Most people in the Seattle area that file for bankruptcy hire a bankruptcy lawyer, defined under the federal bankruptcy law as a Seattle debt relief agency. But even if you retain a Seattle debt relief agency, you’ll find the bankruptcy process far less taxing if you educate yourself about bankruptcy basics. For most debtors, the basics they need to know are those involving a Chapter 7 bankruptcy. This is the section in the bankrupcy law that most debtors file for bankruptcy under. Below you’ll find some essential Chapter 7 points, some of which you may want explained to you in more detail by a Seattle debt relief agency.
Chapter 7 is often described as a "liquidation bankruptcy.” As your Seattle bankruptcy attorney can explain more fully, the reason for this is that any of your assets that aren’t exempt from the bankruptcy process may be seized and sold, with the sale proceeds used to pay creditors. In fact, often debtors have only exempt assets. When that happens, there’s no liquidation. Instead, a debtor’s unsecured debts are simply discharged. (For questions about the difference between secured and unsecured debts, talk to your Seattle debt relief agency.)
Exempt assets — those you get to keep after bankruptcy — include clothing, household goods and some retirement benefits. Check with your Seattle debt relief agency for a full list of assets exempt from bankruptcy. Your Seattle debt relief agency can also fill you in about dollar limitations for exempt assets.
To be eligible for Chapter 7, a debtor must meet a statutory "means" test that’s been in effect since 2005. Doing the computations required by this test isn’t easy. So you should have the computations made by your Seattle debt relief agency.
Every Chapter 7 bankruptcy proceeding has a trustee. This individual’s job is to pay off your creditors as much as possible. Your Seattle debt relief agency has a very different goal: help you retain as much of your assets as possible.
Most of your debts will be wiped away under Chapter 7. That means you'll no longer owe money to creditors. However, the bankruptcy law provides that certain debts aren’t discharged by bankruptcy; in other words, you still owe the money. Debts that bankruptcy doesn’t wipe out include federal taxes as well as child and spousal support. Your Seattle debt relief agency can describe the other types of debts that you can’t avoid even with bankruptcy.
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