Bankruptcy: an overview

   Bankruptcy is a Federal Court process designed to help consumers and businesses eliminate the debts (Chapter 7), or to repay some or all of them under the protection of the bankruptcy court (Chapter 13).  Bankruptcy roots can be traced to the Bible: “At the end of every seven years you must cancel debts.  This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite.  He shall not require payment from his fellow Israelite or brother, because the Lord’s time for canceling debts has been proclaimed.” (Deuteronomy 15:1-2).

 

   In all bankruptcy cases, the individual filing the bankruptcy petition is called a Debtor, and the person or company to whom the Debtor owes money is called a Creditor.  Bankruptcy cases are initiated by filing a bankruptcy petition with the bankruptcy court.  The bankruptcy petition typically contains 30-35 pages, including a list all creditors and a list of the real and personal property owned by the debtor.  It also contains a Statement of Financial Affairs, and a schedule of the debtor’s income and expenses.

 

   Bankruptcies can generally bedescribed as either “liquidation” or “reorganization” proceedings.  A liquidation bankruptcy is called a Chapter 7.  Under Chapter 7 bankruptcy, a consumer or business asks the bankruptcy court to eliminate, or discharge, the debts owed.  Certain debts cannot be discharged.  In exchange for the discharge of debts, if a consumer has non-exempt property, it is sold or liquidated, and the proceeds are used to pay off creditors.  Exemptions which define property that a debtor is allowed to retain are very generous.  It is, therefore, rarefor a debtor to lose any assets, particularly if their bankruptcy is handled properly.

 

   While there are several types of reorganization bankruptcies, most consumers who have secured and unsecured debts within certain dollar limits can file for Chapter 13.  In a Chapter 13 bankruptcy, the debtor files a plan with the bankruptcy court proposing how the creditors will be repaid.  Some debts must be paid in full; others only require a percentage to be paid.  Some debts are not paid at all with a Chapter 13 bankruptcy proceeding.  Some debts are paid with interest; others may be repaid at no interest.

 

    All debtors must have filed IRS tax returns, or a substitute for a tax return, for the last four (4) years, and have copies of these returns available for review by the bankruptcy trustee who is appointed in their case.  Debtors must also be able to provide verification of all income received during the six (6) months prior to their bankruptcy filing.

Law Office of George Peter Rose

417 South “G” Street

Tacoma, WA 98405

Phone: (253) 572-1657

Fax: (253) 272-1472

The United States Bankruptcy Court is held in the federal courthouse at historic Union Station for cases filed in the Western District of Washington at Tacoma.

Over 25 Years Bankruptcy Experience

While the information presented in this web site is accurate as of the date of publication, it should not be cited or relied upon as legal authority.  It should not be used as a substitute for reference to the United States Bankruptcy Code (title 11, United States Code) and the Federal Rules of Bankruptcy, both of which may be reviewed at local law libraries, or to local rules of practice adopted by each bankruptcy court.  Finally, this web site should not substitute for the advice of competent legal counsel.  If you have further questions, please contact the Law Office of George Peter Rose at (253) 572-1657 or email us at prose@roselaw.comcastbiz.net.

We are a debt relief agency.  We help people file for bankruptcy relief under the Bankruptcy Code.