FAQ’s
We know that there are a lot of questions you might have when thinking about filing for bankruptcy. We have put together a list of questions we get asked frequently, and tried to answer them fully. If you still have questions after finding this page and reading our answers, please feel free to contact us, we are always willing to answer any questions you have and help guide you through this process.
1) How Do I Repair My Credit Score After I file Bankruptcy?
2) Can I file Bankruptcy Again?
3) How can I pay for bankruptcy when most Seattle bankruptcy firms are quoting me well over a thousand dollars before they will do anything?
4) Will I be able to keep all or most of my things if I file for bankruptcy?
5) If I am worried about the extent of my personal property, can I transfer some of it to my friends and family?
6) I am Think About Taking money out of my 401k to Pay Debts Rather than Go Through Bankruptcy, Would this be a Better way to handle my debt situation?
7) I owe money to the IRS, how does Chapter 13 help me?
8) How Can the Fair Debt Collections Practices Act Protect Me Against Abusive Collectors?
9) Can I eliminate IRS or state tax in bankruptcy?
10) Do I have to Attend a Bankruptcy Hearing in Seattle or Tacoma?
11) If I file a Chapter 13 bankruptcy, does that mean that I have to repay all of my debts?
12) Can filing for Chapter 13 bankruptcy help me save my house?
13) What is the Court filing Fee for a Bankruptcy in Seattle or Tacoma?
14) How do I Pay an Attorney to enforce my rights under the Fair Debt Collections Practices Act?
15) I have already been sued by a creditor. Will bankruptcy prevent them from winning a judgement against me?
16) Can I pick and choose who I want to put in my bankruptcy?
17) I am way behind on car payments and I am afraid that my car is going to get repossessed, what now?
1. How Do I Repair My Credit Score After I file Bankruptcy?
We are the only Seattle Bankruptcy firm that I know of that actually takes a holistic approach to your debt and credit situation. Instead of simply eliminating your debt and then leaving you to figure out the rest yourself after discharge, we have engaged a company to provide real credit report education and materials to our clients at no extra charge. Our goal is to not only eliminate your debt, but help you repair your credit as well.
The truth is in all likelihood, filing for bankruptcy is the only thing you need to do to repair your credit other than staying employed and paying your bills on time after bankruptcy discharge. Most bankruptcy filers see their scores increase exponentially in the two years after filing. But why not stack the deck in your favor?
We want to see your credit score increase and we are going to pay to make sure that it happens.
2. Can I file Bankruptcy Again?
If you filed Chapter 7 before in Seattle or anywhere else, you can only file a Chapter 7 bankruptcy once eight years have passed since the date that your last Chapter 7 was originally filed with the court. You can, however, file Chapter 13, likely pay back dimes on the dollar, and even get a discharge of all your debt as long as it has been four years since your Chapter 7 filing.
Even if it has been less than four years since your Chapter 7, you can still file a Chapter 13 to catch up on mortgage or car payment and keep all the creditors away from you.
3. How can I pay for bankruptcy when most Seattle bankruptcy firms are quoting me well over a thousand dollars before they will do anything?
We are likely the only Seattle area Bankruptcy law firm that is truly willing to step in and make your bankruptcy filing happen. We offer all our Washington clients the opportunity to pay less than a third of their attorney and court filing fees prior to filing their case. The idea is pay the lowest amount that the Western District of Washington will allow and then pay the remainder of your attorney and filing fees in seven monthly installments.
Other Tacoma area firms talk about payment plans, but what they mean is they will keep taking money from you until you have paid every dime. These arrangements are payment plans in name only. These layaway plans are not very helpful when you are worried about garnishments, lawsuits or foreclosures. Given that your credit score isn’t really going to start recovering until discharge, waiting around is probably not to your advantage long term even if there are no immediate threats on the horizon.
4. Will I be able to keep all or most of my things if I file for bankruptcy?
If you have lived in Washington, California, Oregon or any combination thereof for the last two years, you can almost always keep all of your property, including both houses and cars, as long as your equity interest in those assets does not exceed the legal limits available under the law.
Thankfully both Washington and Oregon have adopted the federal exemptions as an alternative to their often less generous state exemptions. The federal exemptions generally enable us to protect nearly everything under the sun. However, under certain circumstances, the Washington bankruptcy exemptions are actually more expansive.
Your Tacoma bankruptcy attorney should know when to choose the state exemptions rather than the federal exemptions in order to protect your property.
5. If I am worried about the extent of my personal property, can I transfer some of it to my friends and family?
Transferring assets to friends and family is one of the worst things you can do prior to filing bankruptcy.
First, the exemptions that would have protected the property can no longer be applied. Second, the bankruptcy trustee will likely reverse the transfer and go after the asset. If you have signed anything over to a friend or family member in anticipation of filing bankruptcy, you will want to disclose the transaction to your attorney immediately so that he or she can take the appropriate steps to either reverse the transaction or minimize its impact.
6. I am Thinking About Taking money out of my 401k to Pay Debts Rather than Go Through Bankruptcy, Would this be a Better way to handle my debt situation?
