• It is recommended to review your personal financial situation with a bankruptcy attorney, if you are experiencing any of the following:
• Purchasing basic home supplies, such as groceries or medicine on credit cards
• Using one credit card to pay off another
• Making only minimum payments to credit cards
• Falling behind on mortgage or auto payments, or paying on “the last day”
• Sudden termination of a credit card or credit line or a jump in the interest rate.
• Financial concerns are beginning to affect your health, work or family relationships
• Little or no savings

A bankruptcy attorney can help you review all of your options, such as debt negotiation and mortgage foreclosure defense, not just bankruptcy. In some cases, a visit to an attorney can help you avoid bankruptcy and look at other options. If you do qualify for for bankruptcy, your attorney will help walk you through the different chapters of bankruptcy available to you and discuss the pros and cons of each.

Although all debts are not dischargeable, the majority of your debts can be discharged through Chapter 7, especially if you do not have any extraordinary circumstances.  Among your dischargeable debts, only your debts that arose before the date of filing for Chapter 7 will be discharged.  However, you are still responsible for any debts that occur after filing your petition but before receiving a discharge.

Bankruptcy Code 19 list 19 different types of debt that cannot be discharged.  If it does not fall into one of these categories it is dischargeable.  Below is a list of the most common dischargeable types of debt.  

Common Categories of Dischargeable Debt

• Credit card charges- including overdue and late fees
• Medical bills
• Utility bills- past due amounts only
• Personal loans from friends and family members
• Collection agency accounts
• Certain tax penalties and unpaid taxes
• Business debts
• Auto accidents claims – except those involving drunk driving
• Dishonored checks
• Money owed under leases – includes past due rent
• Attorney fees – except child support and alimony awards
• Civil court judgments
• Repossession deficiency balances
• Social security over payments
• Veterans assistance loans and over payments
• Revolving charge accounts

*Student loans are generally not dischargeable.

If you are filing for chapter 13 bankruptcy, then yes, you can repay all or a portion of your debts through a repayment plan over a period of three to five years.  In exchange, you may be able to keep your property, assuming you continue to keep up with payments on any loans, and keep making your repayment plan payments.  Your plan will also have to ensure that your creditors will will get as much through Chapter 13 bankruptcy as they would have received in a Chapter 7 bankruptcy.  For example, if your own a non-exempt real estate valued at $15,000 your plan will have to pay your unsecured creditors at least $15,000.

In Chapter 7, you have to ask the bankruptcy courts to discharge most of your debts that you owe.  In exchange for this, the bankruptcy trustee can take any property you own that is not exempt from collection, sell it and distribute the proceeds to your creditors.  Which property is exempt from collections depends on the state you live in.  Typically, exemptions include some equity in your home, car, retirement funds, clothing, most household goods, appliances, books and musical instruments.

In Washington, you are able to exempt or protect certain properties when you file for bankruptcy.  You will be able to keep these exempt properties after you have filed for divorce.  There are several areas that these exemptions fall into, and it is best to consult with your lawyer to determine what exemptions apply to you.

New bankruptcy laws have made filing on your own very complicated and expensive.  A bankruptcy attorney now has to spend more time on validating each client’s case.  While it is not required to hire a bankruptcy attorney to file, the changes in the laws have made completing bankruptcy on your own more complicated.  A qualified bankruptcy attorney will guide you through your financial situation and help schedule all court appearances and complete necessary documentation.

Your employer cannot legally fire you because you filed for bankruptcy.  Bankruptcy laws do not protect you from being laid off or terminated if your company is downsizing or reducing its workforce in an otherwise legally acceptable manner.

Generally speaking, you are unable to get discharge student loan debt.  Under bankruptcy laws student loans must be paid at 100% regardless of bankruptcy status.  Any failure to pay these loans back can result in aggressive collection efforts, including the seizure of tax returns and wage garnishments.

A Qualified Domestic Relations Order (QDRO) is an order that is included in a divorce settlement when dealing with a person’s retirement fund.  The QDRO establishes your soon to be ex, the right to receive a designated of your retirement benefit plan.

A QDRO will ensure that you receive all of the benefits awarded to you in a divorce.  You will run the risk of losing your rights if your former spouse dies, remarries, retires is fired or quits, takes out a loan secured by the plan account or withdraws funds from the plan prior to retirement.

A QDRO can’t tell you that.  You, your ex-spouse and the courts will determine how your benefits will be split up.

There are several types of retirement plans- profit sharing, 401(k), pensions, employee stock ownership plans and deferred compensation.  Some make lump payments and others a monthly payment after retirement age.  QDRO’s define how much your former spouse is eligible for.  The QDRO must be drafted in a way that is consistent with the terms of both the retirement plan and the divorce decree.  This can get very complicated quickly, and should be handled by someone who understands QDROs and how they are applied to the particular plan.

A QDRO is generally required for each retirement plan that is being divided. It is not uncommon for a party to have more than one plan to be split in the divorce. For example, a 401(k) and a defined pension may each require a separate QDRO, even if they are both administered by the same employer.

Generally, the process takes anywhere from three to six months, assuming everything goes well and both sides are cooperating.

Although the point of a Qualified Domestic Relations Order is to reduce the impact of taxes, retirement distribution payments following implementation of a QDRO may be subject to tax payments and penalties.  The specific tax consequences vary depending on each payee’s age and the state where distribution is occurring.