There are many reasons why people contemplate filing for bankruptcy. The most commonly reported reasons include overwhelming medical bills, loss of a job, excessive credit card use, divorce or separation, and unexpected expenses due to natural disasters where the individual is not insured. Chapter 7 in Lakewood Wa is the most common.
Who is Eligible for Chapter 7?
Eligibility for filing under Chapter 7 is determined by the outcome of the “means test” which calculates if your income is low enough. To be deemed low enough, your income must fall below the median or average, income level for your geographical location. This helps weed out those who’s wage may be higher, and their debt accrued is mostly consumer debt. Their option would be to file for Chapter 13 where a repayment plan is set up.
Chapter 7 Filing Process
This option is typically the quickest and simplest route of filing bankruptcy. Filing starts with the submission of the official petition, along with a statement of financial affairs and schedules. These documents require full disclosure and truthfulness. All assets and debts, as well as financial history, will be required to be listed and divulged. Accuracy is critical, which makes this the most time-consuming aspect of the filing. It’s essential to list all creditors and their mailing addresses on the schedules even if the debt cannot be discharged.
Possible Exemptions Under Chapter 7
Chapter 7 filing allows certain property of the debtor to be claimed as exempt, meaning some property doesn’t have to be relinquished, under the guidelines. Exempt property is claimed in the schedules submitted in the initial filing and may include items like furniture, vehicles, household items, and personal items. 401(k) plans and pension plans are automatically exempt. The idea behind filing bankruptcy is to provide a fresh start, and without some basic assets, a fresh start is not possible.
Automatic Stay
All bankruptcy filings provide an injunction against creditors known as the automatic stay. Just the act of filing is enough to prompt the court order which prohibits creditors from contacting debtors. The stay is binding even if the creditor hasn’t received a copy of the filing or legal notice.
The decision to file bankruptcy is one that should consider carefully and thoughtfully. Due to the intricacies of filing and importance of timely submissions, consulting with an attorney versed in Chapter 7 in Lakewood Wa is highly recommended.
