Frequently Asked Questions
What does a bankruptcy cost?
There are different costs for different types of bankruptcy. The level of complexity and the type of bankruptcy filing will play a part in determining the cost of your bankruptcy. The initial consultation for a personal bankruptcy is free. The attorney will be able to go over the cost range for your bankruptcy after meeting with you in the initial consultation.
What will a bankruptcy filing do to help me?
A bankruptcy filing normally creates an order of automatic stay that stops debt collection actions. The filing can stop garnishments, auto repossessions and provide you with protection against harassing phone calls from aggressive debt collectors. The bankruptcy filing can stop a foreclosure on your home and provide you with the opportunity to resolve missed payments. A successfully completed bankruptcy will eliminate your legal obligation to pay dischargeable debts that were incurred prior to the filing and help you make a financial fresh start.
Will a bankruptcy wipe out all my debts?
A bankruptcy filing can help you get rid of many, but not all, kinds of debt. Most credit card and medical bills are wiped out, but several kinds of debt, like child support, tax debt, parking and traffic tickets cannot generally discharged in a bankruptcy. Student loans are generally not dischargeable in bankruptcy, unless the debtor can prove that repayment would cause an undue hardship. The hardship condition is very difficult to improve. Debt secured by property can often be discharged only if the property is surrendered to the creditor or their agent. Creditors may also argue that a debt should not be discharged due to debtor’s actions that suggest bad faith when incurring the debt. Your bankruptcy attorney will review the information that you provide and can advise you so you avoid mistakes that might look like bad faith to a creditor.
Will I be able to keep my car and other important possessions if I file a bankruptcy?
The exemption laws allow a debtor to protect property in a bankruptcy filing. A bankruptcy filing in Washington State has generous protection for a modest vehicle (truck, car, motorcycle, or van). The exemption laws for Washington State also allow debtors to protect and keep other valuable items. The Trustee appointed in a Chapter 7 bankruptcy filing is authorized to review and value the debtor’s possessions to determine if there are assets that can be seized and sold to pay off creditors. Your bankruptcy attorney can help you protect possessions from the seizure powers of the Chapter 7 Trustee.
My driver’s license is suspended, can a bankruptcy filing reinstate my driving privileges?
If your driver’s license is suspended for traffic tickets which are not discharged, the filing may still help you by eliminating other debt and allowing you to pay the debts that are causing the license suspension. If your license is suspended due to debts from an auto accident, the bankruptcy filing may discharge these debts and reinstate your driving privileges. If a debtor has too many traffic fines to resolve through a Chapter 7 filing, you can consider a Chapter 13 bankruptcy protection to consolidate and payoff the traffic fines over the three to five years of the Chapter 13 bankruptcy case. Your bankruptcy attorney can help you reinstate driving privileges shortly after the Chapter 13 case is filed even though the tickets and fines may not be paid for several years.
Do I have to go to court if I file for bankruptcy protection?
A debtor will have to appear for a meeting, known as a creditors meeting or Section 341 hearing about a month after the case is filed. The creditor’s meeting is held at the US Bankruptcy Court and the trustee appointed in the bankruptcy is in charge of this hearing. The Trustee will ask you questions about your assets, your finances and your debts at the creditors meeting. Your bankruptcy attorney will represent you at this hearing and can help you understand the process and answer the Trustee’s questions. There may be other hearings scheduled during the course of a bankruptcy proceeding, but normally, the debtor is not required to be present for any hearing other than the initial creditors meeting.
Can I file a bankruptcy if I have money in a 401k or other type of retirement account?
Funds in 401(k) and other qualified retirement accounts are generally protected in a bankruptcy proceeding. Money in checking and savings accounts and other financial instruments that are not qualified retirement accounts can be protected to the extent of the exemptions that can be claimed against the value of these accounts. Your bankruptcy attorney is an expert at understanding the exemption laws and knowing how to use those laws to protect your assets and property.
Will a bankruptcy filing ruin my credit score?
If you are delinquent on financial accounts and have a lot of debt compared to your assets, then your credit score is already on the way to the cellar. If you have managed to accumulate a lot of debt and kept your credit score high, the bankruptcy filing will definitely damage your credit score and history. The credit scoring companies do not generally make a distinction between a Chapter 7 or Chapter 13 bankruptcy filing. See “Life After Bankruptcy” for advice on how to repair your credit score after a bankruptcy.
Do I have enough debt to file for bankruptcy?
There is no minimum debt rule for filing for bankruptcy. A better question to ask is whether you can manage your debts without filing for bankruptcy. A decision about filing for bankruptcy can be influenced by whether your creditors are willing to work with you, the type of debts that you have and the facts of your individual situation. Your bankruptcy attorney will help you review these questions at the initial consultation and advise you on getting your financial house in order.
What is a reaffirmation agreement and how does it work in bankruptcy?
A reaffirmation agreement in bankruptcy law is an agreement made between a creditor and a debtor
that waives discharge of a debt that would otherwise by discharged in a bankruptcy proceeding. Debtors will sometimes enter into a reaffirmation agreement in order to keep a vehicle that might otherwise need to be surrendered in the bankruptcy. A debtors gives up bankruptcy protection for a specific debt when they enter into a reaffirmation agreement. Your bankruptcy attorney will review the facts of your situation and advise you about whether to enter into reaffirmation agreements as part of your bankruptcy.
What is redemption and how does it work in bankruptcy?
Redemption is an option in Chapter 7 bankruptcy that may allow you to keep a vehicle or other asset that has been used as security for a loan. Redemption requires that a debtor be able to come up with cash up front to resolve the debt and keep the vehicle or other asset, so it is not always an option for a debtor. There are some companies who will make redemption loans to debtors in bankruptcy. Your bankruptcy attorney will review your situation and advise you if there is an opportunity to complete a redemption in your bankruptcy.
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