About two-thirds of people who file for personal bankruptcy choose Chapter 7 instead of Chapter 13. Chapter 13 requires a payment plan lasting three to five years, during which the individual pays back a large amount of the debt owed. In contrast, a Chapter 7 Bankruptcy Attorney in Tacoma WA helps clients wipe the slate clear of debt, allowing them to quickly have a fresh start.
Which Assets Can Be Kept?
One major downside to Chapter 7 is that the person may have to part with some assets. Many people have already lost most of their assets by the time they face bankruptcy, but some are still holding onto certain valuable belongings. The law allows people to keep fundamental belongings needed to maintain their household and a job. That means the person does not have to give up every bit of furniture or clothing, and one car is allowed as long as it is not of exceptionally high value. These are known as exempt assets.
Items That Must Be Sold
In contrast, this person will not be able to keep a motorcycle unless this is his or her only vehicle. Boats and RVs must go. These assets are sold to pay off creditors to the extent possible. A Chapter 7 Bankruptcy Attorney in Tacoma WA may be able to help clients keep belongings they truly want. For instance, the trustee may arrange it so the individual can buy something back in cash after the bankruptcy process is complete.
Considerations
To keep a house and car under Chapter 7, the person must own these assets outright or be up to date on payments. Otherwise, the bank or financing company has the legal right to foreclose on the real estate and repossess the vehicle. The individual may still be able to work out a repayment arrangement with the vehicle financing company or a loan modification with the mortgage company. This may depend on how far behind the person is in payments and what his or her current income level is. Questions can be answered by a lawyer such as Kevin G. Byrd during a free initial consultation.