This is almost always a terrible idea. In the state of Washington, most retirement accounts are completely exempt from seizure by creditors. Since these accounts are meant for your retirement and can almost never be reached by your creditors, taking the money out doesn’t make any sense. The money was meant for your retirement, leave it there.
Making matters even worse, taking money out of these accounts will involve incurring considerable tax liability in order to repay debts. Going into debt to pay off debt just doesn’t make any sense, particularly when you substitute the IRS for a run of the mill unsecured creditor. You have to think are you really trying to do the best thing for you or your family or are you just trying to avoid embarrassment that you associate with bankruptcy? See an attorney to discuss this option before doing so.
7. I owe money to the IRS, how does Chapter 13 help me?
Bankruptcy may enable you to completely discharge your debts to the IRS and state departments of revenue. Please feel free to contact our office if you want to determine whether the taxes can be completely eliminated without any repayment. Even if your taxes are not immediately dischargeable, Chapter 13 will allow you to repay the taxes through your Chapter 13 Plan. The advantages of doing so are significant.
You will be able to repay them at zero percent interest over a long period of time without any collection activity from Oregon or the IRS. Moreover, most tax penalties will be discharged in your Chapter 13 Bankruptcy. Finally you will normally be able to repay them at the expense of your other creditors. Many of our clients file Chapter 13, paying very little up front, and then end up just paying the IRS back over a few years, interest free and nothing back to their other unsecured creditors.
8. How Can the Fair Debt Collections Practices Act Protect Me Against Abusive Collectors?
It’s important to understand two important things about the FDCPA. First, it only applies to consumer debts. A consumer debt is one that was incurred for personal, family, or household purposes. In other words, business debts are not covered by the FDCPA.
Second, the FDCPA only applies to someone who is collecting the debt of another. For example, if you have an unpaid Capital One credit card and Capital One itself is trying to collect the debt, the FDCPA doesn’t apply.
With those two things in mind, it is a violation of the FDCPA if a debt collector:
• Lies or misleads you;
• Yells, shouts, swears, calls you names, or uses racial slurs;
• Calls your friends, family, co-workers, or neighbors and tells them that you owe a debt
• Threatens to sue you or garnish you when they have no intention to do so
• Calls you at work after you’ve told them not to
• Tells you that you can be arrested or go to jail if you don’t pay the debt
• Calls you when they know you have a lawyer
• Threatens you with violence
• Calls you—or even just causing your phone to ring—repeatedly
• Any other conduct that is unfair, untrue, undignified, or disrespectful.
If a debt collector violates the FDCPA, you have the right to sue them, and if you win the case, receive up to $1,000.00 plus any actual damages that you’ve suffered. Moreover, the debt collector must pay your attorneys’ fees and any out-of-pocket costs.
In other words, if you win your case, you get $1,000, any provable actual damages, a free lawyer, and your litigation costs paid for.
If you live in the Seattle area and you’re getting debt collection calls or letters, here are a few things you should do to protect your rights:
• Save every letter you get from a debt collector, including the envelope
• Take detailed notes of every conversation you have with a debt collector. Use the attached form and feel free to make more copies. Include notes of anything that just doesn’t feel right to you
• Save every voice-message left by a debt collector
• When you come in for your bankruptcy filing appointment bring in your debt collector contact records with you. We can help figure out whether a debt collector has violated the FDCPA. If they have, we can discuss whether suing them is a good option for you.
9. Can I eliminate IRS or state tax in bankruptcy?
The answer to this question is that you can eliminate them in more cases than you might think. Even when you can’t eliminate them entirely, you can get better treatment of them in bankruptcy.
There are certain conditions that must all be met in order to completely discharge state or federal taxes
1. It has been over three years since the returns were last DUE (including extensions) to be filed; and
2. Your tax returns were either filed in a timely manner or it has been at least 2 years since the returns were filed; and
3. There was no fraud involved or attempts to evade the tax; and
4. The taxes have not been assessed within the last 240 days.
As you might suspect, there are many exceptions and events which can extend the above rules. Never conclude, without having transcripts analyzed by an attorney familiar with tax discharge issues, that your tax liability will be discharged in your bankruptcy.
Remember that even if you cannot fully discharge your tax liabilities in bankruptcy, you may be able to discharge some of it. Through a Seattle Chapter 13 Bankruptcy, you will likely obtain a much more favorable repayment plan for your tax debt than you would ever get outside of bankruptcy.
10. Do I have to Attend a Bankruptcy Hearing in Seattle or Tacoma?
The “341(a) meeting is often called the “meeting of creditors” Section 341 of the Bankruptcy Code requires every debtor to actually appear at a meeting of creditors and to submit to an examination under oath. The meeting is held outside the presence of the judge. It is almost never held in a courtroom. Your specific location depending on county can be found here.
Your bankruptcy case may be dismissed if you fail to show up for the hearing. It is usually scheduled between four and five weeks after the new petition is filed. The Court will mail you an official notice setting the exact time, date and location of this hearing.
