Bankruptcy FAQ: General Bankruptcy Questions

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Should I declare bankruptcy?

Unfortunately, there's no simple answer - your financial situation must be carefully examined on an individual basis. Due to the lasting credit impacts of declaring bankruptcy, it is typically only considered when circumstances make paying your debts impossible (by their given deadline). Some events that may prompt people to think about bankruptcy might include finding themselves mired in unmanageable credit card or loan debt, inability to find a job, facing wage garnishment by creditors, and threats of foreclosure/repossession, to name a few.

Whatever your reasons, financial experts agree that you shouldn't face this difficult decision alone - get in touch with your financial advisor or contact us today to discuss your options and find the best solution for you.

Here are some basic pros and cons that you may want to consider:

Advantages of declaring bankruptcy:

Elimination or significant reduction of unsecured debt

Possible avoidance of foreclosure and wage garnishment (or wage attachment)

Ending harassment by creditors and collection agencies

A "fresh start" when financial hardships make your personal life stressful and leave you struggling to provide neccessities for yourself or family.

Disadvantages of filing for bankruptcy:

Negative impact on your credit score, lasting up to 10 years.

Difficulty obtaining accounts, major purchases, or rentals, as a result of credit impact

Inability to discharge some bankruptcy-exempt debts, such as back taxes

Which bankruptcy chapter should I file for?

To determine the chapter that best fits your situation, please visit our bankruptcy chapter descriptions page. Generally speaking:

Chapter 7 is for individuals needing near-complete elimination of overwhelming debts, accomplished via "liquidation", or selling of your non-exempt property.

Chapter 11 is for businesses seeking to reorganize debt, and involves re-structured payment plans.

Chapter 12 is geared specifically toward individuals who qualify as a "family farmer" or "family fisherman".

Chapter 13 is for individuals with regular income who plan to repay their debt over time. This option is usually preferable for those seeking to retain their non-exempt properties and avoid foreclosure.

When I file bankruptcy, am I cleared of all debt?

Not neccesarily. The majority of your unsecured debts, including credit card debts, unpaid bills, and outstanding loans can be eliminated or substantially reduced. However, some debts are exempt from the protections of bankruptcy, depending on which chapter you file under. Some examples of exemptions include:

Debts owed to the government, such as taxes, back taxes, and government loans

Court ordered payments, including alimony and child support

How do I file for bankruptcy in Washington State?

Although you can file for bankruptcy on your own, consulting a bankruptcy attorney is a beneficial first step for the vast majority of individuals. We encourage you to contact us, so we can set up a case evaluation, and guide you through the process - if bankruptcy is truly your best option. That said, the basic steps for initial filing in Washington are as follow:

Determine which chapter (i.e. Chapter 7, Chapter 13, etc.) is applicable to your situation - keep in mind that you must assess your eligibility for the given Chapter (for instance, satisfying the criteria of a "means test" for Chapter 7) in accordance with federal and state regulations.

Locate the bankruptcy court in your area (you'll find one in most major cities like Seattle, Yakima, Bellevue, Redmond, etc.), and pick up the appropriate set of forms.

Gather all required paperwork, including pay stubs, tax receipts, asset records, and detailed documentation of outstanding debts.

Return completed forms and all required documentation to the bankruptcy court clerk. After filing, the process will vary depending on the nature of your filing and circumstances of your case.

Do I really need a bankruptcy lawyer to file for bankruptcy?

No. You have the right to provide your own legal representation in filing and any proceedings that follow. However, ask around or search the web, and you'll find that virtually every credible source strongly recommends consulting a bankruptcy attorney. Why? Because should you choose to represent yourself, you will be expected to understand and abide by bankruptcy law - which can prove very complex if you do not have any legal background. Often, the process involves a lot more than simply filing. You may be required to negotiate repayment terms, interact with creditors, or defend yourself against challenges that are brought to court - and creditors will bring their attorneys.

Considering the potentially high costs of forfeiting property or being denied discharge altogether, providing yourself with every possible advantage is simply a good investment. By nature, bankruptcy is a stressful experience. Access to proffessional advice, along with the confidence of having an expert in your corner, will enable you to make the clear, informed decisions that can turn your financial situation around.

Disclaimer: The content of this page is intended for informational purposes only, and does not constitute legal advice/counsel.

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