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Man in need of bankruptcy assistance in Everett, WABankruptcy is a federal legal process for debt relief. There are two types of bankruptcy for individuals and small businesses: a Chapter 13 (pay back program) and a Chapter 7 (wipe out the debt). Under the bankruptcy code the emphasis is towards the filing of a Chapter 13.  To file a Chapter 7 your income must fall below certain income limitations which are explained below.

The Attorney fees and costs for a bankruptcy depend on which one is most appropriate for you. To see an estimate of the initial Attorney's fees our office charges please see our Services page and "Fees." Gregory L. Davies will discuss the Attorney's fees and cost in complete detail when you meet with him to discuss your bankruptcy needs.

Gregory L. Davies, Attorney has been assisting clients  with bankruptcy in Everett, WA matters since 1980. Gregory L. Davies, Attorney and our staff are experienced in helping our clients through one of the most difficult time in their lives.

To find out more about how our law firm can help you with your debt relief matters, contact Gregory L. Davies, Attorney at Law in Everett, Washington. Call (425) 259-2755 or email us

The law firm of Gregory L. Davies is a "debt relief agency" pursuant to the US Bankruptcy Code.

 

OVERVIEW OF THE BANKRUPTCY PROCESS


Thank you for your interest in our office and our legal services. It is our goal to provide you with professional and efficient legal services. In order to make you more fully aware of the future course of your bankruptcy, it is important that you have full and complete information regarding the process through which your case will continue until its final conclusion.


Disclaimer: The following overview of the bankruptcy process is intended for information only and is not intended as a substitute for meeting personally with Gregory L. Davies and getting legal advice regarding your specific matter.


Please visit our website at www.gregorydavieslaw.com for more information about our office and the legal services we provide. When visiting our website please like us on Facebook by clicking on the Facebook icon on our website home page lower right hand corner.


A bankruptcy can be complex and confusing. Bankruptcy law is complicated and not easily described. Bankruptcy has long-term financial and legal consequences. It is strongly recommended that you hire our office to ensure your bankruptcy is properly prepared, filed, and finalized.


What is a bankruptcy?

Bankruptcy is a federal legal procedure in which the bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating assets to pay their debts or by creating a repayment plan.


Types of bankruptcy for individuals:

Chapter 7

Individuals, corporations and partnerships are eligible to be a debtor in a Chapter 7. State law determines what assets a debtor may keep by claiming exemptions. A trustee is appointed to liquidate the rest of the debtor's assets and distribute the proceeds to creditors. If all the debtor's assets are exempt or if minimal assets are found, the case will be a "no-asset case, with no distribution to creditors.


A Chapter 7 is an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor's estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt property and the rights of secured creditors. Because there is usually exempt property in most Chapter 7 cases, there is usually no actual liquidation of the debtor's assets. These cases are called "no-asset cases." A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most Chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed.


Chapter 13

This chapter provides a way for individuals with a regular source of income to pay off their debts over a period of time under supervision of the court and a trustee. Corporations and partnerships may not file under Chapter 13. Individuals may file only if their unsecured debts do not exceed $383,175.00 and their secured debts do not exceed $1,149,525.00. A plan is filed with the petition or immediately thereafter. Payments are made to a Chapter 13 "Standing trustee," who makes distributions to creditors according to the provisions of a confirmed plan. The debts may be paid back in whole or in part, depending on what the debtor's plan provides.


A Chapter 13 “Adjustment of Debts of an Individual With Regular Income”, is designed for an individual debtor who has a regular source of income. Chapter 13 is often preferable to Chapter 7 because it enables the debtor to keep a valuable asset, such as a house, and because it allows the debtor to propose a "plan" to repay creditors over time – usually three to five years. Chapter 13 is also used by consumer debtors who do not qualify for Chapter 7 relief. At a confirmation hearing, the court either approves or disapproves the debtor's repayment plan, depending on whether it meets the Bankruptcy Code's requirements. Chapter 13 is very different from Chapter 7 since the Chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the Chapter 13 trustee, based on the debtor's anticipated income over the life of the plan. Unlike Chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under Chapter 13 than the discharge under Chapter 7.


Chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the Chapter 13 plan on time. Another advantage of Chapter 13 is that it allows individuals to provide for the repayment of secured debts (other than a mortgage for their primary residence) and extend them over the life of the Chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a Chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under Chapter 13 protection.


What are the income limits for filing a Chapter 7?

A "means test" is used to determine whether individual consumer debtors qualify for relief under Chapter 7. If such a debtor's income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief.

 

There are presumptive income thresholds based on the size of the household. In Washington State,as of November 1, 2016, the annual limits per earner in the household are as follows:

Family Size

1 Earner:  $58,417
2 Earners: $71,557
3 Earners: $78,760
4 Earners: $91,572

 

Starting/Filing a Bankruptcy

A Chapter 7 or Chapter 13 case begins with the debtor filing a petition and supporting schedules with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. For Clallam, Island, Jefferson, King, Kitsap, San Juan, Skagit, Snohomish, and Whatcom counties the bankruptcy court is the United States Bankruptcy Court for the Western District of Washington at Seattle.


Pre-bankruptcy Credit Counseling:

A pre-bankruptcy counseling session with an approved credit counseling organization is required. The counseling session will include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and generally takes place online. There is a fee for the counseling. It will generally be about $50.00 per person. Be sure to ask us for any coupons from approved providers. We often get “special” prices from providers that are less than $50.00.


Once you complete the required counseling, you must get a Certificate of Completion.  Give the original of the certificate to our office. We are required to submit this certificate when the bankruptcy petition is filed.


Current Filing Fee for a Bankruptcy:

The filing fee currently charged by the Clerk of the United States Bankruptcy Court for the Western District of Washington at Seattle is:
    Chapter 7        $335.00
    Chapter 13      $310.00


What is the effect of filing a bankruptcy petition?

Filing a petition under Chapter 7 or Chapter 13 "automatically stays" (stops) most collection actions against the debtor or the debtor's property. But filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.


In most cases, the Fair Credit Reporting Act limits credit reporting agencies from reporting negative information that is more than seven (7) years old, or bankruptcies that are more than ten (10) years old.


Trustee

Chapter 7 - The primary role of a Chapter 7 trustee in an asset case is to liquidate the debtor's nonexempt assets in a manner that maximizes the return to the debtor's unsecured creditors.


Chapter 13 – The primary role of a Chapter 13 trustee is to receive regular payments from the debtor’s income as set out in an approved Chapter 13 plan. These monies are then used by the Chapter 13 trustee to pay creditors over the life of the plan. Within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court, the debtor must start making plan payments to the trustee. The debtor must make regular payments to the trustee either directly or through payroll deduction, which will require adjustment to living on a fixed budget for a prolonged period. Furthermore, while confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor may not incur new debt without consulting the trustee, because additional debt may compromise the debtor's ability to complete the plan.


A debtor may make plan payments through payroll deductions. This practice increases the likelihood that payments will be made on time and that the debtor will complete the plan. In any event, if the debtor fails to make the payments due under the confirmed plan, the court may dismiss the case or convert it to a liquidation case under chapter 7 of the Bankruptcy Code. The court may also dismiss or convert the debtor's case if the debtor fails to pay any post-filing domestic support obligations (i.e., child support, alimony), or fails to make required tax filings during the case.

 

Meeting with Trustee:

Approximately 30 days after the petition is filed, a case trustee will hold a meeting of creditors.  During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor's financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors' meeting and answer questions.


It is important for debtors to cooperate with the trustee and to provide any financial records or documents that the trustee requests. The Bankruptcy Code requires the trustee to ask the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt.


Chapter 7 and Chapter 13 meetings for Snohomish and Island Counties are held at the Everett Red Cross Building, Boeing Room, 26th St. Entrance, 2530 Lombard Ave., Everett, WA 98201.


