Bankruptcy is a major financial step that should never be taken lightly. If you have found yourself in dire financial straits, however, you may benefit from the provisions included in Washington's bankruptcy law. Understanding the rules about bankruptcy can be rather tricky, so we will provide you with a quick primer about the process.
First, if you are considering Chapter 7 bankruptcy, you should know that you will be required to pass a "means test" to determine whether you qualify for that protection. A court will review your income obtained during the six months prior to the filing. Then, that amount is compared to the median income in Washington. Income levels that exceed the median may not be eligible for Chapter 7; instead, those filers may be required to pursue a modified repayment plan under Chapter 13 protection.
After the courts have determined that you are eligible for Chapter 7 bankruptcy, the bulk of your work begins. You must be able to paint a comprehensive picture of your financial situation to the courts, including statements of income and expenses. You may be required to produce documents dating back two years or more. The bankruptcy court will want to see accounts of your monthly living expenses, property holdings, debts and other assets.
Now that your financial profile is complete, you are ready to actually file for bankruptcy. At this time, you may present a list of property that you think should be exempt from the bankruptcy. The courts are not permitted to seize your tools that are used for work, for example, and you are also allowed to keep items such as your wedding ring. You and your attorney will work together to develop this list and present it to the courts.
Although this process may not sound terribly complicated, it can be difficult to maneuver for those who choose to go it alone. A legal and financial team can ease this burden, providing you with the support you need to make it through the process without stumbling. An experienced attorney is a valuable asset during any type of bankruptcy proceeding.
Source: Washington Bankruptcy Law, "Washington Bankruptcy Process" Sep. 22, 2014