Are you stressed out? Of course, we all are. But if you're in a serious amount of debt, chances are your stress levels are higher than the average. Nearly half of American households* are actually spending more money anually than they are making. Mounting credit card debt can create a serious amount of stress in your life, especially if you get behind and creditors begin to hound you. Though the word bankruptcy has a scary and shameful stigma, for many it is the only way to pull themselves out from under the mountain of debt they have accumulated.

In the past decade, the number of personal bankruptcies has doubled. American credit cardholders have an average of 7.6 active cards and approximately $8000 in debts. Many people have reached the point where they are just completely overwhelmed. When this happens, bankruptcy may be the only realistic solution to clean the slate and then start again, smarter. There are two types of bankruptcy to choose from in the United States: Chapter 7 and Chapter 13. This article is not meant to substitute for the advice of an attorney, it is just provided for informational purposes.

Chapter 7 Bankrupcty

The reason why Chapter 7 Washington State bankruptcy is referred to as liquidation is because the process will convert your non-exempt assets to cash and use those to pay off some of your outstanding debt. Though this is the first part of the process in a Chapter 7 bankruptzy, the majority of people who apply for Chapter 7 do not actually have any non-exempt assets. For this reason, there is actually no liquidation.

Choosing a Chapter 7 Washington State bankruptcy usually means that your discharge will be received within a few months. There are certain debts that cannot be discharged. These include child support, student loans and certain tax debts. Debts that will be discharged are credit cards, medical, personal loans, judgments regarding car accidents, money owed for repossessed vehicles, some older tax debts, payday loans and wage or other garnishments.

Chapter 13 Bankruptcy

A Chapter 13 Washington State bankruptcy is often called a reorganization bankruptcy. This type of Washington State bankruptcy allows individuals to pay off certain types of outstanding debts over a three to five year period. For those individuals who have non-exempt assets they do not want to liquidate (houses, cars, boats, etc.), the Chapter 13 bankruptcy is the preferred choice. People with predictable income available after their basic expenses are paid each month might also choose this type of Washington State bankruptcy.

With a Chapter 13 Washington State bankruptcy you can prevent a foreclosure on your house, make up missed payments for cars or mortgages, pay back taxes and stop interest accrual on various tax and other debts. Once the plan is established, if you stick to it, your remaining dischargable debt will be released. Repayment amount must be high enough to match or exceed the amount of money a creditor would have received in the case of a Chapter 7 bankruptcy.

You must have a dependable income source in order to file Chapter 13 and you must have enough disposable income left after basic expenses to follow the repayment plan. If you have secured assets like a house or a car that you are not willing to liquidate in order to pay your debts, then Chapter 13 bankruptcy might be the right choice for you. However, for the majority of individuals wanting to clear their debts and start fresh, Chapter 7 bankruptcy is the better option.

Requirements for Washington State Bankruptcy

Though Chapter 7 bankruptcy and Chapter 13 bankruptcy have different qualification requirements, they do have some required actions in common. For both types of bankruptcy, you will be required to attend a credit counseling session prior to filing for bankruptcy and a debtor education course before your bankruptcy can be finalized.

The credit counseling session is an opportunity for you to review your finances with a qualified individual, discussing your reasons for wanting to file for Washington State bankruptcy and also other options available to you. The credit counseling must be provided by a bankruptcy court-approved agency; your lawyer will be able to help you make sure you choose correctly.

Attending a credit counseling session is mandatory. If you do not attend, your bankruptcy will most likely not move forward. Though there is a possibilty for exemption, the reality of receiving one is very rare. The good news is, the session is short (usually about thirty minutes) and you can choose to fulfill this requirement in person, via phone or online. Remember to consult your attorney or bankruptcy court trustee to be sure you are attending an approved session.

After your bankruptcy paperwork has been filed, you will be required to attend a debtor's education course. Again, this course must be administered by a court-approved agency and can be done in person, online or on the phone. The purpose of this course is to get you back on track financially so that you make the most out of your "clean slate." This course will help you to create a realistic budget, discuss your financial plans and teach you the basics of healthy financial management. The courts want to help you to the best of their ability to make sure you don't return to your former stressful level of debt.

Bankruptcy Alternatives

There are some alternatives to bankruptcy that might be more appropriate for some individuals. One of these alternatives is a debt consolidation loan. You can either get a secured debt consolidation loan if you have assets with equity. Or, if you have no equitable assets, you can get an unsecured bank loan.

Another alternative to Washington State bankruptcy is credit counseling. With credit counseling, you will work with an agency to consolidate and settle your debts. A plan will be created and you will make scheduling payments to the counseling service. They will in turn pay your creditors according to the established plan. In most cases, the debt consolidation plan will cease creditors' collection efforts and wage garnishments. Though you will not receive a clean slate at the end of the process, you will be making payments to your debtors throughout the credit counseling process.

Whether bankruptcy is the right option for you or you find another option, dealing with your personal finances doesn't have to be stressful. Just face facts and ask for some help. You'll feel much better than if you try to bury your head in the sand. Hopefully you have found this information on Washington State Bankruptcy helpful.

*According to a 2004 U.S. Federal Reserve survey, 43% of U.S. consumers spend more than they make each year.