Can I Qualify for a Bankruptcy in Richland, Washington? We Have the Answers You Are Looking For

Are you ready for a fresh start and a viable way to get out of overwhelming debt? For those living in Richland, Washington, understanding whether you qualify for bankruptcy or not is a good first step.

Our experienced Richland bankruptcy attorneys know how to navigate this sometimes complicated qualification process and are here to offer their expertise when it comes to the different bankruptcy types that are available and the laws specific to Washington and Benton County.

In Richland, Washington, bankruptcy is governed by the US Bankruptcy Code. However, state laws also play a significant role. This is especially true when it comes to exemptions and asset protection.

Bankruptcy is designed to help those struggling with unmanageable debt, allowing them to either eliminate or reorganize it. However, not everyone qualifies for every form of bankruptcy. Eligibility depends on several factors, like your income, assets, and specific financial situation.

The two most common types of bankruptcy available for you in Richland are Chapter 7 and Chapter 13. Businesses may also qualify for Chapter 7 but it is primarily for individuals, while Chapter 13 is designed for individuals with a steady income. Keep this in mind as you weigh the pros and cons of each type and decide which avenue to take.

Chapter 7 bankruptcy is a liquidation process, meaning your non-exempt assets may be sold to pay off your creditors. After the sale of assets, the remaining eligible debt is discharged, and you will no longer be liable for it. While Chapter 7 bankruptcy is the most straightforward type, it comes with strict eligibility requirements.

To qualify for Chapter 7 bankruptcy, you must pass the means test, which determines if your income is low enough to even warrant liquidation. It compares your income to the median income for a household of your size in Washington. If your income is below the state median, you automatically qualify for Chapter 7.

If your income exceeds the state median, you will then have to go through the second step of the means test. This part will assess your disposable income that is left after necessary living expenses have been met. You might not qualify for Chapter 7 and may need to file for Chapter 13 bankruptcy instead if your disposable income is too high.

Chapter 13 bankruptcy is also known as reorganization bankruptcy. It is more specifically designed if you have a regular income and can pay off a portion of your debts over time. In this type of bankruptcy, you create a repayment plan that lasts three to five years, during which you make monthly payments to a trustee, who then distributes the funds to your creditors to satisfy your outstanding debts.

The eligibility for Chapter 13 bankruptcy is based on your income and the amount of debt you have. To qualify, your secured debts (like a mortgage) must be under $1,257,850, and your unsecured debts (like credit card debt) must be under $419,275. These limits are adjusted periodically, so it is important to confirm the exact figures when considering bankruptcy.

One of the biggest advantages of Chapter 13 is that it allows you to keep most of your property, unlike Chapter 7, which typically requires the liquidation of your non-exempt assets. Chapter 13 also gives you the chance to catch up on missed mortgage payments or car loans, making it a great option if you have an irregular income but can make regular payments moving forward.

Washington state laws, especially exemptions, play a significant role in bankruptcy cases in addition to federal laws. These exemptions let you protect certain assets from liquidation under Chapter 7 and help you avoid losing them during the bankruptcy process.

In Washington, there are key exemptions that may allow you to protect assets in bankruptcy:

• Homestead Exemption: Washington offers a generous homestead exemption that protects up to $125,000 in equity in your primary residence. This means that if you own a home in Richland and have equity under this, your home will likely not be liquidated during bankruptcy.
• Vehicle Exemption: You can exempt up to $3,250 in equity for a single vehicle under Washington’s bankruptcy exemptions.
• Personal Property: Washington allows exemptions on certain types of personal property, such as household goods, clothing, and personal items, up to specific values.
• Retirement Accounts: Funds in retirement accounts like IRAs and 401(k)s are generally exempt from creditors in bankruptcy.
• Wages: Washington state law also offers exemptions to wages earned, typically protecting income up to a certain amount.

The exemptions you qualify for depend on your specific assets and financial situation. Working with a bankruptcy attorney in Richland knowledgeable of Washington’s exemptions can help you maximize your chances of retaining your property during bankruptcy.

Filing for bankruptcy is a multi-step process. Here's a quick overview of what you can expect:

1. Consult a Richland Bankruptcy Attorney: The first step is to consult an experienced bankruptcy attorney in Richland, Washington. They will help you understand the process and guide you through the eligibility requirements.
2. Complete Pre-Bankruptcy Counseling: Before filing, you have to complete a credit counseling session through an approved provider in your state. This is a requirement under federal law.
3. Prepare and File Your Bankruptcy Petition: Your attorney will help you gather all necessary financial documents, including income statements, tax returns, and details of your debts and assets. You will file your petition with the local bankruptcy court in the Eastern District of Washington.
4. Attend the 341 Meeting of Creditors: After filing, you will attend a meeting of creditors, where the bankruptcy trustee will review your case and ask questions about your finances. Creditors may also attend but rarely do.
5. Complete Financial Management Course: Before your bankruptcy is discharged, you must also complete a debtor education course on financial management.
6. Eliminate Eligible Debts: After completing the bankruptcy process, you will receive a discharge of your eligible debts, providing you with a fresh start.

While it is legally possible to file for bankruptcy without an attorney, it is not recommended. Bankruptcy law is complex, and a Richland bankruptcy attorney can help ensure your rights are protected and that you achieve the best possible outcome.

The bankruptcy process typically takes about three to six months for Chapter 7 and three to five years for Chapter 13, depending on the type of bankruptcy and the specifics of your case.

Generally, student loans are not discharged in bankruptcy unless you can prove undue hardship, which is a difficult standard to meet.

The filing fee for Chapter 7 is $335, while the fee for Chapter 13 is $310. You may also need to pay for mandatory credit counseling and debtor education courses. An attorney’s fees will vary based on complexity.

If you and your spouse file for bankruptcy together, your household income and joint debts will be considered. This can sometimes provide a better outcome, but it may also impact both of your credit scores.

Yes, business owners can file for Chapter 7 or Chapter 13 bankruptcy, depending on their personal financial situation. A business may also qualify for Chapter 11 bankruptcy, which is a reorganization option for larger businesses.

If you aren’t sure whether you qualify for Chapter 7 or Chapter 13 bankruptcy in Richland, an experienced attorney can prove to be beneficial. They are familiar with all federal regulations, state laws, exemptions, and income requirements and can guide you through the process.

Your attorney will help you navigate all of these legal requirements and provide assistance from beginning to end. So, whether you’re dealing with overwhelming credit card debt, medical bills, or foreclosure, your Richland bankruptcy attorney has the skills needed to help you qualify and push you forward.