If you’ve suffered a financial set-back, you may be enduring mounting debt, harassment from creditors, or even the threat of losing your home, car, or other personal property. Filing for bankruptcy can bring peace of mind and allow you to pursue a fresh start.

Bankruptcy starts when you file a petition with the bankruptcy court. This court is a specially set up court within the federal court system. Because it is federal law, most bankruptcy law is the same all over the country. Your bankruptcy protection is automatically valid all over the country.

As soon as you file a case, all bill collectors have to leave you alone. Bankruptcy stops foreclosures, car repossessions, law suits, garnishments and most other attempts to collect a debt.

Along with your petition, you have to file documents showing what property you own, what debts you have, how much income you earn and what your budget looks like. You also have to fill out a “means test” form to show how much income you made in the past six months. If your income is higher than the average income for a household of your size, you have to show that your expenses are high enough to deserve a bankruptcy. If you “fail” the means test, it is presumed that you are abusing the bankruptcy system unless you get into a long term repayment plan called Chapter 13 bankruptcy. However, you can try to convince a bankruptcy judge that you have special circumstances and it would still be fair to allow you to file a fairly quick and painless Chapter 7 bankruptcy.

Briefly, the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy is that in a Chapter 13 bankruptcy you have to make payments on at least some of your debt over a period of three to five years. In a Chapter 7 bankruptcy, the whole process usually only takes about four months and you do not have to make payments to creditors. If creditors receive anything in a Chapter 7 bankruptcy, it is from taking property and selling it. Most people in Chapter 7 bankruptcy do not lose any property because the law protects your essentials so you can have a true fresh financial start.

In most bankruptcies you only have to appear at one hearing called a Meeting of Creditors. This hearing is held about a month after you file. Your attorney will appear with you. Creditors usually do not show up. You meet with a trustee who is assigned to administer your case and testify under oath about your bankruptcy. The trustee can investigate your case further if he or she has questions. The trustee is usually just another bankruptcy attorney and is not a judge. Bankruptcy judges make the final decisions if a situation calls for it.

After your case is over, you get a discharge. The discharge permanently prohibits creditors from trying to collect from you. Some debts cannot be discharged, such as student loans, fines, back child support and some taxes.

Frequently Asked Questions

My clients receive personalized advice and honest, professional representation without judgment or pressure. I keep my costs and overhead very low and I pass that savings onto my clients.  Contact me today to set up a free consultation.

In addition to providing other legal services, I am a designated debt relief agency under federal law and provide legal assistance to consumers under the Bankruptcy Code.

Chapter 7

Chapter 7 is the easier, quicker form of bankruptcy. As soon as you file a bankruptcy petition, all collections stop—that includes phone calls, garnishments, law suits, foreclosures, etc. If creditors receive anything in a Chapter 7, it’s from the liquidation of property. Most people do not lose any property in a Chapter 7 because it is exempt from collections. It is important to talk to an attorney about whether your property is exempt. If your household income is over the median income for the state of Washington, you may be required to file a Chapter 13 bankruptcy instead. Click here for a list of the median incomes, state by state, in the U.S.

Chapter 13

Chapter 13 bankruptcy is essentially a repayment plan that lasts three to five years. The amount you pay depends on your income and expenses. As with a Chapter 7, once a Chapter 13 is filed, all collections stop. In addition,  you are afforded longer-term protection from some creditors, such as the IRS or a mortgage company trying to foreclose. Chapter 13 can bring additional relief by allowing you to catch up on a mortgage, back taxes, child support, pay off a car loan, or even reinstate a suspended driver’s license. Click here for a list of the median incomes, state by state, in the U.S.

The Law Office of Larry Lofgren is a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.