What Happens In A Bankruptcy Consultation?

My consultations are probably a little bit different than most attorneys. I offer a free one-hour consultation. I recommend that you bring as much information on your paycheck stubs and what you owe and your monthly budget. We’ll go over that when you call in and we’ll figure out what you need to bring with you.

We sit down and we talk about what the problem is and what your goals are for filing bankruptcy and then we go through your income and your expenses. We go over what you owe and who you owe, what you want to achieve if you want to keep your car and how we can go about doing that, or even what to do if you’re trying to save a house.

We just basically talk about your finances and how you would like to go forward and what a bankruptcy would do for you. I try not to recommend bankruptcy to people that don’t need a bankruptcy and without sitting down and going through your finances, we don’t know for sure until we’ve actually had that conversation. So I tell people to expect about an hour of sitting down and talking and then figuring out how to go from there and what’s the next step for you.

How Soon Can I Start Building My Credit?

Basically, in a chapter seven bankruptcy, the day after you file bankruptcy it goes back to that “18 Again.” You can start building credit as soon as possible. You will absolutely get credit card offers in the mail the same week that you’re going to your court date with me. I typically recommend that you be responsible.

If you want to start rebuilding slowly, you do things like get a gas card and pay it off every month. We also enroll all of our chapter seven clients in a program called Seven Steps To A 700 Credit Score that will help you get to the point where in about one to two years you will be able to look at buying a house after bankruptcy.

Assuming you follow the program and take the necessary and responsible actions, you can also buy vehicles and get credit cards. We also enroll you into a financial management program so that you can work responsibly and build your credit, but it starts day one after you file your bankruptcy that you would start rebuilding your credit.

How is bankruptcy a fresh start?

A lot of people ask if bankruptcy will fix my credit (that’s my favorite question). Bankruptcy doesn’t fix your credit per se, but it does give you that fresh start because it stops collections. I used to call it the “18 Again Effect.” Your credit starts back where it is when you file bankruptcy (like you’re 18 again), but you are able to rebuild it going forward.

So the creditors that you owed before can’t continue to report that negative collection on there anymore. So it starts from where that zero point again. They can’t continue to try to collect from you. You don’t owe them anymore, so you can start to borrow money and repay it without having to worry about all of the old stuff continuing on your credit report. So that’s how it gives you that fresh start that you can “begin again from 18.”

We also enroll all of our Chapter 7 clients in a program called Seven Steps To A 700 Credit Score that helps you to figure out how to get back to that better credit and go forward from there.

How Did Susan Skelton Get Started In Law And Why?

“I went to law school for not necessarily the noblest of reasons at first. I wanted to make sure that I would not be poor—that I wouldn’t have to depend on anyone else as far as making money—that I could always have an education and go. It went back to the way I was raised.

I had a stay at home mom and my mom didn’t necessarily have the confidence to do much else besides be a mom. And when my dad got sick they recognized that she didn’t have a driver’s license. She didn’t know how to balance a checkbook. She didn’t know how to use a debit card. And so I watched that happen and really worried about the idea of being so dependent on someone else that I didn’t know how to support myself. So that’s why I went to law school.

When I came out, I ended up in bankruptcy law because I tend to identify with people that are hurting, that are in financial trouble that needs someone that cares enough to figure out what the best solution is for them—because it’s not always bankruptcy. Sometimes there are other options, but if they do need bankruptcy, you need someone that understands that it’s hard to file bankruptcy. It became what I liked and it’s kind of a puzzle that you have to figure out (numbers), and fitting someone in is sometimes an issue. I like the challenge of it and I tend to like the people that I meet.”

Can I Keep My Car Through Bankruptcy?

You can. A lot of people call me asking that question and sometimes they want to get rid of their car, and that is possible. It can definitely get included in the bankruptcy. If you’re current on your car in a chapter seven, it is safe. We do obviously have to make sure that you don’t have too much equity in your car. Equity is when your car is worth $10,000, for example, and you only owe $2,000 on it. In this hypothetical scenario, you would have $8,000 of equity in it. There are exemptions in Washington that cover that equity to a certain extent and we will definitely sit down and go through that and make sure that it’s covered. But as long as you’re current and it’s covered in a chapter seven, you are able to keep your car and just continue making payments.

