Property You Cannot Keep in Chapter 7 Bankruptcy

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Property You Cannot Keep in Chapter 7 Bankruptcy

When filing for a Washington State bankruptcy, some types of property are typically non-exempt and can be used to pay at least a portion of the claims of creditors. Examples of non-exempt property include: cash and bonds (not part of a retirement account), investments over a certain amount, a second car (for single, non-married debtors), a second home, family heirlooms over a certain value, valuable collections such as paintings, coins, or stamps, and expensive trade or business equipment.

The filing of a Chapter 7 bankruptcy will also stop garnishments and civil lawsuit proceedings and, in most cases, discharge the debts underlying these proceedings.  The length of a Chapter 7 Bankruptcy case is generally 3-4 months from filing the bankruptcy petition to the final discharge of debts. In order to find out if you qualify for a Chapter 7, it is important to talk with an experienced Washington bankruptcy lawyer.

The state median income level

Under the new bankruptcy laws that took effect October 17, 2005, if your income is above your state’s median income, you may not qualify for Washington State Chapter 7 protection. The median income varies from state-to-state and each state therefore has their own list of the state median income thresholds for individuals and married couples with or without dependent children.

Non-Dischargeable Unsecured Debts

Certain unsecured debts are not dischargeable in a Chapter 7 Bankruptcy and must continue to be repaid in full. These include unpaid taxes, government- backed student loans, and unpaid child support. In many cases, however, your monthly payments of these debts can be restructured and lowered by filing a Washington Chapter 13 Bankruptcy.

Chapter 7 also gives you an option to “Redeem Your Vehicle”. This process involves you paying the secured creditor the fair market value of the collateral, which is typically far lower than the amount you still owe on your current car loan. In exchange for redeeming your vehicle, the creditor provides you with the release of their lien. There are several redemption finance companies we can refer you to that will provide you with a loan will have new and lower payments based upon your vehicle’s current and fair market value.

At Washington State Bankruptcy Attorney over 90% of individuals and families still qualify for Washington State bankruptcy laws under the 2005 bankruptcy reform act.
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