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Do you have questions about filing bankruptcy in Washington? If so, Ascend wants to help. In this guide to filing bankruptcy in Washington, we answer the most common questions people have about Chapter 7 and Chapter 13 cases. We also provide links to resources and additional information you can use as you explore ways to get out of debt quickly and affordably. 

1) Chapter 7 vs Chapter 13 Bankruptcy in Washington

A common question is the differences between Chapter 7 and Chapter 13 bankruptcy in Washington, so we will cover some of the key differences.

Chapter 7 Bankruptcy in Washington

Filing Chapter 7 bankruptcy in Washington can get rid of your credit card debts, medical bills, personal loans, most personal judgments, and old rent and utility bills. However, you cannot get rid of alimony, child support, student loans, and most income taxes.

Most debtors (the person who files the bankruptcy case) keep all their property when they file a Chapter 7 case. Some debtors might lose property if bankruptcy exemptions do not fully cover the property, but it is usually rare. Debtors who lose property in Chapter 7 generally reduce more debt when they voluntarily give up homes or cars than when the property is sold in a Chapter 7 bankruptcy auction.

For the most part, Chapter 7 cases in Washington are no-asset cases, meaning the debtors keep their property. A typical no-asset Chapter 7 case can take six months to complete, from start to finish. For additional information about Chapter 7 cases, read our Chapter 7 Bankruptcy Process guide.

Chapter 13 Bankruptcy in Washington

A Washington Chapter 13 bankruptcy case can help you prevent repossessions. It can also stop foreclosures to keep your cars and home. It can help you catch up on back alimony and child support while getting rid of back tax debt. Through a Washington Chapter 13 plan, you might also be able to lower your car payments and get rid of unsecured debts for pennies on the dollar.

A Chapter 13 plan generally takes five years to complete. However, some debtors may qualify for a three-year Chapter 13 plan. Many factors go into the calculation of a Chapter 13 plan, including your income, debts, expenses, and assets. If you have property that is not covered by exemptions, you can also protect assets in Chapter 13 from a bankruptcy auction. 

Do you want more information about filing Chapter 13 bankruptcy in Washington? If so, check out our Guide to Chapter 13 Bankruptcy. You can also try our free Chapter 13 calculator to estimate what your payments might be if you file Chapter 13 in Washington.

2) Chapter 7 Qualification in Washington

The Means Test is a bankruptcy form the government requires in both Chapter 7 and Chapter 13 cases. The form calculates your annual median income by using your income during the prior six months to calculate an average monthly income.  Your annual median income is compared to the annual median income in Washington. If you earn more money than the average median income for a household of your size, you “fail” the Means Test. 

The Means Test has a second section that calculates your disposable income. Disposable income is the amount of money you have each month after deducting your living expenses. If your disposable income is low enough, you might still qualify for a bankruptcy discharge under Chapter 7. Factors used for calculating the Means Test include data from the Census Bureau and the Internal Revenue Service. Please note that the amount of the annual median income also changes periodically. You can find updated Washington means test figures for cases filed on or after November 1, 2020, here or use the calculator below that uses the current figures.

3) Washington Bankruptcy Exemptions

Bankruptcy exemptions allow debtors to keep certain property when filing for bankruptcy relief. The exemptions prevent people from using the net equity in certain property to repay unsecured creditors in Chapter 7. The Chapter 7 trustee can sell property with non-exempt equity at a bankruptcy auction. In a Chapter 13 case, non-exempt equity can increase the amount of the Chapter 13 plan payment.

The federal bankruptcy exemptions are in 11. U.S.C. §522. NCLC has a list of the federal bankruptcy exemptions on its website. The Bankruptcy Code allows states to enact and use state bankruptcy exemptions. Some states allow debtors to choose between federal and state bankruptcy exemptions. 

Washington allows debtors to choose between federal and Washington bankruptcy laws. However, you must live in Washington for at least 730 days before filing the bankruptcy petition to claim Washington bankruptcy exemptions. Common Washington bankruptcy exemptions include:

  • Homestead exemption $125,000
  • Vehicle exemption $3,250
  • Tools of the trade exemption $10,000
  • Clothing and jewelry exemption $3,500
  • Household goods exemption $6,500

It is important to carefully compare the exemptions to determine which set of bankruptcy exemptions provides the best protection of assets in bankruptcy. Bankruptcy exemption amounts are subject to change.

4) Washington Credit Counseling and Debtor Education Courses

Before filing a Chapter 7 or Chapter 13 in Washington, you must complete a credit counseling course. You must also complete a debtor education course after filing for bankruptcy relief. Each of the bankruptcy courses is available online for a small fee.

However, the companies that provide bankruptcy courses must be approved by the United States Trustee’s (UST’s) office. The UST’s website keeps a list of the approved Washington bankruptcy course companies.

5) Bankruptcy Courts and Trustees for Washington

Washington has two bankruptcy districts.

The Western Bankruptcy District of Washington has courts located in Tacoma and Seattle. 341 Meetings for the Western District of Washington are held by the Chapter 7 or Chapter 13 trustee assigned to the case, and they can be held in several locations. 

The Eastern Bankruptcy District of Washington has offices located in Spokane and Yakima. The mailing address for the Eastern District of Washington is PO Box 2164, Spokane, WA 99210-2164. 341 Creditor Meetings for the Eastern District of Washington take place in Spokane, Richland, Yakima, and Wenatchee.

Bankruptcy trustees are assigned based on the district and division of the case filing. Washington Chapter 7 trustees and Washington Chapter 13 trustees administer the bankruptcy estate and conduct the 341 Meeting of Creditors. In a Chapter 13 case, the Chapter 13 trustee receives the bankruptcy plan payments and pays creditors based on the terms in the confirmed Chapter 13 plan.

Should I file a Chapter 7 bankruptcy in Washington?

The first question you should understand is whether you qualify for a Chapter 7 bankruptcy in Washington. You can use the calculator below to estimate whether you qualify and compare alternatives:

If you qualify, you are the one to decide whether you should ultimately file a Chapter 7 bankruptcy. What we would recommend is to explore all your debt relief options to make the most informed decision. Ascend has resources and information on various debt-relief options, including our Debt Settlement, Debt Management, and Guide to Debt Consolidation. If you have questions about filing bankruptcy in Washington or other debt-relief options, contact Ascend.

Post Author: Ben Tejes

Ben Tejes is a co-founder and CEO of Ascend Finance. Before Ascend, Ben held various executive roles at personal finance companies. Ben specializes in Chapter 13 Bankruptcy, Debt Settlement, Chapter 7 Bankruptcy and debt payoff methods. In his free time, Ben enjoys spending time going on adventures with his wife and three young daughters.

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