You sign what’s called a Reaffirmation Agreement. That agreement is just a new contract with your car company saying that you want to keep it and you’re still going pay for it and they say, “That’s great. Then you can, as long as you sign this agreement that keeps it on your credit after filing.”

If you were behind on your car and you want to keep your car, there is still a way to do that. Some companies will let you get caught up on it if it’s not too far behind in a chapter seven. Otherwise we would look at a chapter 13 and that’s where you would pay it over time and we get caught up on that past due amount over time. So a chapter 13 is great for lowering your interest rate on the car and also allow you a little bit extra time to get caught up on the payments and continue making them over the life of your bankruptcy plan. So that would be something that we would sit down and figure out which way you would like to go on that during our consultation.

Can I Do A No Money Down Bankruptcy?

That’s always a complicated question. There are ways that we can work it out so that you can do a no money down bankruptcy. I typically try not to do them that way. The number one question is how much does bankruptcy cost? Most people ask that and it’s important—we know how much a shirt costs when we go into a store. We want to know how much it costs to file a bankruptcy.

Anybody can look up the filing fees. Chapter 7 bankruptcy is $335 and a chapter 13 is $310. That’s how much the court requires you pay to file a bankruptcy. Attorney fees are different. They vary quite a bit and are case-by-case, depending on the client and what their needs are and what work is going to be involved.

There are companies that will help with financing to doing no money down bankruptcy. And that’s what most attorneys that advertise money down. They are using finance companies that help with that process. And I tend to shy away from those companies because you end up paying a lot more for the bankruptcy in the long run, but sometimes they work for people, sometimes that’s the best option because if you’re getting garnished and 25 percent of your paycheck is going out the door before you even get your paycheck, it’s hard to file for bankruptcy. So we can work with you and see if that’s the best option to do a financing of a bankruptcy so you can do a no money down bankruptcy. And that is something that I can work for people, but it typically makes the costs somewhere over $2,000.

Our costs at Skelton Law Firm for chapter seven range from about $1,000 to $1,500. A chapter 13 we can do for no money down because there are what are called no look fees—Meaning that the court sets a flat rates for chapter thirteens that get paid and the attorneys get paid through the bankruptcy plan. So those are a little easier to do with no money down because we can roll that chapter 13 filing fee into the plan also. So you’re just making monthly payments to the trustee and the attorney gets paid out of that payment plan. So all of this basically to say that usually we sit down with each other in our consultation and figure out how much it’s going to cost and you won’t leave that office without knowing the options and what the costs would be.

Can Bankruptcy Stop a Garnishment?

Bankruptcy can stop a garnishment. A lot of times in Washington you will get a judgment against you and you won’t even realize it. They do not have to take you to court per se. They send you documents that start the lawsuit process and you might not recognize that you’ve just been sued.

If you don’t respond to that, they take out what’s called a default judgment against you and they start a garnishment process where they go into your employer and they show this judgment and they say, “You now have to pay us part of this person’s paycheck every week or every pay period.” And you usually don’t notice it until you get a letter from your employer saying, we are now taking this out and your paycheck is about 25 percent less than what it was supposed to be.

A bankruptcy automatically stops that garnishment from continuing to come out. And what we can do, depending on your situation, is work towards a bankruptcy, either a chapter seven or chapter thirteen, that would be filed quickly to stop it. Afterward, we would work towards fixing the problem of getting it off of your paycheck going forward, and then you wouldn’t owe that money anymore.

What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

Chapter seven is what most people think of is bankruptcy; when you list your debts, credit card debts, medical bills, collections, that type of thing—and you ask the government to forgive them and to erase them from your credit. It does not get rid of most taxes or student loans, but it will get rid of all of your other unsecured debt (things that you owe).

