Credit Card Debt

Are you a Seattle resident struggling with credit card debt? Well, the good news is you aren’t alone. With rising costs of living in King County, many find themselves overwhelmed by high-interest debt and find it hard to come out from under the crushing realization of it.

If you are facing this kind of financial hardship, bankruptcy may offer the fresh start you need. Understanding Washington State’s bankruptcy laws can help determine if this is the right option for you.

Working with a Seattle bankruptcy attorney is also a good step because they can help you determine which bankruptcy type is the most appropriate and beneficial for your financial situation.

The Impact of Credit Card Debt

Credit card debt has a way of quickly spiraling out of control because of high interest rates and late fees. Common reasons Seattle residents accumulate credit card debt include:

• Job loss or reduced income
• Medical expenses
• Emergency costs
• High living expenses in King County
• Poor financial planning

If you are struggling to make even those minimum payments, it might be the right time to explore available debt relief options, including bankruptcy.

Bankruptcy Options for Credit Card Debt in Seattle

In Washington State, there are two primary personal bankruptcy types: Chapter 7 and Chapter 13. Each has its own requirements and benefits.

Chapter 7 Bankruptcy to Wipe Out Credit Card Debt

Chapter 7 bankruptcy, also known as liquidation bankruptcy, can discharge most unsecured debts, including high credit card balances that may be overwhelming.

To qualify, you need to pass the Washington Means Test, which evaluates your income against the state median.

Benefits

• Can eliminate most of your credit card debt
• Stops all creditor harassment and lawsuits
• Provides a fresh financial start

Drawbacks

• Potentially lose non-exempt assets
• Can negatively impact your credit score

Washington State law (RCW 6.15.010) allows certain property exemptions that protect essential assets like your primary home (up to $125,000 in equity) and other personal belongings.

Chapter 13 Bankruptcy for Managing Credit Card Debt

Chapter 13 bankruptcy, also known as a wage earner’s bankruptcy, is a debt repayment plan that lasts three to five years. It allows you to reorganize your debt while keeping your assets.

Benefits

• Stops late fees and reduces interest rates
• Protects assets from repossession
• Helps you catch up on those missed payments

Drawbacks

• Lengthy repayment period
• Maintaining a steady income is a must

Under 11 U.S.C. § 1322, your repayment plan is based on your disposable income, and it prioritizes secured debts over unsecured debts like credit cards. So, this is definitely something to keep in mind, especially if you are focusing on credit card debt.

How Bankruptcy Stops Credit Card Collections

One of the biggest reliefs you will find with bankruptcy is the automatic stay under 11 U.S.C. § 362. This means:

• Your creditors will have to stop calling, suing, or garnishing your wages.
• Debt collection agencies can’t harass you.
• Any pending lawsuits related to credit card debt are halted.

For many in Seattle, this kind of immediate relief lets them gain control over their finances without constant pressure from creditors. If this sounds like something you want, don’t hesitate to consult an experienced Seattle bankruptcy attorney who can help point you in the right direction.

When Bankruptcy Might Not Be the Best Option

While bankruptcy is a way to eliminate or restructure your credit card debt in Seattle, it may not be the right choice if:

• You have student loans, tax debts, or child support (which are typically non-dischargeable).
• You recently filed for bankruptcy (restrictions apply under 11 U.S.C. § 727).
• You can negotiate a lower interest rate or settlement with your creditors instead.
• You have valuable assets that you can liquidate in a Chapter 7 bankruptcy.

Some alternatives to bankruptcy you may want to explore include debt settlement, credit counseling, and consolidation loans. These can all help lower those monthly payments without you having to file for bankruptcy.

Filing for Bankruptcy in Seattle, Washington

If bankruptcy still seems like the right solution for you, here’s what you need to do:

1. Attend Credit Counseling: This is required by law before you can file.
2. File a Bankruptcy Petition: Submit paperwork with the US Bankruptcy Court for the Western District of Washington.
3. Meet With a Bankruptcy Trustee: They will review your case and all of your assets.
4. Complete a Financial Management Course: This is also required before your debts are discharged.
5. Receive a Discharge (Chapter 7) or Begin a Repayment Plan (Chapter 13): Your bankruptcy attorney can help you decide the most suitable route for your financial situation.

Frequently Asked Questions About Credit Card Debt in Seattle
Finding Legal Help and Bankruptcy Assistance in Seattle

Understanding complex bankruptcy laws in Seattle can feel overwhelming, and you probably have a lot of questions. Whether through Chapter 7, Chapter 13, or even alternative debt relief options, you can find a path toward financial freedom. Explore all available options to take control of and rebuild your financial future.

A Seattle bankruptcy attorney can be the biggest ally in your case and can help ensure everything goes as planned. They will help you decide which bankruptcy or alternative methods are right for you and can make sure you are eligible and meet all requirements.

Overwhelming credit card debt is one of the biggest reasons people file for bankruptcy. It is easy to get in over your head before you know it if you have suffered a job loss, drop in income or unexpected emergency. If you find yourself charging necessities every month because you have to use your income to pay credit card payments, the writing is on the wall: you are insolvent and bankruptcy is a real possibility. Credit cards are almost always dischargeable in bankruptcy – they are easy to wipe out.

One thing to be aware of, especially if you have made recent purchases on your credit card, is that a credit card company can fight the discharge if they file a case against you for fraud. To win this “adversarial proceeding,” they basically have to prove that you did not intend to pay the credit card charges when you made them. They are careful not to file a case for just any charge. If you only made a few charges for necessities just before filing, especially if you have been making payments, you will probably be fine. They have to hire an attorney, pay a filing fee and get involved in federal litigation to keep you from wiping out your credit card debt. Not only that, if you can show they were not justified in filing the case, you can ask that your attorneys fees be paid. Some of the things the bankruptcy judge would look at to decide whether you made fraudulent charges are how much the charges were, whether you saw a bankruptcy attorney before you made them, how long before filing your case you made them, whether you were making payments, whether they were for luxuries, and whether they were cash advances.

Some banks, especially credit unions, “cross collateralize” cars and credit cards. That means they can repossess your car if you file bankruptcy and stop paying the credit card because they have placed a lien on your car. If you have a car loan and a credit card with the same bank, you should make sure the credit card is not cross collateralized.

You will not be able to keep your credit cards after filing bankruptcy. Even if you have a zero balance on a card, the company will find out you filed and cancel your account. After you have received your discharge, you can apply for a new card, but it may take time. Bankruptcy will not affect your bank account (unless you owe money to the same bank), so you can keep using your debit card after you file your case.

If you are overwhelmed by credit card debt and are thinking about bankruptcy, we want to help you. Call our experienced Seattle, WA lawyers to find out if bankruptcy is right for you.