Chapter 13 Bankruptcy

1. WHAT IS BANKRUPTCY?
   Bankruptcy is a law allowing people a fresh start if they get buried under too many debts. Bankruptcy dates back to Roman times and the word literally means “broken bench” based on the Roman custom of publicly breaking the workbench of any citizen unable to meet his obligations. Some notable bankruptcies in history include the Panama Canal, The Pony Express and President Ulysses S. Grant. More than 10,000 people filed bankruptcy in the Eastern District of Washington last year.


2. WHAT IS A CHAPTER 13 AND WHEN WOULD I CONSIDER THAT?
   Chapter 13 is a type of bankruptcy which you file a plan which purposes how you will repay your creditors out of your excess income on a monthly basis over a three to five year period. Chapter 13 Bankruptcies are useful if you have significant non-exempt assets which will be lost in a regular bankruptcy filing. If you need relief from traffic fines which re causing your driver’s license to be suspended or if you have problems with student loans or other debts of the type listed in question number 6 below. A Chapter 13 requires considerably more work and the cost for filing is significantly higher than a Chapter 7. In addition, you must have a regular excess income over your minimum living expenses for a Chapter 13 to be a feasible alternative.


3. HOW DO I FILE A CHAPTER 13 BANKRUPTCY?
   A person files Chapter 13 Bankruptcy by preparing and filing the appropriate schedules with the United States Bankruptcy Court for the Eastern District of Washington in Spokane (or some other appropriate Bankruptcy Court) along with paying the filing fee of Two Hundred Seventy Four Dollars ($274.00).


4. WHAT HAPPENS AFTER I FILE?
   Within ten (10) business days of filing, the Bankruptcy Court will mail out a notice to all creditors indicating that you filed bankruptcy and advising them that they can take no further legal action to collect their debts. This effectively means you will not have to pay any of those debts no matter what stage of collection process they are in and even if they have already obtained a judgment.