Can I qualify for bankruptcy?

Filing for bankruptcy in Olympia, Washington, can provide much-needed relief from overwhelming debt, but not everyone qualifies. The type of bankruptcy you choose to file comes down to your income, debt, and financial situation.

To help you understand the process and determine which bankruptcy chapter is right for you, consult an experienced Olympia bankruptcy attorney in Thurston County.

The two most common types of bankruptcy you will learn about during this consideration process are:

• Chapter 7 Bankruptcy: This eliminates most of your unsecured debt but does require that you pass the Means Test. It is suitable for those with lower incomes who find it difficult to repay debts. While it can provide you with a fresh financial start by wiping out all eligible debts, some of your assets may need to be liquidated depending on the exemptions.
• Chapter 13 Bankruptcy: This involves a repayment plan over a three- to five-year timeframe and is ideal for those with steady incomes. It allows you to keep your property while reorganizing and paying off your debt in more manageable installments.

You may qualify for Chapter 7 bankruptcy in Olympia if:

• Your income falls below the Washington State median income for your household size. According to recent figures, this is approximately $68,000 for a single earner.
• You pass the means test, which compares your income to your expenses. If your disposable income is too high, you might not qualify.
• You have little to no disposable income left after you pay all necessary expenses each month, like rent, food, and medical bills.
• You haven’t filed a Chapter 7 in the past eight years (11 U.S.C. § 727(a)(8)). If you filed previously, you may need to wait before you can file again.
• If you qualify, the Chapter 7 bankruptcy process is a relatively quick one and usually takes between four and six months to complete.

You may qualify for Chapter 13 bankruptcy in Olympia if you meet the following:

• You have a steady income that shows you can make monthly payments under a court-approved repayment plan.
• Your unsecured debts are under $465,275, and secured debts are under $1,395,875. These limits are adjusted periodically for inflation.
• You are up to date on all of your tax filings and are capable of maintaining necessary expenses while repaying your debts.
• You have not had a Chapter 13 discharge in the last two years (11 U.S.C. § 1328(f)).

Chapter 13 might end up being the better choice if you have assets you want to protect, like your home or car, and you need time to make up missed payments.

When filing for bankruptcy in Olympia, Washington, there are state exemptions that determine what property you can keep. Some of the more important exemptions to familiarize yourself with include:

• Homestead Exemption: This protects up to $125,000 in home equity (RCW 6.13.030). It is especially valuable if you are a homeowner facing foreclosure.
• Vehicle Exemption: This allows for up to $3,250 in vehicle equity (RCW 6.15.010). So, if you rely on your car for work and daily life, this exemption lets you keep it
• Personal Property: Household items up to $6,500 for an individual (RCW 6.15.010), including furniture, appliances, and clothing, are covered.
• Wages: This protects 75% of your disposable earnings or 35x the federal minimum wage, whichever is greater (RCW 6.27.150). It essentially protects a portion of your income from creditors.

An Olympia bankruptcy attorney can review all of your assets with you and help you determine which exemptions apply to your situation. Choosing the right exemptions can mean all the difference between keeping and losing your essential property.

Bankruptcy is a good way to eliminate or restructure certain types of debt when you find yourself struggling:

• Credit card debt
• Medical bills
• Personal loans
• Utility bills

• Student loans—unless you can prove an undue hardship
• Child support or alimony—can’t be eliminated in bankruptcy
• Most tax debts—some older tax debts may be discharged, but recent tax obligations usually can’t be

You can find all the exemptions to discharge in 11 U.S.C. § 523. To know more about which of your debts can be discharged or not, consult your Olympia bankruptcy attorney.

1. Consult a Bankruptcy Attorney: Get legal advice on the right type of bankruptcy for your situation and have them assess your eligibility, exemptions, and potential outcomes.
2. Complete Credit Counseling: This is required. You must complete credit counseling from an approved agency, which must be done 180 days before you file.
3. File Your Petition: Submit bankruptcy forms to the US Bankruptcy Court for the Western District of Washington. This should include a detailed breakdown of your assets, debts, and other expenses.
4. Automatic Stay: This stops all collection actions, lawsuits, and wage garnishments (11 U.S.C. § 362). It also means that your creditors must cease all collection efforts right away.
5. Attend the 341 Meeting: This is a meeting of your creditors where a trustee reviews your case. You will have to answer questions about your finances while under oath.
6. Complete Debtor Education: This is the second required course you must complete before discharge.
7. Receive Your Discharge: If approved, all of your eligible debts are eliminated, marking the end of your bankruptcy case and the beginning of your fresh start.

An Olympia bankruptcy attorney can guide you through each of these steps and ensure you meet all requirements.

If you’re considering bankruptcy in Olympia or elsewhere in Thurston County, it is important to understand all of the different qualifications and legal requirements there are. A bankruptcy attorney can explain all of your available options and guide you throughout the process.

Whether you qualify for Chapter 7 or Chapter 13, knowing your rights and exemptions under Washington State law can help you make more informed decisions and secure your financial future.

Once someone has decided to file bankruptcy, it is important to choose the right kind of bankruptcy to file. Anyone can file a Chapter 7 or a Chapter 13 but the case could be dismissed if the wrong kind is filed. In addition, unpleasant results could occur if the wrong decision is made.

Any person who lives in the United States can file a bankruptcy here. You have to show that the court has jurisdiction over the case. Because bankruptcy is federal law, you have to file the case in the right federal court district, such as the Western District of Washington. Sometimes you can establish jurisdiction by having property located in the district. Married couples can file a joint bankruptcy. Otherwise only individuals can file. You do not have to have legal residency in the United States to file a bankruptcy. Businesses can file bankruptcy but usually do not file a consumer case – a Chapter 7 or 13 – but an expensive and complicated Chapter 11. If a business fails, the owner may need to file a consumer case.

If someone files a Chapter 7, they have to show they are not abusing the bankruptcy system. That requires submitting to a means test to show they do not have the income to make any payments to creditors over five years. The means test looks back six months and compares that household income to the average household income in the debtor’s state. If the income is higher than average, the test deducts expenses to see if there is any money left at the end of each month available for debt payment. The means test sets out strict standards for allowing these expenses. If there is money left in the means test, a Chapter 7 debtor is presumed to be abusing the system. They can fight this presumption of abuse by claiming special circumstances, such an unusually high level of income in the six months before filing, a new baby, or unusual necessary expenses.

Though a debtors property in a Chapter 7 is usually exempt from being taken to pay debt, there are cases where property can be taken over by a trustee for sale to pay creditors. This issue should be explored thorough before filing a Chapter 7. Once a Chapter 7 case is filed and there is a finding of assets, a debtor may not be allowed out of the case.

A debtor who is worried about losing property can file a Chapter 13 to pay creditors with monthly payments rather than paying them with the sale of property. Debtors can avoid a finding of abuse of the system by filing a Chapter 13. You can only file one Chapter 7 with a discharge every 8 years but after 4 years you can file a Chapter 13 and get a discharge. It is much easier to qualify for a Chapter 13 than a Chapter 7, but you have to show your plan is “feasible” – that you have enough income to make the monthly payments. There are limits to how much debt you can have in a Chapter 13 too. The amounts change slightly from time to time but the limits are approximately $1,000,000 in secured debt and $350,000 in unsecured debt. If you can succeed in a Chapter 7 or a Chapter 13, your option is an expensive and complicated Chapter 11, which is usually reserved for businesses.