Washington Bankruptcy Basics
Bankruptcy is not for everyone or every situation. Bankruptcy is the legal process of discharging debt obligations, which allows a new start to all finances. It can stop foreclosures and gives the opportunity to make missed payments. Certain kinds of property, like motor vehicles, may be returned after repossession.
Repossession can even be prevented in some cases. Harassment from debt collectors, wage garnishments, and other forms of collection can be stopped after a petition is granted. Utility services can be restored. Bankruptcy also allows individuals to challenge creditor claims.
On the other hand bankruptcy is not for those looking to eliminate their debts because of slothfulness. Bankruptcy is often abused in this manner, so the United States developed abuse prevention acts to weed out those who abuse the system.
In general bankruptcy is for individuals who have found themselves in large debt due to outside forces. Divorce settlements, the loss of employment, the loss of an important client, or an illness requiring hospitalization are the normal standards for when bankruptcy is legal. A full bankruptcy report for the state of Washington can be ordered for one hundred twenty-five dollars.
Bankruptcy cannot fix all financial problems. Secured loans cannot be affected by bankruptcy filing, including home mortgages and car loans. Bankruptcy can, however, stop additional payments if the property is no longer in possession.
Certain debts are not accessible for bankruptcy, including child support, alimony, most student loans, divorce settlement debts, criminal fines, restitution orders from the court, and most taxes. These debts are called Non-Dischargeable Debts. Those who have cosigned a loan are not protected through bankruptcy when the loan is discharged. He or she often times will still have to pay his or her portion of the loan.
Types of Bankruptcy
Washington has different kinds of bankruptcy to decrease confusion and to suit the needs of different consumers. The new bankruptcy act limits access to bankruptcy courts and the eligibility for bankruptcy in general. Which bankruptcy possible depends on an individual’s income and ability to pay debts each month.
Chapter Seven bankruptcy allows individuals to relinquish their debts by liquidating portions of their property. The court will assign a trustee to the case to sell the property for the current value. The acquired funds will be used to pay off creditors. Only certain kinds of property can be liquidated. This is called non-exempt property.
Exempt property is not allowed to be liquidated and usually includes necessary property for daily use. Exempt property usually includes most pensions, motor vehicles, homes, appliances, clothing, unpaid wages, and some kinds of real estate. An individual may only keep non-exempt property if he or she provides the funds for which the property would otherwise be told.
Chapter Thirteen bankruptcy uses an individual’s personal income to eliminate debts. The court will create a personal repayment plan for the individual after evaluating his or her income, household members, expenses, and debt. The plan will break the debt payments into monthly payments to be completed in a maximum of five years.