Olympia, WA Chapter 13 Bankruptcy Lawyers
What debts are discharged in a Chapter 13 bankruptcy?
What can an Olympia, WA Chapter 13 do for you?
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Assisting Chapter 13 bankruptcy clients in Thurston County, WA.
Experienced WA State Chapter 13 bankruptcy attorneys.
The Most Common Types of Debt that are Discharged in Chapter 13 Bankruptcy
In a chapter 13 bankruptcy, you can propose a plan that you pay over a period of three to five years, and pay some of your creditors back.
1. Secured Creditors:
Generally, we try to help you create a plan and get it approved by the Court which pays back secured creditors, like missed mortgage payments, and pays off vehicles.
Houses: We can help you save your house form a foreclosure, and get caught up on your missed payments over a period of time.
Vehicles: We can often “cram down” the amount owing on a vehicle, and the interest rate, too! The unpaid amounts get discharged when you complete your plan.
2. Priority Creditors:
After the secured creditors, the next creditors that get paid in a chapter 13 plan are taxes, child support and other debts called “priority” debts. Although these kind of debts are not discharged in bankruptcy, they CAN be paid back through a chapter 13 plan over a period of time - while the Court protects you from garnishments!
3. Unsecured Creditors:
After the secured creditors and priority creditors are paid, a chapter 13 plan then may pay some money to unsecured creditors. Unsecured debts are debts where there is no collateral, such as a house, car, furniture, or other property, to secure the debt. Usually, in a chapter 13 plan you will pay little or nothing to your unsecured creditors.
Here are some of the most common kinds of unsecured debts that can be discharged in full or in part, depending on your income and expenses:
Credit Card Debt: Most credit cards are unsecured, and these usually are the largest amount of debts being discharged in a chapter 13 bankruptcy
Medical bills: 50% or more of people that file bankruptcy do so because of medical issues. Even if you have insurance, your share of the bill can be thousands of dollars. Medical collectors used to work more with people, but now they are very aggressive about being paid in full as soon as possible. These can be discharged in bankruptcy.
Personal lines of credit: These are signature loans that someone might have with a bank that are based only on a signature. These can be discharged in bankruptcy.
Deficiencies: When a house is foreclosed on, or a car is repossessed, there may still be money owing on the contract. This is called a deficiency, and it simply means there was not enough from the sale to pay off the entire debt. Usually a second mortgage is NOT paid in a foreclosure, and the second mortgage company will sue to collect on the debt.
The judgment on a second mortgage can be enormous, often $50,000 to $100,000 or more. Nowadays, there are between 7,000 and 10,000 foreclosures every day in the U.S., so if you find yourself in this situation, you are definitely not alone. We can help protect you from mortgage creditors who often demand more money than most people could ever afford to pay back.
Old Income Taxes: In many cases we can help our clients discharge all or part of their taxes. The taxes have to be income taxes that were due more than three years ago (extensions affect this time period), have been filed more than 2 years before the bankruptcy, and there has not been a levy.
There are other important factors that have to analyzed as well. Taxes can be a very complicated issue, and it is important to have an experienced Olympia bankruptcy attorney who can help you. We have over 20 years combined experience helping people with complicated tax situations.