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Eliminate debt and move forward with the next phase of your life
For your review, we have compiled some general information about filing chapter 7 bankruptcy under the new bankruptcy laws in the state of Washington. Please be advised, all information contained in this website is for informational purposes only, and does not constitute legal advice. Every bankruptcy case is different, so be sure to fully explain the facts of your case with us before we file your chapter 7 bankruptcy case.
What is a Chapter 7 Bankruptcy?
Chapter 7 is the legal way to declare yourself unable to pay your debts. To file a Chapter 7, under the new law, your income and expenses must meet certain guidelines, demonstrating that you unable to pay your debts. When the Chapter 7 is completed, you will receive a Court Order discharging your legal obligation to pay your creditors.
The Automatic Stay and Benefits of Chapter 7
Debt relief and the elimination of bill problems are the obvious benefits provided by Chapter 7. Another very important benefit of filing a Chapter 7 bankruptcy is the protection against creditor harassment provided to you by the "Automatic Stay".
After you sign the Chapter 7 Petition and schedules prepared for you by us, we will electronically file all documents with the Clerk of the United States Bankruptcy Court. Immediately upon filing, a protection Order is entered by the Court to protect you from all creditor action, including but not limited to harassing phone calls, lawsuits, threats, judgments, repossessions, and garnishments. This protection Order is known as the "Automatic Stay".
The "Automatic Stay" protects you from all collection activities and harassment by all of your creditors. As stated above, your creditors may no longer:
- Harass you by telephone;
- Send you collection letters;
- File a lawsuit against you;
- Proceed with an existing lawsuit;
- Foreclose and sell your house;
- Repossess your car;
- Start or continue a wage garnishment.
The "Automatic Stay" is a powerful shield that provides you with peace of mind by virtue of the fact that you no longer have to worry about your creditors harassing you. It allows you to continue with your day-to-day life, no longer having to worry about creditors and their annoying telephone calls and is the first step to a FRESH START with your household finances.
CHAPTER 7 Qualifications
Under the new law, if your income and expenses meet certain guidelines, demonstrating that you are unable to pay your debts, you can usually file Chapter 7. Generally, you can file Chapter 7 if you pass what is known as the "means test".
The first method of passing the "means test" is by demonstrating that your income is below a certain median level. Your "income", for bankruptcy purposes, is the total gross income received from all regular sources over the past six months, divided by 6, then multiplied by 12. If your "income" is lower than the most recent median income figures (published by the Census Bureau and adjusted for inflation each year), for your family size and state, you are eligible to file Chapter 7.
For example, if you are an Washington resident, your family size is 3, and your household's income is $60,000.00, you would be eligible to file Chapter 7 since your income for your family size is below the current median. See the table for 2005 median income below:
Family Size
Single:
2 People:
3 People:
4 People:
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Income
$42,452
$52,272
$57,773
$70,857 |
For more information on current median income figures, please see http://www.usdoj.gov/ust/bapcpa/bci_data/median_income_table.htm
The second method of passing the "means test" is by demonstrating that after all of your "allowed living expenses" are deducted from your "income", you are left with an insufficient amount to make payments to your creditors. Your "allowed living expenses" are based on IRS standards. If the amount left over after the deduction of your "allowed living expenses", multiplied by 60, is less than 25% of what you owe to your "nonpriority, unsecured" creditors or $10,000, you are eligible to file Chapter 7.
For example, let's say you have $150 left over each month, and owe $50,000 to your "nonpriority, unsecured" creditors.
Since $150 x 60 = $9,000 and $9,000 is less than 25% of $50,000 (which is $12,500), you would be eligible to file Chapter 7. To find out more about the allowed monthly expenses, please visit: www.wawb.uscourts.gov.
What happens after the bankruptcy is filed?
After your petition is filed with the Court, we will send you a copy of the Notice of Bankruptcy Filing, provide you with your filing date and bankruptcy case number, and advise you when to appear at the meeting with the trustee assigned to your case. One of our lawyers will appear with you at the meeting, where you will be asked some questions about the information in your Petition.
Approximately three to four months after the meeting, the Clerk of the Court will mail you the Order of Discharge, which completes your case and discharges your debts.
What to do now?
As you can see, a chapter 7 bankruptcy can be an extremely complex and difficult task under the new bankruptcy laws.
To receive a free consultation regarding your (or your friend or family member’s) debt problems, please contact us today.
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