Filing for Spokane bankruptcy can be a good option for you, but only if you qualify for relief under the bankruptcy code. Most debt can be completely erased with the filing of the proper paperwork to the Federal Bankruptcy court; this will depend in large part if you decide on/qualify for a chapter 7 or a chapter 13 bankruptcy.
What these options can offer you is peace of mind. Forget about having to deal with ridiculous interest rates, telephone calls at work, garnishments, and just the overall uncertainty that you will be served documents any minute. Most people try to negotiate with creditors, but they will not listen.
Different chapters under the federal bankruptcy code are applied to different situations, for example:
Chapter 7: Liquidation (liquidates all assets and debts)
Chapter 9: Bankruptcy of Municipalities
Chapter 11: Reorganization (or Liquidation for Business)
Chapter 12: Family Farmers Bankruptcy
Chapter 13: Wage Earner Plan (individual debt reorganization plan)
Chapter 15: Border Bankruptcy (i.e. Canada assets)
Most families and single people try to qualify for a chapter 7 bankruptcy, as this chapter allows for the greatest discharge of debt. Chapter 13, for instance, sets an unsecured dischargeable debt limit of $336,000, while chapter 7 does not have a limit for unsecured debt.
If you are thinking about filing a Spokane bankruptcy, you will probably want to determine (or we can help you determine) if you qualify for chapter 7. To do this, you will need an accurate account of the prior six months' gross income.
Gross income includes help from family, gifts, IRA withdraws, or any other source of income.
The average gross income of those six months (referred to as the current monthly income) must be multiplied by twelve to arrive at your average gross annual income. To qualify for Chapter 7, the average gross annual income must be below the medium income table for the relevant family size in Washington.
*For families with more than 4 members, add $7,500 per each individual to the 4-member family size amount.
If the result is under the median income, you could file for chapter 7, or you could file under a 36 month "best effort" chapter 13.
If, however, the result is AT or ABOVE the median income for the pertinent family size, you must undergo a "means test." In addition, if you are filing chapter 13, you must do a 60-month "best effort" plan. If an individual or family fails the means test, then a chapter 13 must be filed.
The means test applies if an individual or a family is over median income, but they have very little left on which to live on (i.e., $100 per month). If this is the result, they will still qualify for chapter 7, and avoid chapter 13.
Remember, if your average gross annual income is below the median income for your family size, you most likely will qualify for chapter 7 or chapter 13 (your choice).