There are many contributing factors that are associated with financial adversity. Some common reasons include heavy debt, divorce, serious illness, foreclosure, or losing one’s job.
In fact, the average credit card debt in District of Columbia is a whopping per person. In addition, foreclosure rates are also as staggering, one out of every DC homes is currently in foreclosure.
If you can relate to the scenarios above, then you are probably dealing with other personal problems that come with dealing with debt. The fear of losing your car, home or your money can drain a person emotionally & physically. You may have even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are definitely not alone. Just under a million people file bankruptcy each year in the United States. Bankruptcy is a means established by the US Government to help struggling Americans find relief from unpayable debt. You may want to consider filing bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the opportunity to resolve their debt while still working with lenders in a legal capacity. It is initiated by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ with a fresh new start.
Throughout the bankruptcy, a trustee is appointed to oversee the deatils of the case. His or her duties will vary and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that District of Columbia ranks #49 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 109 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
People in District of Columbia, who claim bankruptcy, can choose to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information
Chapter 7
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
Chapter 13
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. The individual will be allowed to retain his or her valuable assets over a 3- to 5-year time frame.
In order to determine which chapter an individual can file, they will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
All law references are to the District of Columbia Code.
Homestead
- Any property that the debtor or debtor’s dependants uses as their residence; can include co-op. Property held as tenancy by entirety may be exempt against debts owed by only one spouse.
Personal Property
- Motor vehicle to $2,575; household furnishings, goods, clothing, appliances, books, pets, or musical instruments up to $425 per item and $8,625 total; health aids; family pictures; family library to $400; provisions for 3 months; wrongful death payment; payments for the loss of the debtor or a person depended on including pain and suffering payments.
- Co-op association holdings up to $500.
- Uninsured motorist benefits.
- Residential condominium deposit.
- Cemetery and burial funds.
- Higher education tuition savings account.
Wages
- Nonwage earnings, including pensions, up to $200 per month for head of family; or $60 per month otherwise for up to two months.
- Minimum of 75% of earned but unpaid wages or pension payments. Judge may authorize more for low-income debtors.
Pensions
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Judges.
- ERISA-qualified retirement plans, including IRAs. Stock bonus, pension, or profit-sharing plans.
- Public school teachers.
Public Benefits
- Public assistance.
- Crime victims compensation.
- Social Security benefit; veteran’s benefits.
- Workers’ compensation.
- Unemployment compensation.
Tools of Trade
- Notary public seals and documents.
- Implements, professional books, or tools of the trade up to $1,625; library, office furniture, and implements of a professional person or artist, up to $300.
- Mechanic’s tools up to $200.
Alimony and Child Support
- Alimony or child support.
Insurance
- Life insurance payments; Unmatured life insurance (but not credit life insurance).
- Other insurance proceeds up to $200 per month for a maximum of 2 months if they are for the head of family; up to $60 per month for all others.
- Life insurance proceeds. Disability benefits.
- Group life insurance policy or proceeds.
- Life insurance proceeds that are exempt from being used to pay creditors as per a clause in their contract.
- Fraternal benefit society benefits.
Wildcard
- Any property up to $850, plus an additional $8,075 if you don’t use the homestead exemption.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
Current laws do not require filers to hire an attorney to declare bankruptcy relief. Individuals are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not for the faint of heart.
Filing Bankruptcy without an Attorney
A simple Chapter 7 Bankruptcy that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Generally speaking, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy attorney is there to represent you and not in the interest of creditors.
An attorney is also keenly familiar with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in DC, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In District of Columbia
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In District of Columbia
Additional District of Columbia Resources
Foreclosure Help Program
HomeReliefProgram.com
1-877-494-9007
Disability SSDI Benefits
DisabilityApproval.org
1-888-640-7856