Qualifying for Bankruptcy
Our Tacoma Chapter 7 bankruptcy lawyers can help.
Contact Tacoma bankruptcy attorney, Erin M. Lane today.
Do you feel like bankruptcy might be the right option for you to put a stop to the endless cycle of debt you’re in? Erin M. Lane and her team can help you determine if you qualify for bankruptcy. Don’t live another minute in fear of losing your home, getting your car repossessed, or losing your assets. With a FREE initial consultation, you can get the help and answers you need to get on the fast track to financial recovery.
FREE consultation: (253) 444-5869
Questions about qualifying for bankruptcy? Ask.
Is qualifying for Chapter 7 bankruptcy in Tacoma, WA easy?
There are different concerns about qualifying for the two kinds of bankruptcy available to most consumers. To qualify for Chapter 7, you must show that you are not abusing the bankruptcy system because your income is too high.
Because Chapter 7 is the quicker, easier kind of bankruptcy, higher income people who may be able to tighten their belts and pay some of their debt may not be able to go through this chapter. Because Chapter 13 is a repayment plan, you must be able to show your plan is affordable and will take care of the debts it needs to by law.
Can anyone qualify for bankruptcy in Washington State?
In general, anybody in the United States can file for a bankruptcy. The question is whether they are filing the correct chapter. Not only are there legal barriers to filing a particular chapter for some people, you need to make sure you are filing the one that is best for your goals. Many people could file either chapter but need to decide things like whether they are one of those who may lose property with Chapter 7.
If they live in Tacoma and are looking at Chapter 13, they need to consider whether the three to five year plan is worth it. That may require taking a good look at whether catching up on an expensive mortgage is for the best in the long run. Good Tacoma Chapter 7 bankruptcy lawyers will fully explore each chapter with their client’s goals in mind.
Is Chapter 7 bankruptcy faster than Chapter 13?
Most people would like to be in and out of bankruptcy quickly and Chapter 7 will do that for you. When you file for Chapter 7, you need to calculate the average of your last six months income on a “means test” form. If this income is more than the state median for the number of people in your household, you must complete the rest of the means test. The test subtracts some actual expenses, such as mortgage payments, car payments, health insurance, taxes, child support and day care. It also subtracts some strictly limited expenses, such as clothing, food, transportation and rent.
Bankruptcy law borrows the caps on these expenses from the IRS tax repayment regulations. Once the expenses are deducted from the average income over the last six months, the test determines whether there is a “presumption of abuse.” Abuse is presumed when there is disposable income left for general unsecured creditors. Unsecured creditors are creditors that are not “secured” by collateral.
Credit cards are unsecured. Mortgages are secured. The presumption can be rebutted if the debtor can show they have special circumstances. The test is fairly rigid and there are some cases where you can persuade a bankruptcy judge that it doesn’t tell the true story. If abuse is determined, the case can be possibly dismissed or even converted to a Chapter 13.
In Chapter 13, you must pay the means test’s disposable income to general unsecured creditors over five years. You also pay any secured debt you want to take care of, in addition to support obligations and back taxes. Chapter 13 is easier to qualify for, but you need to show that you are able to make the payments.
You cannot stay in Chapter 13 if you are unemployed, unless you have some other kind of reliable income that will last at least three years. There are debt limits to Chapter 13 – $1,149,525 of secured debt and $383,175 of unsecured debt. If you are over the debt limits and cannot file Chapter 7, you can file a Chapter 11 but that is a very expensive kind of bankruptcy that is usually reserved for businesses.
Our Tacoma Chapter 7 bankruptcy attorneys can help you see if you qualify.
Qualifying for Chapter 7 bankruptcy in Tacoma, WA and learning more about the process is easier with the help of knowledgeable legal counsel. Allow one of our skilled Tacoma Chapter 7 bankruptcy lawyers to assist you to see if you qualify. We are here to answer your pressing questions and make achieving the dream of becoming debt free more possible with our affordable flat low fees and inexpensive payment plans!
(253) 444-5869