The hearing permits the trustee to review your petition and schedules with you and your attorney personally. You are required to answer questions under penalty of perjury. Most if not all of these questions will relate to any transfers of property that may have taken place in the two years prior to filing bankruptcy, the extent of your income and the value of your personal property. As long as these areas have honest in your answers in your bankruptcy petition, you have nothing to worry about. Our office can send you a link of a video of a 341 hearing so that you can see how one of these hearings is conducted.
The hearing is called the “meeting of creditors” because creditors are allowed to attend and ask questions, but they almost never do. The hearing itself usually lasts for a few minutes. If the trustee needs additional information at the close of the hearing, a continued 341 hearing will be set for another date. Often this hearing will be cancelled if the missing information is supplied to your attorney promptly.
11. If I file a Chapter 13 bankruptcy, does that mean that I have to repay all of my debts?
Unless you make enough money and your expenses are low enough to allow for 100% repayment during a three or five year period, Chapter 13 rarely requires you to pay more than an affordable fraction of your debt – and interest free at that.
The fact is most Seattle area Chapter 13 debtors pay back dimes or quarters on the dollar to their unsecured creditors. In many cases where the monthly budget is needed just to pay off a reduced monthly car payment or taxes at zero percent interest, the other creditors do not have to be paid at all.
The fact is there are many circumstances that make Chapter 13 a more affordable and better choice even for people who qualify for Chapter 7.
12. Can filing for Chapter 13 bankruptcy help me save my house?
In addition to stopping a foreclosure in its tracks, a Chapter 13 bankruptcy can help you save your house a few different ways. First, a Seattle Chapter 13 Bankruptcy filing enables you to pay off the back-owed arrears interest free over a five year period without any fear of reprisal. So if you are $12,000 behind on your house, you catch up at $200 per month over five years. Second, a Chapter 13 Bankruptcy filing can give you some more time to try to work out some kind of modification with your lenders. Let’s say your house is in foreclosure and you need to stop it so that you can get some more time to work out a modification before taking on the obligation to pay back any arrears. A Seattle Chapter 13 filing may allow you to do just that. Finally, let’s say your house is worth less than what your owe on your first mortgage and it’s the burden of making payments on your second that’s killing you. A Chapter 13 bankruptcy filing will enable you to eliminate the second mortgage.
13. What is the Court filing Fee for a Bankruptcy in Seattle and Tacoma?
In the Western District of Washington, the court charges a filing fee of $281 for a Chapter 13 Bankruptcy in addition to your attorney fees. This money is owed to the court. In Washington, only $100 must be paid prior to filing and the other $181 can be paid through your Chapter 13 Plan.
In the Western District of Washington, the court charges a filing fee of $306 in addition to your attorney fees. The Court requires that you pay at least $100 prior to filing and then will take the $206 within 90 days of your case being filed.
14. How do I Pay an Attorney to enforce my rights under the Fair Debt Collections Practices Act?
If we agree to represent you in a Fair Debt Collections Practices Act matter, you don’t pay anything to us unless we prevail. Not only are our fees paid by your collector, but we will even front the filing fee for you so that money is not an object to enforcing your rights.
15. I have already been sued by a creditor. Will bankruptcy prevent them from winning a judgement against me?
Just because a creditor has now sued you in Clark County, or any other Washington County for that matter, the fact that it has filed a complaint does not entitle it to any special rights once your bankruptcy has been filed. As soon as your bankruptcy is filed, the collection lawsuit is stayed. Frankly, filing bankruptcy is often a better and cheaper way to deal with the lawsuit than attempting to litigate it.
If you have been sued, consult with one of our bankruptcy attorneys immediately. If you own real estate or have a considerable amount of unsecured debt, filing bankruptcy prior to judgment is likely a good idea. Even if the creditor has already obtained a judgement, a bankruptcy filing will stop your creditor from attempting to empty your bank account, garnish your wages or lien your home.
16. Can I pick and choose who I want to put in my bankruptcy?
You are required by law to list every single one of your creditors, including friends and family members who have loaned you money. Intentionally leaving out a debt is a serious matter that can result in a denial or revocation if the Seattle Bankruptcy Trustee finds out later.
Many Clark County bankruptcy filers want to leave out their mortgage lender or car creditor because they believe that listing them will result in losing their house or car. Nothing could be further from the truth. In fact there are specific provisions in the bankruptcy schedules that allow you to tell your mortgage or auto lender that you want to keep the collateral and keep making payments.
Other Seattle filers feel a moral obligation to pay a specific debt or are worried that a trusted family dentist will stop working with them once the bankruptcy is filed You are not, however, barred from continuing to pay these debts after your bankruptcy is completed.
17. I am way behind on car payments and I am afraid that my car is going to get repossessed, what do I do now?
The good news is that a Chapter 13 Bankruptcy filing can not only stop the repo man from taking your car, but it will give you a way to either catch up on your payments and under some circumstances actually lower the principal on your car loan and lower the amount that you pay back. Even if the car has already been taken, we can almost always get it back provided that you act quickly. Even if you don’t want the car back, the fact is most of these cars are sold off for a song and then the creditor sues you for a ridiculous amount afterwards. This has become quite an industry. Filing a bankruptcy will almost always keep the car creditors from collecting from you after the repo.
