Chapter 13 bankruptcy under the United States Bankruptcy Code is a solution well-suited for Washington debtors who have a stable income and want to avoid losing property and assets to a possible liquidation sale, such as what might happen under a Chapter 7 bankruptcy.
Stone Rose Law represents people who are facing mounting debts and who need to seek protection from their creditors, including Chapter 13 bankruptcy.
If you need help deciding whether this form of bankruptcy is right for you, call (480) 739-2448 to speak with an experienced bankruptcy attorney and schedule a free consultation with a Washington bankruptcy lawyer, or contact us online.
What is Chapter 13 Bankruptcy in Washington?
A Washington Chapter 13 bankruptcy lets you reorganize and consolidate your debts into an affordable monthly payment plan, typically lasting three to five years. This is a practical choice if you have a regular income but cannot meet your current debt servicing obligations. The Chapter 13 debt repayment plan can give you the ability to pay down many of your debt obligations. In some cases, a percentage of the debt will be discharged at the end of the plan.
What makes Chapter 13 different from working with a Debt Consolidation company?
Debt consolidation plans allow you to arrange for a new payment schedule, often for a lower total amount than if you stay with your original payments. But you are still subject to legal debt collection actions if you cannot keep up. Interest, fees, and penalties will continue to accrue on what you owe. And your creditors do not have to accept your debt consolidation offer or payments.
Under Chapter 13, when the bankruptcy trustee approves your debt repayment plan, your creditors must accept payments that you can afford. If you cannot pay back all your debts with your current income and expenses, your remaining unpaid debts will be discharged at the end of your plan (with a few exceptions).
Also, while your debt payment plan is in effect, you are protected from legal action like garnishments and levies. All the interest on your debts stops accruing on the day you file.
Is Chapter 13 Bankruptcy a Bad Reflection on You?
Absolutely not! Chapter 13 bankruptcy was established to help people struggling financially to repay their debts without suffering long-term financial effects, such as property foreclosure, garnishment, or asset loss. It creates the opportunity for you to start fresh with your credit.
Your credit recovery begins immediately upon filing – there is no waiting until the end of the three to five years. In some cases, our clients qualify to purchase a home within two years of filing their case while the case is still pending. Your Chapter 13 bankruptcy can open doors that are closed due to bad credit.
Chapter 13 bankruptcy is not for everyone. It is best suited for people with a regular income that can sustain a debt repayment plan. To qualify for filing bankruptcy in bankruptcy court, you must:
- Be an individual, not a business entity
- Complete credit counseling 180 days before filing for bankruptcy
- Have a regular income
- Not have more than the allowable maximum amount in unsecured debts and secured debts
Bankruptcy proceedings are not easy proceedings and may impact your credit report, but in almost all cases, the fresh start is worth it.
What Happens To Debt Collectors When You File Chapter 13?
Upon filing for Chapter 13 bankruptcy in federal court, an automatic stay immediately protects you and your assets from any attempts at collection and all legal actions, such as garnishment, lawsuits, foreclosures, and levies. If you have a pending foreclosure sale date or repossession, a Chapter 13 filing will stop that and allow you more time to cure the default through your Chapter 13 plan.
Upon filing, creditors will receive notice of your Chapter 13 bankruptcy. They must prove you owe a valid debt and wait to be paid according to their type of debt.
The bankruptcy automatic stay does not apply to some types of debts or financial obligations, like child support payments. To learn more, consult with a Washington Chapter 13 bankruptcy attorney at Stone Rose Law.
Does Chapter 13 Erase All Debt?
Chapter 13 does not erase every kind of debt. Instead, debts will be treated differently depending on their nature.
Priority Debts
Priority debts include child support, spousal support, and recent taxes, which are not dischargeable in bankruptcy and must be paid.
Secured Debts
Secured debt is debt secured by an asset you wish to keep, like your car or home. Anyone filing for bankruptcy must pay short-term secured debts, such as car loans or a second mortgage, during the repayment plan. In some cases, this includes your monthly mortgage obligations.
Vehicles or homes that are subject to a lien or security interest are known as secured assets. Other types of secured debts, like judicial or tax liens, must also be paid during the repayment plan.
Unsecured Debts
Unsecured debt is any debt not secured by an asset and is either an administrative expense or a priority claim. Common examples of unsecured debts include credit card balances or medical bills. You must pay unsecured creditors at least as much as they would get in a Chapter 7 liquidation bankruptcy. Our experienced bankruptcy attorneys will assess the liquidation value of your case.
Our skilled bankruptcy lawyers can help identify your debts and assist you in forming an achievable Chapter 13 plan.
What If My Chapter 13 Payments Are Too High?
Staying the course of the repayment plan is required to receive debt relief through a Chapter 13 bankruptcy proceeding. A skilled Chapter 13 bankruptcy Washington lawyer can assist you in crafting a plan that works for your financial situation. If life happens during the term of the bankruptcy, a modification can be filed to make adjustments if there is room for change.
Can I File Chapter 13 Without My Spouse?
Yes, you can file without your spouse if their assets and income are disclosed. Washington is a community property state where all income and assets held by the household must be disclosed. Your spouse will not be a party to your bankruptcy, and although their credit will not be impacted, it will be noted.
To qualify for Chapter 13 bankruptcy, at least one partner must be eligible for Chapter 13 bankruptcy relief, and the combined debts of both spouses must not exceed the debt limits.
How Much Does It Cost To File Chapter 13 Bankruptcy In Washington?
The cost of a given Chapter 13 bankruptcy case will vary, but a Washington Chapter 13 attorney at Stone Rose Law can provide a free consultation. With our support, you can rest assured that you will receive the optimal plan from your Chapter 13 bankruptcy.
See if Chapter 13 Bankruptcy Law Can Help You in Washington State
A Stone Rose Law bankruptcy attorney can help you get your financial life under control. We can help you deal with unsecured and secured creditors, stop creditor harassment, prevent foreclosure actions and wage garnishments, and assist you in rebuilding your credit record.
Contact our team today for your free bankruptcy consultation at (480) 739-2448 or reach us online.
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