Edmonds Law Offices provides advice, services, and representation in matters involving the following legal practice areas:

Bankruptcy*

• Chapter 7 Bankruptcy

  • Eliminates: Credit Card Debt, Hospital and Medical Bills, Utility Bills, Automobile Loan Deficiencies, and Civil Lawsuits.
     

  • Immediately stops: Wage Garnishments, Bank Account Levies, and Car Repossessions.
     

PURPOSES, BENEFITS, AND COSTS OF BANKRUPTCY
The United States Constitution provides a method whereby individuals, burdened by excessive debt, can obtain a fresh start and pursue productive lives unimpaired by past financial problems. It is an important alternative for persons strapped with more debt and stress than they can handle. The federal bankruptcy laws were enacted to provide good, honest, hard-working debtors with a fresh start.

Types of Bankruptcy: The Bankruptcy Code is divided into chapters. The chapters which almost always apply to consumer debtors are Chapter 7, known as a "straight bankruptcy," and Chapter 13, which involves an affordable plan of repayment. An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically stops and brings to a grinding halt most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection harassment. It offers debtors a breathing spell by giving the debtor and the trustee assigned to the case time to review the situation and develop an appropriate plan. In most circumstances, creditors cannot take any further action against the debtor or the property without permission from the bankruptcy court.

Chapter 7: In a Chapter 7 case, the bankruptcy court appoints a trustee to examine the debtor's assets to determine if there are any assets not protected by available exemptions. Exemptions are laws that allow a debtor to keep, and not part with, certain types and amounts of money and property. For example, exemption laws allows a debtor to protect a certain amount of equity in the debtor's residence, motor vehicle, household goods and furnishings, life insurance, health aids, retirement plans, specified future earnings such as social security benefits, child support, and alimony, and certain other types of personal property. The debtor will be discharged from the legal obligation to pay unsecured debts such as credit card debts, medical bills and utility arrearages. However, certain types of unsecured debt are allowed special treatment and cannot be discharged. These include some student loans, alimony, child support, criminal fines, and some taxes. In order to qualify for a Chapter 7 bankruptcy the debtor’s income must be fall within the guidelines of allowable income determined by the “means test.”

Chapter 13: In a Chapter 13 case, the debtor puts forward a plan, following the rules set forth in the bankruptcy laws, to repay certain creditors over a period of time, usually from future income. A Chapter 13 case may be advantageous in that the debtor is allowed to get caught up on mortgages or car loans without the threat of foreclosure or repossession, and is allowed to keep both exempt and nonexempt property. The debtor's property is protected from seizure from creditors, including mortgage and other lien holders, as long as the proposed payments are made and necessary insurance coverages remain in place. The plan generally requires monthly payments to the bankruptcy trustee over a period of three to five years. 

Bankruptcy may make it possible for financially distressed individuals to:

1. Discharge liability for most or all of their debts and get a fresh start. When the debt is discharged, the debtor has no further legal obligation to pay the debt.

2. Stop foreclosure actions on their home and allow them an opportunity to catch up on missed payments.

3. Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.

4. Stop wage garnishment and other debt collection harassment, and give the individual some breathing room.

5. Restore or prevent termination of certain types of utility service.

6. Lower the monthly payments and interest rates on debts, including secured debts such as car loans.

7. Allow debtors an opportunity to challenge the claims of certain creditors who have committed fraud or who are otherwise seeking to collect more than they are legally entitled to.

Bankruptcy, however, cannot cure every financial problem. It is usually not possible to:

1. Eliminate certain rights of secured creditors. Although a debtor can force secured creditors to take payments over time in the bankruptcy process, a debtor generally cannot keep the collateral unless the debtor continues to pay the debt.

2. Discharge types of debts singled out by the federal bankruptcy statutes for special treatment, such as child support, alimony, student loans, certain court ordered payments, criminal fines, and some taxes.

3. Protect all cosigners on their debts. If a relative or friend co-signed a loan which the debtor discharged in bankruptcy, the cosigner may still be obligated to repay whatever part of the loan not paid during the pendency of the bankruptcy case.

4. Discharge debts that are incurred after bankruptcy has been filed.

Bankruptcy's Effect on Your Credit: By federal law, a bankruptcy can remain part of a debtors credit history for up to 10 years. Whether or not the debtor will be granted credit in the future is unpredictable, and probably depends, to a certain extent, on what good things the debtor does in the nature of keeping a job, saving money, making timely payments on secured debts, etc.

Before filing a bankruptcy case, your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most likely to be beneficial for you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the Bankruptcy Court. Once your case starts, you will have to attend the required First Meeting of Creditors where you will be questioned by a court official called a "Trustee" and by creditors. If you choose to file a Chapter 7 case, you may be asked by a creditor to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming your debts. It may not be in your best interest to reaffirm a debt. If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your Chapter 13 plan and with the confirmation hearing on your plan which, if held, will be before a bankruptcy judge. Your bankruptcy case may also involve litigation, which may increase the cost of your bankruptcy. 

This discussion is intended only as a brief overview of the types of bankruptcy filings and of what a bankruptcy filing can and cannot do. No one should base his or her decision as to whether or not to file bankruptcy solely on this information. Bankruptcy law is complex and there are many considerations that must be taken into account in making the determination whether or not to file. Anyone considering bankruptcy is encouraged to make no decision about bankruptcy without seeking the advice and assistance of an experienced attorney who practices bankruptcy law.