 governed by federal law and handled in federal courts, so the procedural and substantive rules involved in Washington are often the same as anywhere 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 Seattle, Washington bankruptcy Lawyer beforehand.
Chapter 7 Bankruptcy in Seattle, Washington
In Seattle, Washington, there are 2 common forms of commonly-used consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 liquidates some of the debtor's assets. It requires a certain percentage of the debtor's assets to be sold off to pay as much of his or her debt as possible. However, many types of property that most people own are exempt, meaning that they don't need to be sold. This often includes houses, vehicles, insurance policies, and basic personal items, like clothing. These assets are not available to creditors.
Once the qualifying property is sold, and the funds transferred to the creditors, the dischargeable debt is cleared. Some types of debt, however, can't be absolved in Chapter 7 Bankruptcy in Seattle, Washington. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be absolved, Chapter 7 might not be the best choice for you.
Chapter 13 Bankruptcy in Seattle, Washington
Chapter 13 bankruptcy in Seattle, Washington is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your individual case. Chapter 13 bankruptcy does not excuse debt, it restructures it. This involves a court coming up with an altered repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original contracts that created the debt in the first place. This creates a new payment structure, normally involving a single monthly payment, that the debtor should find manageable.
Which Type of Consumer Bankruptcy Should I File in Seattle, Washington
Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your particular situation. If you have a steady income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a steady income, and most of your property is exempt, Chapter 7 might be a better way to go.
Regardless of your situation, you should speak with an attorney in Seattle, Washington who is experienced in bankruptcy before making a decision. They will be able to advise you of your options, and the likely outcomes of each one, allowing you to make a much more informed decision.