Chapter 13 Repayment Plan:

Debtors must file a repayment plan with the Chapter 13 petition or within 14 days after the petition is filed. A plan must be submitted for court approval (confirmation) and must provide for payments of fixed amounts to the Chapter 13 trustee on a regular basis, typically biweekly or monthly. The Chapter 13  trustee then distributes the funds to creditors according to the terms of the plan, which may offer creditors less than full payment on their claims.


The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" over an "applicable commitment period," and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under Chapter 7.


In Chapter 13, "disposable income" is income (other than child support payments received by the debtor) less amounts reasonably necessary for the maintenance or support of the debtor or dependents and less charitable contributions up to 15% of the debtor's gross income. If the debtor operates a business, the definition of disposable income excludes those amounts which are necessary for ordinary operating expenses.


The "applicable commitment period" depends on the debtor's current monthly income. The applicable commitment period must be three years if current monthly income is less than the state median for a family of the same size - and five years if the current monthly income is greater than a family of the same size. The plan may be less than the applicable commitment period (three or five years) only if unsecured debt is paid in full over a shorter period.


Within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court, the debtor must start making plan payments to the trustee.


What happens after the Meeting with the Trustee?

Chapter 7 – In most cases, once you attend the meeting with the trustee there is nothing further for you to do. Approximately, 60 to 70 days after the meeting you will receive in the mail a discharge order. Your case is not officially closed until the court closes the case.

 

Chapter 13 – In most cases, the next hearing is the confirmation of the Chapter 13 plan. Usually, the debtor does not have to appear at the confirmation hearing unless there are objections to confirmation by the trustee or creditors. Objections are addressed before the confirmation hearing. Once the Chapter 13 plan is confirmed (approved) by the court debtors continue to pay the required periodic payments to the Chapter 13 trustee for distribution to approved creditors.


What is a Reaffirmation Agreement?

A reaffirmation agreement is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. Reaffirmation agreements are not required by the Bankruptcy Code or other state or federal law. A debtor can voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be valid reasons for wanting to reaffirm a particular debt.


Post-Bankruptcy Filing Financial Management Class:

A debtor education course by an approved provider should include information on developing a budget, managing money, and using credit wisely. Like pre-filing counseling, debtor education will take place online. The education session might last longer than the pre-filing counseling — about two hours — and the fee is between $50 and $100.


Once you complete the required financial management class, you must get a Certificate of Completion.  Give the original of the certificate to our office. We are required to submit this certificate to the bankruptcy court so your bankruptcy can be finalized and your debts discharged.


Discharge of debts:

Chapter 7 - A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Debts not discharged in chapter 7 include, but are not limited to, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments.


Chapter 13 - A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan. Debts not discharged in chapter 13 include, but are not limited to, certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments.


Attorney’s Fees and Costs:

Our attorney’s fees are based on an hourly rate along with an estimate of the amount of time we believe it will take to finalize your bankruptcy and our fees must be disclosed to the court and trustee. Our current fees are listed on our website in “Services” under “Fees.”  


Note to Do-It-Yourselfers:

A bankruptcy can be complex and confusing. Bankruptcy law is complicated and not easily described. Bankruptcy has long-term financial and legal consequences. It is strongly recommended that you hire our office to ensure your bankruptcy is properly prepared, filed, and finalized.


Our office keeps itemized billing records that are created at the same time as specific services provided for your case. This itemized billing statement is provided to you at the end of each month. You should review this billing statement carefully as it is not only a record of our time and charges for your case but also a record of our services provided.


Our office also prepares a written attorney fee agreement for each case. The agreement is signed by you and Gregory L. Davies. The original is kept in our client file and a copy is provided to you.


Thank you for your interest in our office and our legal services.  If you have any questions concerning bankruptcy (or any other legal matter), whether you hire our office to work with you or you are processing your bankruptcy yourself, please contact our office to set up an appointment to meet with Gregory L. Davies.  

 

To find our find out more about how our law firm can help you with your debt relief needs, contact Gregory L. Davies, Attorney at Law, in Everett, Washington. Call (425) 259-2755 or email us.

3721 Colby Avenue Everett, WA 98201