Filing for bankruptcy can be an overwhelming experience for anyone. Still, Chapter 13 bankruptcy is a great way to reorganize your debts and keep your assets if that’s the direction you feel you need to take to regain control of your financial situation.
A Seattle bankruptcy attorney can help you get through the ins and outs of the complex legal requirements you will encounter when filing for Chapter 13 bankruptcy.
The right one will help ensure that your plan is structured correctly and maximize your debt relief options. Without this kind of legal guidance on your side, you risk errors that could lead to a complete case dismissal or even more financial strain.
What Is Chapter 13 Bankruptcy?Chapter 13 bankruptcy, commonly known as the wage earner’s plan, allows you to create a repayment plan to pay off your debts over three to five years as long as you have a regular income.
Unlike a Chapter 7 bankruptcy, which involves liquidating your assets, Chapter 13 helps you keep your home and other valuable property while making your structured payments.
Eligibility for Chapter 13 Bankruptcy in Washington StateTo qualify for Chapter 13 bankruptcy in Seattle, Washington, you must:
If you aren’t sure of your eligibility, an experienced Seattle bankruptcy attorney can review your case and fill you in on any requirements you may have missed.
The Chapter 13 Repayment PlanYour repayment plan is going to be the backbone of your entire bankruptcy case. It must:
Once your repayment plan is done, any of your remaining eligible unsecured debts may be discharged.
How Chapter 13 Bankruptcy Affects Your Home and CarChapter 13 is often used to stop foreclosure or repossession proceedings. If you are behind on your mortgage payments in King County, this bankruptcy type lets you:
When you file for Chapter 13 in Seattle, an automatic stay goes into effect (11 U.S.C. §362). This prevents your creditors from doing any of the following:
The protection you receive against all of this during the automatic stay lasts throughout the duration of your Seattle bankruptcy case and as long as you continue to comply with your repayment plan.
Costs and Fees for Chapter 13 Bankruptcy in SeattleFiling for Chapter 13 bankruptcy includes:
Here are some key laws you want to familiarize yourself with as you go through the process of filing Chapter 13 bankruptcy in Seattle.
Yes! You can file without an attorney’s help. However, this isn’t recommended because bankruptcy laws and requirements can be complex.
Your Chapter 13 bankruptcy will stay on your credit report for up to seven years from the date you filed.
Yes, you can include student loans in your repayment plan, but you also have to note that these loans are generally not dischargeable under 11 U.S.C. §523 unless you can prove undue hardship.
Filing alone will not directly affect your spouse’s credit, but any joint debts you have may be pursued.
Missing payments during the three to five-year repayment window can result in a case dismissal or a conversion of your bankruptcy type to Chapter 7.
Chapter 13 bankruptcy in Seattle provides a more structured way to regain some financial stability while still keeping all of your assets. If you are considering filing, consult a Seattle bankruptcy attorney to explore your options and create a solid repayment plan you can stick to.
Hiring an experienced Seattle bankruptcy attorney can make a big difference in the outcome of your case.
A skilled attorney will analyze your financial situation, ensure you meet all eligibility requirements, and assist you in developing a repayment plan that aligns with your income and other obligations. They can help you protect key assets, leverage exemptions, and negotiate more favorable terms on your behalf.
So, don’t feel like you have to go through this process alone. Our skilled bankruptcy attorneys in Seattle are here to help you navigate the more chaotic times in your life and get a solid footing for a more stable financial future.
Chapter 13 is a more complicated form of bankruptcy than Chapter 7. It lasts longer, and the debtor must make payments for three to five years. However, for people in serious financial distress, it is usually better than fighting creditors one by one. It is more predictable and secure than debt consolidation plans, and it allows a debtor to include all their debt, unlike non-bankruptcy consolidations that only pay certain kinds of debts.
In a Chapter 13, the debtor makes monthly payments to a bankruptcy trustee. The trustee splits the payments up among creditors according to a three to five year payment plan. Any debt that you cannot afford to pay by the end of the plan is discharged. Some debt is not discharged in bankruptcy, such as student loans, some back taxes, back child support, and spousal maintenance.
In a Chapter 13, a debtor can include back mortgage payments and get caught up on a mortgage over five years. Many people save their homes from foreclosure with Chapter 13. A second mortgage can be removed from a home in Chapter 13 if the home’s value is lower than the balance of the first mortgage.
Car loans can be repaid in a Chapter 13 plan. Car loans that are over two and half years (or all refinanced loans) can be “crammed down” in a Chapter 13. This allows the debtor to pay the loan at the value of the car and pennies on the dollar for any amount over that. Furniture, electronics, and appliance loans can be crammed down as well.
Back taxes can be included in a Chapter 13 plan. Back child support or spousal maintenance can be included too. Driver's licenses can be reinstated by including back tickets in a repayment plan. These debts cannot be discharged in bankruptcy, but a Chapter 13 can consolidate them with the rest of the debt and give the debtor some breathing room.
Debtors who are required to file Chapter 13 because they can’t pass the means test must pay their unsecured creditors a percentage based on the means test results. The means test looks back at the last six months' income and deducts monthly expenses from this average. What’s left must be paid though the plan to unsecured creditors. The means test deducts secured debt payments, such as mortgages, car loans, and back tax, spousal maintenance and child support payments, and this amount is already included in the total monthly payment. If the means test shows a payment that is unaffordable, the person can claim special circumstances and argue that this amount should be lowered. Examples of special circumstances could be an unusually strong six months of income leading up to bankruptcy, a sudden drop in income, or a new addition to the household.
Find out if Chapter 13 bankruptcy is right for you by contacting the bankruptcy lawyers at Washington State Attorneys in Seattle, WA. If you are struggling with debt, we can help. Call us or request an appointment today.