Washington State's Bankruptcy Laws

General overview of the bankruptcy process here in Washington State.
Bankruptcy has become increasingly common in the United States in recent years, and Washington State is no exception.  With everything happening in today's economy, it's no surprise.  Bankruptcy filings have steadily increased over the last couple of years, and this trend is only projected to increase.

Contrary to what the credit card companies want you to believe, filing for bankruptcy does not mean that you are a financial failure.  The bankruptcy laws are here for your protection, often from the predatory practices of the credit card companies who try so desperately to make you believe that filing for bankruptcy means you are an irresponsible and bad person.

This is obviously ridiculous.  But it is what your creditors want you to believe.  If you qualify under the federal statutes or Washington State's bankruptcy laws, discharging your qualifying debts, such as credit cards or medical bills, is your legal right.  You simply need to decide to exercise it.

Filing for bankruptcy is often the best solution.
As a practical matter, filing for a Bankruptcy is often the best solution for people drowning in debt and struggling to meet their monthly obligations.  For many of our clients, their current financial problems are often not their fault.  In fact, they are frequently the result of events that are outside of their control.

The fact that bankruptcies are on the rise here in Washington is due to many factors.  In addition to a severely depressed economy, these factors include the recent sub-prime mortgage crisis, rising unemployment, skyrocketing medical costs, the depressed housing market, and the numerous problems associated with unscrupulous credit card companies.

For many years, the credit car companies and other predatory lenders wanted consumers to borrow as much as possible.  And when it became difficult for people to make their monthly payments these companies severely penalized their customers by jacking up their interest rates and charging outrageous fees.

Washington State's bankruptcy laws are here for your protection.
Bankruptcies are defined under various chapters that directly correspond with the Federal bankruptcy laws.  There are two common types of bankruptcy chapters that are available for consumers.  These are the Chapter 7 bankruptcy, and the Chapter 13 bankruptcy.

The Chapter 7 Bankruptcy process in Washington State
A Chapter 7 bankruptcy is roughly a three month process from beginning to end. The Chapter 7 bankruptcy process begins with the filing date. This is when your bankruptcy petition is actually filed with the bankruptcy court.  Part of this filing process also includes filing schedules of your debts and assets.

At the time of filing your petition, an “Automatic Stay” is in place. This “Automatic Stay” forbids any creditors from contacting you during the bankruptcy period.  If you are currently being hounded and harassed by creditors, this will stop when we file our petition.

This is a great relief to many of our clients who feel that they have been unfairly targeted and improperly treated by collection agencies who employ scare tactics and inappropriate threats when contacting them.

Many people are also surprised to learn that they will keep most, if not all of their personal property when they file for their Chapter 7 bankruptcy here in WA state.  It's true.  The overwhelming majority of our clients do not forfeit ANY personal property in their Chapter 7.

Stop all harassing phone calls.

Keep your personal property.



After I file my Washington State Chapter 7 Bankruptcy Petition is filed, what happens at my 341 Meeting of Creditors?
After a bankruptcy is filed, a Chapter 7 Trustee will be appointed over the debtor’s entire estate during the bankruptcy period.  Roughly 20-40 days after the filing date, debtors will be required to attend what is called a 341 Meeting of Creditors.  In the vase majority of cases, however, no creditors actually appear at this hearing.

At the 341 Meeting of Creditors, the debtor will appear before the Chapter 7 Trustee who will ask several questions pertaining to the bankruptcy petition.  The Chapter 7 Trustee will determine whether or not there are any assets that they can recover to pay creditors.  When you retain our firm, it is very important to disclose all financial matters and assets to your attorney.  Many Chapter 7 Trustees either are or employ forensic accountants.

What happens after my 341 Meeting of Creditors Hearing?
After the Meeting of Creditors, there is a period of about 60 days. During this time, the Trustee can investigate the debtor’s estate. If financial issues needing clarification or additional documentation are raised at the Meeting of Creditors, those issues are clarified and followed up on during this period. After this period is up and the Trustee has found no assets that he can legally go after, the Trustee will grant an Order of Discharge and close the case. After the discharge, all unsecured, non-priority debts are forgiven. Creditors are no longer allowed to attempt to collect on these pre-petition debts. They are fully discharged along with any additional fees and never have to be repaid.

For most people, especially those who do not own their own home, it is always preferable to try and file a Chapter 7 bankruptcy. The primary qualifying factor for being eligible to file a Chapter 7 is your income, or the income of you and your spouse if you are married. In most cases, we are able to determine if you will qualify for a Chapter 7 during your initial consultation.

The Chapter 13 Bankruptcy Process in Washington State
A Chapter 13 bankruptcy is commonly known as the “house-saver” bankruptcy.  Chapter 13 bankruptcies stop foreclosure sales and place the mortgage arrears in a re-payment plan.  A Chapter 13 bankruptcy can also reinstate a driver’s licenses if it is suspended due to unpaid tickets. 

In some cases, it can also facilitate reinstatement if the suspension was due to auto accident liabilities.  A Chapter 13 bankruptcy is also used in many other ways, such as managing tax payments or child support arrearages.

The Chapter 13 bankruptcy is a three to five year process where a portion of your total debt is actually paid back to your creditors. As with the Chapter 7 bankruptcy, the “Automatic Stay” begins with the filing of your petition. There is also a 341 Meeting of Creditors within 20 to 40 days after your petition and your schedules are filed.

When a Chapter 13 is filed, your attorney proposes a repayment plan to the Chapter 13 Trustee.  Once your repayment is accepted, the Chapter 13 Trustee collects payments from you and administers payments to creditors who file claims.  The plan may also be adjusted for feasibility until the Confirmation Hearing date.

The first Confirmation Hearing is the date that determines whether or not the proposed Chapter 13 Plan is feasible. There is no need to attend this Confirmation Hearing.  This is simply the date when the judge looks over the proposed plan and will either order it confirmed or continued.

Confirmation Hearings are continued on a monthly basis until all matters are resolved.  It is a normal part of the Chapter 13 bankruptcy process.  When the Chapter 13 Plan is confirmed, the creditors who filed claims will begin to receive monthly payments from the Chapter 13 Trustee.

For additional information about filing a Chapter 13 bankruptcy, please see our web page devoted specifically to the Chapter 13 bankruptcy process here in Washington State.

At the end of the three to five years, a discharge will be granted and the case closed.  As with the Chapter 7 discharge, most, if not all unsecured, non-priority debts are forgiven and completely discharged.  Creditors are no longer able to attempt to collect on these pre-petition debts.