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Thank you for taking the time to visit our web page discussing some of the most common issues that come up when filing a Chapter 13 bankruptcy. We are Olympia Chapter 13 bankruptcy attorneys. We assist clients throughout Thurston County seek protection and debt relief under the Federal and Washington State Chapter 13 bankruptcy laws.
If you have questions about whether or not you can qualify for bankruptcy protection under Washington State's Chapter 13 bankruptcy laws, we encourage you to call our offices for a free initial consultation. One of our Olympia Chapter 13 bankruptcy attorneys will be happy to review your finances and discuss whether or not a Chapter 13 is an option that you should consider.
No one likes the thought of having to file for bankruptcy. It can be a scary and complicated process. Our Olympia Chapter 13 bankruptcy lawyers are here to help you understand your legal rights and options so that you can make an informed decision. You can then decide what is best for you and your family. Our Thurston County Chapter 13 bankruptcy attorneys serve clients in the cities of Olympia, Lacey, Tumwater, Yelm, Tenino, and Rainier.
Filing for Chapter 13 bankruptcy protection in Olympia and Washington State.
A Chapter 13 bankruptcy is unlike a Chapter 7 because it involves a payment plan that lasts from three to five years. The Chapter 7 bankruptcy process is much shorter and does not involve a repayment plan. In a Chapter 7 bankruptcy, however, you could lose some of your property if it is not “exempt” as a necessity you need for a meaningful fresh start. In general, most clients are better off filing a Chapter 7 bankruptcy. If your household makes above the median income, however, you may have to file a Chapter 13.
Additionally, if you have filed a Chapter 7 in the past 8 years, you will have to file a Chapter 13 bankruptcy. If you filed a Chapter 7 in the last four years, you can file a Chapter 13 but you do not receive a discharge. You may still want to file a Chapter 13 without a chance at getting a discharge in that situation if you have an urgent need to do so, such as getting caught up on a mortgage, paying tax debt or giving yourself some breathing space with a non-dischargeable debt like student loans.
The Chapter 13 repayment is controlled by a plan that lasts from three to five years. If you make above the median income, you may have to commit to a five year plan. Additionally , you may want to extend you plan to five years so that you can pay your debts with a payment that you can afford. It can be a little complicated. But one of our Olympia Chapter 13 bankruptcy attorneys will explain exactly how we develop your payment plan, which is also partially determined by what you hope to accomplish through your Chapter 13. For example, are you trying to stop a home foreclosure? Are you trying to deal with a lawsuit or back taxes?
How is my Chapter 13 bankruptcy repayment plan calculated?
The plan is a formula that pays debts according to their legal priority and what you want to accomplish. Some debts, which are typically secured debts, get paid before others. For example, mortgages and car loans get paid before back taxes, which get paid before general unsecured debts like credit cards.
If you make your best efforts to pay off the first priorities and there isn’t enough money in your plan to pay the lower priority debt, the lowest priority debts, such as credit card bills, medical bills, and other unsecured debts, would not be paid anything and will just be discharged, or canceled, by your bankruptcy. This is one of the primary benefits of a Chapter 13 bankruptcy.
Many of our Olympia Chapter 13 bankruptcy clients are able to discharge all of their unsecured debts because all of the money being paid into their plans is going to secured and other first priority creditors. Additionally, creditors have a relatively short deadline to file a claim in your Chapter 13 case. If you list them on your bankruptcy and they do not file a claim, the debt is discharged.
Other reasons for filing a Chapter 13 bankruptcy.
Even if you are not above the median income, there may be a number of other reasons for you to file a Chapter 13. One of the most common reasons it to get caught up on mortgage payments. If you fall behind on mortgage payments, the mortgage company can foreclose on your home if you don’t get caught up right away. A Chapter 13 bankruptcy lets you get caught up over three to five years, which of course is much more feasible for someone who may have experienced a sudden crisis such as an illness or drop in income but can get back on track if given the chance.
Car loans are also paid through Chapter 13 plans and the ability to restructure these loans in a Chapter 13 can help you afford a car. If you bought the car over 910 days ago, you can also “cram down” the loan. That means you can pay the car loan off in a Chapter 13 plan by paying 100% of the value of the car, then paying any amount of the loan over the value as it if it were a credit card debt – at anywhere from 0% to 100%, depending on your ability to pay. You can also pay off taxes and court fines in a Chapter 13.
Another reason someone might want to file a Chapter 13 bankruptcy is to protect property they might lose in a Chapter 7. If you have property that you want to protect but you cannot exempt, you can pay the amount to creditors that they would receive in a Chapter 7, only spread out over time. For example, if have rental property with $30,000 in equity that you could not protect in a Chapter 7, you could pay that $30,000 over five years to unsecured creditors instead of having to lose the property.
Is an Olympia Chapter 13 bankruptcy the right option for me?
Chapter 13 bankruptcy cases are often difficult and complicated to properly prepare. And, it is highly advisable that you speak with an experienced bankruptcy attorney before filing one. It can be difficult to complete the payment plan and Chapter 7 bankruptcy cases tend to be more successful.
They are often, however, a much better option than debt consolidation programs because there is a lot more certainty when dealing with the federal courts. Your creditors have to go along with the plan, as long as your plan is approved and you make your monthly. As a result, in the long run, you typically end up paying less but have a lot more certainty.
Our Olympia Chapter 13 bankruptcy attorneys are very experienced at guiding Chapter 13 plans all the way through to final discharge. If you want to learn more about the advantages of an Olympia Chapter 13 bankruptcy, we invite you to call our offices for an initial consultation. One of our Olympia Chapter 13 bankruptcy lawyers can review your case in detail and then help you decide if a Chapter 13 is right for you and your family.