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Bankruptcy is not the easy way out, but might provide fresh start

When money problems become overwhelming, consumers in Washington will likely consider their options. While bankruptcy can help to resolve money problems, it could have an adverse effect on a person's future because it will stay on his or her record for several years. However, if bankruptcy is determined to be the only option, professional legal advice can ease the process.

Chapter 7 bankruptcy can provide almost instant debt relief because the court can discharge all unsecured debts like credit card and medical debt. It comes at a price, though, because the court will appoint a trustee to arrange a liquidation sale of non-exempt assets. Chapter 13 bankruptcy is much less severe, and provides the opportunity to continue paying off debts over three to five years and have remaining balances discharged at the end of the period.

This is done by a court-approved payment plan that allows no defaults in payments. A Chapter 13 filer can also save his or her house from foreclosure, as long as every month's mortgage payment is made. This can provide a fresh financial start if the filer understands that it can only offer a solution as long as the payment plan is followed exactly. The bankruptcy can be dismissed as soon as he or she fails to make a payment on the due date.

The bankruptcy process has other advantages such as debt counseling and programs to teach budgeting and money management. An experienced Washington bankruptcy attorney can explain other requirements such as the means test to determine eligibility for Chapter 13. A lawyer can also help with drafting the repayment plan for the approval of the court, and provide ongoing support throughout the process.

Source:, "Expert: Here's when you should consider bankruptcy", Joanna Campione, Nov. 10, 2017

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