Many people are concerned that if they file for bankruptcy, they will lose everything. That is not the case. All kinds of people file for bankruptcy, including people you might think are immune to financial problems. In recent months, Nicholas Cage and Dionne Warwick have filed. Chris Tucker, Evander Holyfield, Antoine Walker and Toni Braxton all faced the foreclosure of their homes. We don’t know what those celebrities kept through their bankruptcies, but one thing is true ― BK Law aggressively advocates for your right to keep the things you need to make a fresh start after bankruptcy.
Chapter 13 and Chapter 7 are the most common forms of bankruptcy. Secured and unsecured debts are treated differently under each. Secured debt is debt backed by collateral ― for example, a house or a car. If you default on a secured debt, your creditor can take back the house or car. Unsecured debt, including credit card debt and medical debt, is backed only by your promise to pay the debt back.
Under Chapter 7 bankruptcy, unsecured debt is eliminated though some of your non-exempt property may be sold to repay creditors. You can choose either to have the creditors repossess the items as collateral or to pay the creditor a sum equal to the value of the property.
Each state has its own list of exemptions. In some states, including Washington, you are allowed to choose either the state or the federal government’s bankruptcy exemptions. Washington State exemptions under Chapter 7 include up to $125,000 in equity in your homestead and up to $3,250 in one car, used for personal transportation or for work.
Under Chapter 13 bankruptcy, you develop a payment plan to pay your consolidated debt over a specified period — usually three to five years. The court will look at how much unsecured debt you have in comparison to your income, to determine how much of your unsecured debt you will have to pay back. Chapter 13 can be structured to allow you to keep some secured debt possessions like your home or car. Your secured debts can be reorganized to make the payments manageable.
If you find yourself faced with the decision to file for bankruptcy, the qualified bankruptcy attorneys at BK Law work with you to decide which form of bankruptcy is best for your situation. We protect your assets and set you on the path to financial health.