Chapter 7 Bankruptcy lawyer in lynnwood

CHAPTER 7
A Chapter 7 bankruptcy is commonly known as a “fresh start bankruptcy,” a “straight bankruptcy,” or a “liquidation bankruptcy.”  Basically, in a Chapter 7 bankruptcy you keep all of the property you own up to a certain dollar amount and any property above that can be taken by a bankruptcy trustee and sold, with the money going to pay down your debt.  Any eligible remaining debt is discharged (i.e. “wiped out.”)  Eligible unsecured debts such as credit card debt, medical bills, payday loans, old utility bills, deficiencies on vehicle repossessions, unsecured lines of credit, and unsecured loans may be discharged.  If you owe on a house, car or other secured property you must keep making the payments in order to keep the property.  If you would rather not make those payments, or you can no longer afford them, you can give the property back to the lender and the lender cannot “come after you” for the remaining balance or penalties.

A straightforward, "typical" Chapter 7, where there are no complications and no assets are administered, typically takes around three and a half months from the day the bankruptcy is filed in the bankruptcy court until the Discharge Order is entered.

Qualifying for Chapter 7 is based solely on gross annual household income.  If your gross annual household income is above a set amount you will probably not qualify for Chapter 7, although there are some exceptions.   Following are the current amounts (as of 11-1-24):

• Household of one person:  $83,033
• Household of two people:  $99,852
• Household of three people:  $121,292
• Household of four people:  $141,177
• Household of five people:  $151,077
• Household of six people:  $160,977
• Household of seven people:  $170,877
• Household of eight people:  $180,777

CHAPTER 13

A Chapter 13 bankruptcy is commonly known as a “debt reorganization” bankruptcy.  In a Chapter 13 bankruptcy you make monthly payments over three or five years.  Your monthly payment may go towards your mortgage, vehicles, taxes, child support, and spousal maintenance,  and arrears on payments if you are behind.  Depending an various factors it may or may not also go towards your unsecured debt.  At the end of your Chapter 13 bankruptcy any remaining eligible unsecured debt which has not been paid is discharged (i.e. “wiped out.”)

Qualifying for Chapter 13 is based in part on your financial ability to make the required monthly payment.  

WHICH CHAPTER IS RIGHT FOR YOU?
Generally speaking Chapter 7 is much quicker and less expensive than Chapter 13.   Assuming you qualify for each you will be able to elect one or the other.  Every person’s situation is different and there are many issues to consider when deciding upon a bankruptcy chapter.  Therefore the answer is not “one size fits all.”  Together we will review your financial situation and I will advise you regarding all of your bankruptcy options, including the pros and cons of each.  

To read more about the bankruptcy process and the different bankruptcy chapters click here.  

To schedule a free consultation with Chapter 7 bankruptcy attorney Teri Johnson, located in Lynnwood, WA, click below: