Lynnwood Bankruptcy Lawyer

The United States Bankruptcy Code lists six types of bankruptcy: Chapters 7, 9, 11, 12, 13, and 15, but you will want to speak to a Lynnwood bankruptcy lawyer for help determining the chapter that will work best for you. The two most common chapters people file under are Chapter 7 and Chapter 13.

There are significant differences between Chapter 7 and Chapter 13, although both chapters certainly have their respective advantages and disadvantages. Your income, expenses, and family size can all be determining factors when it comes to the chapter you will be filing.

Chapter 7 vs. Chapter 13

Chapter 7 bankruptcy is usually the preference of many people for bankruptcy because it is the fastest path through bankruptcy, and a person can finish their case in only four months. There is no repayment plan involved in Chapter 7 because it is a liquidation bankruptcy, meaning the court simply discharges all debts it approves.

With Chapter 7, a debtor may get to keep some of their personal property that is exempt from liquidation, and exemptions may include automobiles, clothing, furniture, pensions, and some home equity. Many Chapter 7 filings are no-asset cases in which all of the debtor’s assets are exempt, but other people will risk losing homes or motor vehicles.

When a debtor wants to keep specific secured debt, they can reaffirm the debt or reach an agreement with a creditor to pay all or a portion of the amount owed. This may allow a debtor to keep a home or car that would otherwise have to be sold.

The obvious downside to Chapter 7 is that you will have to sell the property that a bankruptcy court will not let you keep, also known as non-exempt assets. Co-signers can still be liable for their portion of a debt as creditors will be free to pursue the co-signer even when they can no longer pursue you.

Chapter 7 is also extremely limited in who can apply for it because of the bankruptcy means test, which is based on your current monthly income and has to be less than the median income for your household size in Washington. When your monthly income is too high, you have to pass the means test to qualify, and a person that has too much disposable income under the means test will need to switch to a Chapter 13 filing.

Chapter 13 is also known as the wage earner’s plan and lets a person keep more of their property than Chapter 7 because they repay debts over a longer period, usually three to five years. Chapter 13 is especially beneficial for people wanting to protect their homes from foreclosure.

Chapter 13 bankruptcy will halt foreclosure and allow a debtor to catch up on late mortgage payments while restructuring other debts to give a person more time to pay them off. Chapter 13 can also protect co-signers.

With Chapter 13, a portion of your debts will still need to be repaid. The process takes much longer than Chapter 7 because, again, it takes three to five years to finish a repayment plan.

Call Us Today to Schedule a Free Consultation with a Lynnwood Bankruptcy Lawyer

Do you need help determining the best chapter of bankruptcy to file for in Washington? An experienced Lynnwood bankruptcy lawyer at Bountiful Law can help clients with incomes of all sizes get the financial relief they need.

Our firm knows how overwhelming filing bankruptcy can be for people, and we are with you every step of the way in the process. Call 425.775.9700 or contact us online to take advantage of a free consultation so we can actually converse with you about what you are going through and how we might be able to help.