Should You File For Bankruptcy? Four Questions To Ask Before Filing

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Four Questions to Ask Yourself Before You File Bankruptcy

Before you decide whether to file for bankruptcy, it’s important to consider all your options. If you’re struggling with high levels of debt, you may be considering bankruptcy as a way to deal with those troubles and get back on your feet financially. This article will cover the four questions to ask yourself before you file bankruptcy and what to expect if you decide to proceed with this type of filing.

Filing for Chapter 7 bankruptcy (also known as liquidation) is a legal option for those who can no longer make payments on their debts and want to start over with a clean slate. When you file, your assets are liquidated and used to pay back creditors; all remaining debt is then discharged. A trustee manages your case and is tasked with selling off your assets and paying your creditors. Chapter 7 cases usually last between three and six months before they’re closed out. But not everyone qualifies for relief under Chapter 7—and it isn’t necessarily a quick fix either.

That said, when considering whether or not filing bankruptcy makes sense in your situation, ask yourself:

If you’re considering filing for Chapter 7 bankruptcy, there are some important things to know before you do.

How long will my debt last?

The main factor in deciding whether or not filing bankruptcy is right for you depends on how much time you’ll need to make payments over your remaining debts. If you expect to pay off your loans within six months, it might make sense for you to file for chapter 13 bankruptcy. On the other hand, if most of your loans don’t end until after five years or less, going down a different route will likely save you money over time. There are different types of bankruptcy depending on how much money you owe and what kind of repayment plans work best for you, so look into them carefully when making decisions about how to proceed in paying off what you owe.

What are my options besides bankruptcy?

While bankruptcy isn’t always necessary, sometimes it is. But there are plenty of other ways to help manage your debt without going through one of those processes. Credit card companies know that many consumers choose bankruptcy as a last resort, so they offer several types of hardship programs specifically designed to meet consumer needs. These programs offer consumers flexible payment schedules based on certain conditions such as unemployment or medical emergency. It’s also possible to negotiate with creditors by agreeing to receive smaller monthly payments than initially expected in exchange for dropping interest rates or increasing loan length times beyond standard expectations.

Is there another path that might be better for me?

An attorney with Lauber Dancey will negotiate with your creditors to settle your unsecured debts for 20-50% less than what you owe. You may have heard of or been involved with a debt relief or debt consolidation company that asks for money upfront to reduce your debts. Those programs are typically scams and will not get you the same results an attorney at Lauber Dancey can secure for you. If creditors are harassing you, retain an attorney through our firm to re-direct those phone calls to us. Once you are represented, they can only talk to your attorney.

Also, you may qualify for assistance that could delay or stop garnishments from creditors while keeping open lines of communication between yourself and creditors.

Do I really need to file?

Just because it may seem like all of your options have been exhausted doesn’t mean that they actually have been. Many people get so caught up in taking care of their creditors and bills; they forget to consider potential alternatives. Consider debt settlement and negotiation services or seek out some credit counseling before you file bankruptcy.

While there are many reasons why you may want to file for bankruptcy, such as medical bills or job loss, it’s essential to understand all of your options and look at them through a financial lens. Before filing for bankruptcy, you should consider other alternatives that aren’t as drastic. This is because bankruptcy can negatively affect your credit score and take years before you start seeing an improvement.

When deciding whether or not filing bankruptcy is right for you, weigh your personal situation against your financial goals; everyone’s reasons for doing so are different. Learn about your options, talk to others who have done it before, and make sure that bankruptcy is truly your best bet.

Learn More about Washington State Bankruptcies

Are you overwhelmed with harassing phone calls from your creditors? The Law Offices of Lauber Dancey PLLC provides free consultations to help you recover peace and stability in your financial life. As a Lauber Dancey client, you will receive exceptional judgment-free advocacy from an attorney who is truly invested in helping you get back on solid ground.


Contact us today to see if you qualify.

The Pros and Cons of Filing For Bankruptcy

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If you’re struggling to pay your bills and feel like you have no options left, it may be time to consider filing for bankruptcy. However, several factors must be considered before you take this step. We’ll explore these options and more in this article on the pros and cons of filing for bankruptcy.

If you’re considering bankruptcy, you might first hear about Chapter 7 (or straight bankruptcy). Unlike other forms of bankruptcy, Chapter 7 allows you to discharge some or all of your debts.

 

Do I Qualify For Chapter 7 Bankruptcy?

When you do not have a sufficiently high or regular income to enable you to pay off debts, a straight liquidation bankruptcy under Chapter 7 may be the best choice for you. Chapter 7 does provide you the opportunity to avoid almost all of your debts without making any payments. Sometimes referred to as a “total debt liquidation bankruptcy,” or a “straight bankruptcy,” Chapter 7 has generally been used by people who have few assets but who carry a large amount of unsecured debt like credit cards, medical bills, personal loans, auto deficiencies or monies due from old apartment leases.

