Bankruptcy is a process that offers consumers a way out of a crisis. The process should be considered when a person s facing foreclosure, garnishment, or repossession. Talk to a Bankruptcy Lawyer In Tacoma Wa if you’re afraid of losing your property. Many lawyers offer free consultations.
What Is Bankruptcy?
Bankruptcy is a filing in federal court. The lawyer draws up a series of schedules that outline the client’s financial situation. There’s a schedule of debts and another for assets. The court also looks at how much money the debtor made in the last few years. The best thing about bankruptcy is the automatic stay. The stay means that all collection activities must stop. A bankruptcy trustee is appointed to oversee each case.
Chapter 7
Chapter 7 and 13 are the most popular consumer bankruptcies. Filing Chapter 7 takes about four months and the filing fee is $335. Filers must pass the means test. Debtors must swear they don’t make enough money to repay creditors. Additionally, the trustee looks at the debtor’s recent purchases. They may liquidate anything of value like land and expensive jewelry.
The debtor’s property is controlled by the trustee who targets assets. Indeed, trustees are paid according to how much money they recover for creditors. A Bankruptcy Lawyer In Tacoma Wa, explains what assets are exempt from liquidation. Debtors may keep their home and car. Second cars and vacation homes are sold to pay creditors.
Chapter 13
Chapter 13 filers must repay their debt and make current debt payments. Filers go through the difficult process in order to keep specific properties. The trustee’s job in Chapter 13 is to develop a repayment plan. Basically, the debtor makes a monthly payment to the trustee. In turn, the trustee pays priority and secured debts. Priority debts are items like past-due child support and taxes. These items must be paid in full. On the other hand, creditors with secured debts may be willing to take less than what’s owed.
Filing bankruptcy stays on the consumer’s credit report for several years. However, one can breathe easier knowing they will be debt-free eventually. Moreover, debtors learn from mistakes. Hopefully, they’ll avoid making bad financial decisions in the future.
