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Which bankruptcy is right for me?
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Chapter 7 versus Chapter 13.
Which is right for me?
Because you don’t get a fresh financial start in a Chapter 13 until you finish making monthly payments in a bankruptcy plan, a Chapter 7 is usually much cheaper and easier. There are times, however, when a Chapter 13 bankruptcy is the only option for the goals you need to accomplish.
If you have already filed a Chapter 7 in the past 8 years, you have to file a Chapter 13 to get bankruptcy relief. If your income is above the median, or average, income, you may be forced into some kind of repayment plan. If the law says you have to pay at least something back, we can carefully analyze the situation and make sure your repayment plan is fair to you and your family.
There are times when a Chapter 13 is the best way to get you out of financial trouble. Examples include when you need some breathing space to catch up on a mortgage, you have some property that could be taken from you in a Chapter 7, you need to save a car from repossession, or you have some tax debt or back child support that needs to be addressed.
Our Washington bankruptcy attorneys are very experienced in guiding our clients toward the best bankruptcy solution.
What can only a Chapter 13 accomplish?
The following can only be accomplished by filing an Olympia Chapter 13 bankruptcy, not a Chapter 7.
A Thurston County Chapter 13 bankruptcy will stop a home foreclosure from proceeding.
If you need to prevent a Thurston County home from being foreclosed upon, then filing an Olympia Chapter 13 bankruptcy is your only option. A Chapter 13 will stop the foreclosure of your house and require that your mortgage company allow you to “catch up” any late payments through your plan.
In essence, your lender is required to give you the time allotted in your Chapter 13 plan (36 to 60 months) to make up any missed payments, so long as you stay current on your mortgage in the future. This means that you MUST be able to make your regular monthly payments. As a result, we must be able to demonstrate to the trustee that you will have sufficient income in the future to make your plan payments.
An Olympia Chapter 13 bankruptcy will typically allow you to keep many different types of property that would have to be forfeited in a Chapter 7 because it cannot be exempted.
This means that you will typically not have to give up any property in an Olympia Chapter 13 because you will be using your future income to make your plan payments.
An Olympia Chapter 13 bankruptcy may also allow you to "Cram down" certain secured debts that are higher than the value of the property that secures them.
In certain instance, you may be able to use and Olympia Chapter 13 bankruptcy to greatly reduce a secured debt for an asset that you wish to keep. The most common type of “Cram Down” is for a vehicle that you purchased at least 30 months prior to filing. If your debt qualifies, this can be a very powerful tool that is only available in a Chapter 13.
It works like this. Your purchased your car more than 30 months again, and it currently has an outstanding loan of $15,000. But its fair market value is only $9,000. In this scenario, you can propose a plan that only pays the creditor $9,000 and requests that the remaining $6,000 owing on the loan be fully discharged.
Certain other kinds of property may also be able to subject to cram down. But for all other types of property, you cannot propose a cram down on a secured debt unless you purchased it at least 12 months prior to filing your Olympia Chapter 13 bankruptcy.