 

To file for Chapter 7 bankruptcy, you must meet the income guidelines. You may be eligible to file Chapter 7 Bankruptcy if you meet the following household size and income limits:

  • With a single-person household, your monthly income may not exceed $5,625.92, and your annual income may not exceed $67,511.00.
  • With a two-person household, your monthly income may not exceed $6,687.58, and your annual income may not exceed $80,251.00.
  • With a three-person household, your monthly income may not exceed $7,714.00, and your annual income may not exceed $92,568.00.
  • With a four-person household, your monthly income may not exceed $8,956.75, and your annual income may not exceed $107,481.00.

 

A huge pro with Chapter 7 is that most people feel they’re able to put their financial situation behind them more quickly than they would be opting for another form of bankruptcy…which allows them to get on with their lives!

Filing bankruptcy can save time and energy. One of the most appealing aspects of filing for bankruptcy is that it offers immediate protection from creditors. After you file for bankruptcy, only certain payments will continue—the rest will be wiped away. When other types of relief don’t work, many people take comfort in knowing they won’t have to deal with harassing phone calls or letters anymore.

Put a stop payment on creditor collection efforts immediately. In addition to wiping out debts for good, Chapter 7 also stops collection agencies from harassing you about old debts. Even if a creditor does sue you after a bankruptcy discharge (an extremely rare occurrence), their ability to collect from you ends when your case is discharged because you no longer owe them anything.

Stop wage garnishment and repossession efforts. Wage garnishment happens when creditors obtain a court order instructing an employer to automatically withhold part of an employee’s paycheck until their debts are paid off; not paying student loans is one of the most common reasons for wage garnishment. Auto repossession happens when creditors repossess cars under similar circumstances; often, drivers get behind on auto loans due to unexpected events like sudden unemployment or significant health issues.

Cut back on interest rates. By eliminating debt in Chapter 7 bankruptcy, you can save money by reducing how much you pay in interest over time. If any of your credit cards have high-interest rates, Chapter 7 might be beneficial to save money down the road.

However, like most things in life, there are pros and cons to consider when deciding whether or not Chapter 7 is right for you. Be sure you understand the negative consequences of filing for bankruptcy before you take the plunge.

A Chapter 7 bankruptcy can remain on your credit report for up to 10 years. How much this affects your overall credit depends on your credit before filing for bankruptcy. Many people can actually increase their credit score faster by filing for bankruptcy. This is because, with a fresh start, you can start paying your bills on time, improve your debt to income ratio, and begin building a positive financial foundation.

Filing bankruptcy now might make it harder to do later if something worse happens. For example, if you complete the bankruptcy process under Chapter 7, you can’t file for another Chapter 7 bankruptcy for six years. The six years is counted from the date you last filed for bankruptcy. This can cause financial problems in the future in the event of job loss or other unforeseen circumstances that impact your ability to pay your debts.

All debt isn’t considered “dischargeable debt.” There are several types of debts that cannot be discharged by filing for Chapter 7. Child support, recent tax debt, student loans, and certain types of court-ordered damage awards are not dischargeable with bankruptcy.

 

Learn More about Washington State Bankruptcies

Are you overwhelmed with harassing phone calls from your creditors? The Law Offices of Lauber Dancey PLLC provides free consultations to help you recover peace and stability in your financial life. As a Lauber Dancey client, you will receive exceptional judgment-free advocacy from an attorney who is truly invested in helping you get back on solid ground.


Contact us today to see if you qualify.

Do I need to hire a lawyer?

Why Should I Hire A Bankruptcy Lawyer?

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Why should I hire a bankruptcy attorney?

When filing for bankruptcy, there are a myriad of rules and regulations that must be adhered to. If regulations aren’t met and technical missteps are made, the errors can be costly in regards to a debtor’s rights. If you’re filing for bankruptcy, you have the right to file without the help of an attorney, also known as filing pro se. However, doing so may have long-term financial and legal repercussions. When filing for bankruptcy, here are five reasons why seeking legal counsel is a must:

Understanding the Different Types of Bankruptcy

Filing for bankruptcy involves deciding between the different types of bankruptcy options. U.S. Bankruptcy Code offers five different bankruptcy filing options – Chapter 7, 9, 11, 12, and 13. Each type of bankruptcy is completely different, and offers different options regarding status (individual or business), debt extinguishment, and payment options. Having a thorough understanding of the types of bankruptcy available, and regulations and rules associated with each is critical. An attorney can help you to understand the different types of bankruptcy, and provide you guidance regarding which type is most suitable for your financial needs.

Avoiding Bankruptcy Fraud

Bankruptcy fraud is a serious crime in the United States, punishable by both civil penalties (such as loss of exemptions) and criminal penalties (like prison time or fines). If, when filing for bankruptcy, you do not disclose all property and assets, falsify information or records, or fail to fill out your bankruptcy forms accurately, truthfully, and completely, you may be at risk of committing bankruptcy fraud. In order to ensure that you avoid both civil and criminal penalties associated with bankruptcy fraud, it is essential that an attorney review your forms prior to submittal.

