This information is designed to provide a more thorough understanding of the bankruptcy process. Below are some of the most frequently asked questions about your options and answers that may be able to help. Please contact us for additional assistance.
What am I allowed to keep if I file bankruptcy?
Does someone come inspect my home after I file?
How long does the process take?
Can I modify my home mortgage?
How can I rebuild my credit after bankruptcy?
Will I be able to buy a house after bankruptcy?
How much does it cost?
Chapter 7 cases are charged a flat fee starting at $1500 depending on the complexity of your case. Contested matters, such as challenges to your discharge, are billed separately.
Chapter 11 cases are billed at an hourly rate subject to approval by the court.
Chapter 13 cases are minimum $3500 and can be partially paid through payments you make through your plan.
The filing fee charged by the court is $310 for Chapter 13 and $335 for Chapter 7.
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What am I allowed to keep if I file bankruptcy?
Bankruptcy laws let you keep for yourself, or exempt, certain property to help in your fresh start. Most consumer debtors keep their home equity, household possessions, cars, bank accounts, wages, retirement accounts and pension plans. The state and federal exemption laws are different and we will advise you which exemptions are best for your situation. We will tell you before you file a case if any of your property might be at risk of being sold in a Chapter 7 and advise you on the best ways to protect your property.
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Does someone come inspect my home after I file?
If you own a home the bankruptcy trustee may have an appraiser or real estate agent value your home to confirm the value you place on your home.
If you have valuable furniture, art, antiques and other possessions the bankruptcy trustee may have someone appraise the contents but in most cases no one will inspect your home.
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How long does the process take?
A Chapter 7 usually takes about 90 days from the date you file the case. A Chapter 13 plan will run between 3 and 5 years unless you are paying your creditors in full. Chapter 11 cases have no set length, their duration depends on the complexity of each case.
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What can I do about my student loans?
In most cases you can expect to have to keep paying on your student loans after bankruptcy. To discharge your student loan you must convince your bankruptcy judge that requiring you to continue paying them would be a hardship. Courts presently require you to demonstrate (1) You cannot maintain, based on current income and expenses, a minimal standard of living for yourself and your dependents if you are forced to pay off student loans; (2) additional circumstances exist indicating that your financial hardship is likely to persist for a significant portion of the repayment period of the student loans; and (3) you have made good faith efforts to repay the loans.
Discharging student loans is not easy. You must file a lawsuit in your bankruptcy case, the government or loan servicer will usually resist and your case will likely require a trial. You will have to present evidence that the facts in your case justify discharging the student loans.
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Why should I file Chapter 13?
You may need propose a payment plan under Chapter 13 if: (1) you have too much income to qualify for a Chapter 7; (2) you have property that is at risk of being sold in a Chapter 7 and filing Chapter 13 lets you keep it; (3) you are behind in your mortgage or car payments and need more time to catch up than the bank is willing to give you; (4) you have priority tax debt that must be paid over time
Can I modify my home mortgage?
No. Current law does not allow you to change the interest rate, monthly payment or other term of the mortgage on your principal residence. You can bring past-due payments current over an extended period, however.
If you own rental property or commercial real estate the bankruptcy laws do permit you to propose a modification of the loan terms and the judge must approve the changes if the lender does not agree.
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Can I include taxes?
In general, income taxes and excise taxes that have been owed for more than 3 years may be discharged in bankruptcy. The rules are very particular and the facts of each case must satisfy the criteria.
Recent income taxes, payroll tax, sales tax and tax liabilities for older years where a tax return was not filed will not be discharged in bankruptcy.
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How can I rebuild my credit after bankruptcy?
The best way to improve your credit score after bankruptcy is to stay current on any debt that carries over from your bankruptcy, such as a car loan, mortgage or student loan.
If you don’t carry over any debt, you may be able to establish credit through a secured credit card or through auto financing you may be offered after you file.
You should check your credit report about a year after you file to make sure the information is accurate. You are entitled to one free credit report per year from each of the three major credit reporting agencies. Go to www.annualcreditreport.com to get started.
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Will I be able to buy a house after bankruptcy?
If you have had a house foreclosed, you will not be eligible for FHA or VA loans for two years from the foreclosure date. Otherwise, your eligibility for a mortgage after bankruptcy will depend on your income, your credit score, how much of a down payment you can afford, how long you have been at your job and how creditworthy you are at the time. A good real estate agent will prequalify you for financing so you will know how large of a mortgage you can obtain.
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Can I keep my car?
If you own the car free and clear and can exempt its value, you can keep your vehicle. If you have a loan against the car and the equity is exempt, you can keep it as long as you stay current on the loan. The lender may require you to sign a reaffirmation agreement which will keep your personal liability for the loan in place after your bankruptcy is closed.
A reaffirmation agreement enables the lender to pursue you for a deficiency after the bankruptcy if you default on the loan, the lender repossesses the car and cannot pay the loan in full from sale of the vehicle.
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Can I keep my house?
If you live in your home and intend to stay there, you can keep your home if the equity is exempt. Washington law permits an exemption of up to $125,000 of equity. Federal bankruptcy law permits an exemption in a much smaller amount. Equity is calculated by estimating the home’s current fair market value and subtracting the debts against the home (mortgages, home equity loans and real estate taxes, for example) and factoring in an allowance for costs of a hypothetical sale. If the net result is less than the maximum allowable exemption, then you can keep your house.
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