Typically, how you qualify for that is based on your income and on what you own. There are assets that we can protect with what are called exemptions and most people if they meet the income requirements, we try to get you into a chapter seven because it’s a quick and easy process and it gets it done from filing date to discharge dates, it’s 90 days. So you’re in and out pretty quickly.

Chapter 13 is a debt repayment program; it’s where you’re repaying a portion of your debt based on your income. And that’s just a math problem we figure out together to know how much you’re going to repay.

Most of the time you’re not paying unsecured debt, you’re paying that back at zero percent. What you’re paying back is if you’re behind on a house or a car payment, it helps you to pay that back over time, or if you have any taxes that you need to pay back, you can pay those back over time. So it’s a three-to-five-year repayment plan that you pay through the court to a trustee and that trustee pays back your debts in that time period, and then you received your discharge.

Most people file a chapter 13 either because they don’t qualify income-wise for a chapter seven or because they had an asset that they’re trying to protect. So if you’re behind on your house or a car and you want to keep that asset, that’s when a Chapter 13 is really a powerful tool. The main difference is the time period, and whether or not you have to pay back something. Chapter Seven is what most people think of when it comes to filing bankruptcy, but a chapter 13 bankruptcy filing is very useful if you owe a large past due portion on your house, car, or taxes.

Are There Exemptions In A Bankruptcy?

Exemptions:  When you file for bankruptcy, you are allowed to protect a certain amount of “stuff” from liquidation under a Chapter 7 bankruptcy, or from being counted as an asset available to pay back creditors in a Chapter 13 bankruptcy.  Washington allows you to choose from either the federal or state exemptions.  Always speak with an attorney regarding the best choice for claiming exemptions in a bankruptcy.  This is not an exhaustive list of exemptions, but a few examples of Washington State exemptions include:

Your house: 

Under Washington law, homeowners may exempt up to $125,000 of their home or other property covered by the homestead exemption. If you are not living in the home, you must file a homestead declaration.

You can also protect up to $15,000 of unimproved property, but you must first file a homestead declaration.

Motor Vehicles:

A debtor may exempt up to $3,250 in one motor vehicle that is used for personal transportation or to maintain employment. A married couple may exempt two motor vehicles not to exceed $6,500. Wash. Rev. Code Ann. § 6.15.010(1)(c)(iii).

Personal Property:

You may exempt the following personal property:

  • clothing, but no more than $3,500 for furs and jewelry
  • books and electronic media to $3,500
  • household goods, appliances, and furniture (not to exceed $6,500 per individual or $13,000 per married couple, with no single item to exceed $750)
  • child support
  • health aids
  • health savings account and medical savings account deposits (6.15.020)
  • keepsakes and family pictures
  • tuition units purchased more than 2 years before filing
  • spendthrift trusts (6.32.250; In re Findley, 286 b.r. 163 (2002))
  • personal injury recovery and/or proceeds, not to exceed $20,000 per individual (doesn’t protect pain and suffering or past lost wages), and
  • loss of future earning recoveries (to the extent reasonably necessary for support).

Wash. Rev. Code Ann. § 6.15.010.


A debtor may exempt the following amount of his or her wages (except to enforce court awarded support orders):

  • 75% of his or her disposable earnings; or
  • 30 times the federal minimum hourly wage per week (whichever is greater).

Wash. Rev. Code Ann. § 6.27.150.

Pension and Retirement Accounts

A debtor may exempt pension benefits for federal employees, teachers, city employees, law enforcement officials, firefighters, state patrol officers, and volunteer firefighters. Wash. Rev. Code Ann. § § 6.15.020, 41.26.053, 41.28.200. 41.32.052, 41.24.240, 41.44.240, 43.43.310.

Tax-exempt retirement accounts (such as 401ks and IRAS) are exempt as per the federal rules.

What Is Chapter 12 Bankruptcy?

Chapter 12: Family Farmer or Fisherman.

This section of the Code allows family farmers and fishermen to enter into a repayment plan similar to a Chapter 13 Wage Earner Plan. I do not file cases under Chapter 12.