Bankruptcy relief is based on federal law. There are two types of bankruptcy individuals can file: Chapter 7 and Chapter 13.Chapter 7 is a fast liquidation track, in which assets are surrendered and sold to repay debts. Often, there are no or few assets turned over to the bankruptcy trustee for this purpose. Chapter 13 is a reorganization case with a longer track, during which a debtor has a repayment plan for three to five years to pay a proportional amount of creditors' claims. Debtors usually have a home and/or car they want to keep, and bankruptcy gives them the ability to restructure rates and timelines for repayment.
A debtor's residency in Washington impacts the bankruptcy filing process.
Where Can You File Bankruptcy?
Washington's Bankruptcy Court has two districts, each with two divisions:
- The Western District has a Seattle Courthouse located at 700 Stewart Street, No. 6301, and a Tacoma Courthouse located at 1717 Pacific Avenue.
- The Eastern District has a Spokane Courthouse located at 904 West Riverside Avenue, Suite 304, and a Yakima Courthouse located at 402 East Yakima Avenue, Suite 200.
The Bankruptcy Code requires debtors to file bankruptcy where they reside.
Eligibility for Chapter 7
The Bankruptcy Code's criteria determine a debtor's eligibility to file bankruptcy and type of case debtor can file. If your average monthly income is less than Washington's median income, you can file Chapter 7. If your average monthly income is greater than or equal to Washington's median income, you cannot file Chapter 7 unless you pass a stringent means test.
Chapter 13 Plan Duration
If your average monthly income is less than Washington's median income, your Chapter 13 plan cannot be longer than 36 months, unless the Bankruptcy Court determines “good cause” exists to extend your plan up to 60 months. If your average monthly income is greater than or equal to Washington's median income, your Chapter 13 plan must usually be 60 months.
What are bankruptcy exemptions? Exemptions specify property a debtor can keep in a Chapter 7 case outside reach of creditors and bankruptcy trustee, or how much a debtor must pay creditors in Chapter 13.
In Washington, debtors may either use the state's exemptions or the federal bankruptcy exemptions in the Bankruptcy Code. However, debtors cannot pick favorites from each list and combine or mix exemptions. If debtors opt to use the state's exemptions, they can use applicable federal non-bankruptcy exemptions, though.
Washington's state exemptions encompass homesteads, personal property, insurance, pensions, public benefits, tools of trade and wages, as well as miscellaneous categories. There are residency rules for state exemptions. They mandate you reside in the state for a required term. You usually have to live continuously in the state for two years before filing bankruptcy. There are also limits on homestead exemptions for property acquired less than four four years prior to bankruptcy.
This article provides a brief, general introduction to filing for bankruptcy. You should contact a Washington bankruptcy lawyer for legal advice regarding your case.