In Washington state and all other jurisdictions, a Chapter 13 bankruptcy is based on making periodic payments to the Chapter 13 trustee over a three to five-year period. The trustee then pays administrative expenses and divides the net funds among the person's creditors. A Chapter 13 bankruptcy is a valuable tool and sometimes a life-saver for those who want to hold onto their home despite being in default and owing substantial arrearages.
Most people in Washington and throughout the country find it compelling to file for consumer bankruptcy relief due to losing a job, incurring massive medical debt, marital dissolution or taking on huge credit card debt. When the debt is in the foregoing categories and is unsecured, Chapter 7 is usually the remedy sought because unsecured debts are erased absolutely and permanently in that kind of filing. Changes to the bankruptcy laws in 2005 now make it more difficult, however, for an individual or married couple to be approved for a Chapter 7 filing.
After completing a bankruptcy in Washington or other states, the individual or married couple may have a difficult time obtaining a reasonable credit card and other reasonable extensions of credit. For a Chapter 13 payment plan, the negative report of a bankruptcy can remain on one's record for up to seven years after discharge. There are many ways to build up one's credit rating, however, and in some instances, it is found that the bankruptcy itself ceases to be reported at some time less than seven years. In any event, with focus and some hard work, one can restore a very respectable credit score within a few years after the discharge.
Chapter 13 in the state of Washington and elsewhere is the bankruptcy program that provides for a monthly payment plan for an individual or married couple to catch up on their debts over a specified period. It is well-suited to consumer debtors who have sufficient income to fund a payment plan. Chapter 13 is also a valuable tool for those who want to keep their home despite having fallen behind in the payments.
In Washington state, bankruptcy law must follow federal law in many respects. In a Chapter 13, for example, it is no longer allowed for a debtor to modify the terms of the mortgage on the debtor's residence. The U.S. Supreme Court has set forth reasons why this cannot be done, mainly based of the need to give first mortgage lenders on residential properties some assurance that their loan terms will not later be changed in a bankruptcy.
Washington state consumers can get a fresh start and relieve the pressure of overwhelming debt by filing and completing a bankruptcy. Chapter 13 bankruptcy gives a consumer the opportunity to pay off debt over a three to five-year period during which the debtor will pay a predesignated monthly installment to a Chapter 13 trustee. As soon as the Chapter 13 is filed, the automatic stay goes into effect and continues to prohibit collections by creditors throughout the bankruptcy.
The best way to keep one's home in Washington state when the mortgage payments have fallen behind is to file a Chapter 13 bankruptcy. No other program compels the mortgage holder to accept monthly payments to get the back amounts paid and the loan up-to-date and current. This can sometimes work even where the borrower has received a foreclosure action against the residential property. In such situations, there is an emergency need to consult with an experienced consumer bankruptcy attorney who is familiar with handling Chapter 13 cases.
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.
Faced with serious financial problems, many Washington residents will look for relief. That relief may come in the form of a bankruptcy filing. As part of that process, consumers sit down with a bankruptcy attorney and go over the process to determine if bankruptcy is the best option for their needs, and which type of bankruptcy is most advantageous. According to a recently published report, not all consumers receive that level of advice.
Many Washington residents find themselves in financial distress. They turn to the U.S. Bankruptcy Court for help, protection and a chance to start over financially. However, if they file too many Chapter 7 or Chapter 13 bankruptcies and essentially abuse the system, the court could deny them a discharge now or in the future.