Can I Qualify? Your Roadmap to Navigating Bankruptcy in Vancouver, Washington

Vancouver, a city located in Clark County, Washington, combines beautiful scenery with amazing amenities and a postcard-perfect view. However, despite its charm, its residents aren’t exactly immune to financial struggles. Whether they just lost their job or are facing mounting medical bills or out-of-control credit card debt, some may be wondering if they qualify for bankruptcy.

Our experienced Vancouver bankruptcy attorneys can be a great source of information, explaining everything you need to know about the qualifications and the process.

Bankruptcy Basics: What You Should Know

To put it simply, bankruptcy is a legal procedure that offers individuals and businesses a chance to eliminate or reorganize their debt. There are two primary types of bankruptcy available for individuals: Chapter 7 and Chapter 13. Each chapter has its own qualifications, benefits, and drawbacks.

• Chapter 7 Bankruptcy: This is a liquidation bankruptcy option that allows you to discharge most of your unsecured debts.
• Chapter 13 Bankruptcy: A reorganization bankruptcy lets you come up with a repayment plan spanning three to five years, as long as you have a steady income coming in.

Eligibility for Chapter 7 Bankruptcy in Washington

To qualify for Chapter 7 bankruptcy in Vancouver, you will have to meet specific criteria that you can find outlined in federal and state laws.

The Means Test

The means test determines whether your income falls below what is considered the median for your household size in your state. In Washington, the median income for a single individual is around $67,000, though this number changes annually.

If your income is higher than this, you may still qualify by passing the second part of the test, which takes a closer look at your disposable income after considering all of your allowable expenses.

Exempt vs. Non-Exempt Assets

Washington allows for state or federal exemptions to protect specific assets during bankruptcy. Some of the most common exemptions include:

• Homestead Exemption: Under RCW 6.13.030, Washington provides a generous homestead exemption, protecting up to $125,000 of equity in your primary residence. This ensures that you won’t lose your home in a Chapter 7 bankruptcy as long as your equity falls within the limit.
• Motor Vehicle Exemption: Covers up to $3,500 in vehicle equity.
• Personal Property Exemption: Includes household goods, clothing, and jewelry, typically capped at $3,000 per item. You can find the types and values of personal property that can be exempted in RCW 6.15.010.

Eligibility for Chapter 13 Bankruptcy in Washington

Chapter 13 bankruptcy can prove to be a viable option if you have a steady income, don’t qualify for Chapter 7, or want to keep all of your assets. In these cases, take a look at the eligibility criteria for Chapter 13 in Washington.

Debt Limits

To qualify for this bankruptcy type, your secured debts, including your mortgage or car loan, must be under $2,750,000, and your unsecured debts, like your credit card balances or medical bills, can’t exceed $550,000. These amounts are often adjusted for inflation, so keep this in mind.

Disposable Income

You must show that you have sufficient disposable income to meet your repayment plan. The court will assess your income, living expenses, and debt obligations to ensure the plan you propose can be done and followed through with.

Residency Requirements

You also must meet residency requirements to file for bankruptcy in Washington. Typically, you need to have lived in the state for at least 180 days before you can file.

Previous Bankruptcy Filings

You can’t file for Chapter 7 bankruptcy if you have received a discharge in a previous Chapter 7 case that happened within the last eight years or a Chapter 13 within the last six years.

Fraudulent Activity

If there is any indication at all that there was any fraudulent activity, like incurring a lot of debt right before filing, it can lead to the dismissal of your case or a denial.

Compliance With Filing Requirements

To proceed with the bankruptcy, make sure you correctly file all required federal and state tax returns for the past four years. The bankruptcy court will determine if your payment plan was proposed in good faith, meaning you intend to pay your creditors to the best of your ability within the terms of the plan.

The Steps to Follow to Determine Eligibility in Vancouver

Still unsure if you qualify for bankruptcy in Vancouver? Follow these steps:

1. Take a Close Look at Your Financial Situation: List all of your debts, income, and assets.
2. Go Over the Means Test: Compare your income to the median in Washington to determine your initial eligibility.
3. Consult a Vancouver Bankruptcy Attorney: Bankruptcy laws can be confusing in the best of times. For this, you want a qualified bankruptcy attorney near you who can provide advice that best suits your circumstances.
4. Complete Credit Counseling: Federal law requires that you complete pre-bankruptcy counseling from an approved provider.
5. File All the Necessary Paperwork: Your Vancouver attorney will help you prepare and submit all the required forms to the bankruptcy court.

When to Consider Filing for Bankruptcy in Clark County

The decision to file for bankruptcy is a big one and something you shouldn’t take lightly. If you are facing overwhelming and growing debt, it actually might turn out to be the best first step you can take. Here are a few scenarios where it may be your best option.

Persistent Collection Calls and Ongoing Creditor Harassment

When you can’t make your payments, creditors and collection agencies often turn up the pressure. To do this, they resort to relentless calls, letters, and even threats of legal action, which are unlawful according to the Fair Debt Collection Practices Act (FDCPA). Filing for bankruptcy immediately stops all of this through an automatic stay.

Wage Garnishments

If your creditors were able to obtain a court order to garnish your wages, you may find it difficult to cover basic living expenses. Bankruptcy can stop wage garnishments in their tracks, allowing you to keep your earnings and redirect them toward paying your necessary living expenses or repayment plans.

Foreclosure or Repossession

Are you in danger of losing your home or vehicle? Filing for Chapter 13 bankruptcy can help you keep these assets by allowing you to catch up on all of those missed payments over time. The automatic stay also stops foreclosure proceedings or repossessions while your case is active.

Medical Bills

Did you know that medical debt is one of the leading causes of bankruptcy in the US? If a medical emergency leaves you buried under piles of medical bills, bankruptcy can help you discharge them and provide you with some financial relief.

Credit Card and Unsecured Debt Overload

Credit card debt can get out of control quickly because of high interest rates and fees. Bankruptcy can discharge unsecured debts like your credit card balances, personal loans, and payday loans, giving you a fresh start.

Can You File for Bankruptcy If You Are Unemployed?

Yes. Unemployment doesn’t automatically disqualify you from filing for bankruptcy. In fact, loss of income is one of the more common reasons people choose to file in the first place. While Chapter 7 doesn’t require that you have a steady income, Chapter 13 does require sufficient income so you can show you can stick to the repayment plan. These are things to keep in mind before choosing to file.

What If You Only Have Secured Debts?

You can still file even if your debt is primarily the secured type, like a mortgage or car loan. Chapter 7 might allow you to surrender secured assets if you can’t afford the payments, while Chapter 13 will help you restructure that debt so you can keep the assets.

How Does Owning a Business Affect Your Eligibility?

While owning a business doesn’t disqualify you from bankruptcy, it does affect how your case is handled. A sole proprietor, for example, can include business and personal debts in a Chapter 7 or Chapter 13 filing. If you have a larger business, Chapter 11 bankruptcy would be more appropriate.

The Role of a Vancouver Bankruptcy Attorney

When trying to wade through the complexities of bankruptcy and eligibility, it helps to have an experienced Vancouver bankruptcy attorney on your side. They can explain the specific bankruptcy laws and exemptions available in Washington and can clarify how a bankruptcy ultimately affects your debts and which obligations can or cannot be discharged.

Your attorney can help you make more informed decisions about your financial future. The attention to detail they provide can also reduce the stress you may be experiencing.

Bankruptcy is a big decision that can impact your life and have long-lasting implications. Working with a local Vancouver bankruptcy attorney ensures you can benefit from their knowledge and expertise.

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