Filing for Chapter 13 Bankruptcy

Chapter 7 bankruptcy is much more straightforward and simple than Chapter 13 bankruptcy is. If you are filing for Chapter 13 bankruptcy, you should know that doing so is much more complex and labor intensive, and requires constructing a realistic payment plan that can be presented to creditors. Additionally, if alterations to a mortgage or car loan are included in your bankruptcy needs, the paperwork is even more intense. Essentially, filing for Chapter13 bankruptcy requires an extensive understanding of bankruptcy law; if you are not trained in bankruptcy law, it is highly advised that you seek legal counsel.

As a note, Chapter 7 bankruptcy can also be complex if you are a business owner, have a high number of assets, have non-dischargeable debts, or have income that may disqualify you from filing.

Fulfilling Credit Counseling and Debtor Education Requirements

In order to file for bankruptcy, both credit counseling and post-filing debtor education courses are required for Chapter 7 and Chapter 13 bankruptcy. You must receive credit counseling from an approved agency prior to filing, and you cannot receive a discharge of debts until debtor education requirements have been fulfilled. If you fail to do either, your bankruptcy claim will be denied. If working with an attorney, your lawyer can help you to understand the differences between the two courses, and how to attend both.

Contact a Bankruptcy Attorney Today

Being buried in debt can be a very emotional and exhausting experience, as well as one that is scary and stressful. If you are facing overwhelming amounts of debt and are considering filing bankruptcy, it is within your best interest to retain the assistance of a bankruptcy attorney. An attorney can help to put an end to debt creditor harassment, explain your options for filing, help you to get all necessary documents and paperwork in order, and provide you with a straight-forward and stress-free solution to your financial problems.

Sources

http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyResources/FilingBankruptcyWithoutAttorney.aspx

http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyResources/BankruptcyFraudAndAbuse.aspx

Most asked questions about Bankruptcy

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What is the difference between Chapter 13 and Chapter 7?

We provide two different types of consumer bankruptcies– Chapter 7 and Chapter 13.  Chapter 7 is the “Start Fresh” bankruptcy.  It will get rid of credit card debt, medical debt, old auto repossession charges and debts from lease or apartment deficiencies.  It may also get rid of old personal income taxes (Come in to see if your taxes qualify).  Chapter 13 is like a Chapter 7 “plus”.  If you qualify for a Chapter 7, it can do everything a Chapter 7 can and more.  It may allow you to “cram down” the price of your car to its true value (rather than what you owe on the contract) and might allow you to “strip off” a 2nd mortgage and get rid of it like a credit card.  It may also allow you to pay off IRS tax debt or credit card debt at no interest.

What is the benefit to filing for Bankruptcy?

Immediately after filing and giving notice to your creditors, the calls will stop. The foreclosure will stop. There will be no repossession or eviction. This “stay” allows time for you to get things in order and either make payments or arrange for an orderly return of property. And surprisingly, your credit rating will start to rise sharply after filing and discharge, causing you to possibly have a better credit rating than if you’d paid all your creditors off.

Will bankruptcy stop lawsuits and will it stop garnishments?

Yes–almost immediately for just about all lawsuits and garnishments. The “stay” as mentioned above, gives you some breathing room so we can look at your financial situation and see if we can get rid of the judgments or possibly pay them off over a longer period of time with no interest. Garnishments can take up to 25% of your gross income. If you get a court summons, come to us at Lauber Dancey to discuss your options. It costs you nothing and may save you a lot.

Will I lose my home? Car?

If you are current on your home and we can protect the equity, you won’t lose your home. If you are current on your car, you won’t lose your car. One of the first questions the attorneys at Lauber Dancey will ask is “What are your goals?” Do you want to keep your home? Do you want to keep your car? We will give you all the options so you can make the decision that is right for you and your family. And if the creditors are knocking because you are behind, we can protect your home and car by forcing your creditors to accept a longer payment through the bankruptcy court.

My car was just impounded! What do i do?

Yes! But you must move quickly. Get proof of insurance and make an appointment with Lauber Dancey immediately. We can get your car back within 10 days by filing a Chapter 13 bankruptcy. As long as the car hasn’t been sold by the dealer, you can get your car back and make long term payments on that car, normally at a lower interest rate.

Chapter 7 and Chapter 13 Bankruptcy Attorneys in Seattle, Everett and Bellingham Washington.

What is the difference between Chapter 13 and Chapter 7?

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We provide two different types of consumer bankruptcies– Chapter 7 and Chapter 13.  Chapter 7 is the “Start Fresh” bankruptcy.  It will get rid of credit card debt, medical debt, old auto repossession charges and debts from lease or apartment deficiencies.  It may also get rid of old personal income taxes (Come in to see if your taxes qualify).  Chapter 13 is like a Chapter 7 “plus”.  If you qualify for a Chapter 7, it can do everything a Chapter 7 can and more.  It may allow you to “cram down” the price of your car to its true value (rather than what you owe on the contract) and might allow you to “strip off” a 2nd mortgage and get rid of it like a credit card.  It may also allow you to pay off IRS tax debt or credit card debt at no interest.