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When a debtor files for bankruptcy relief, something called the automatic stay immediately kicks into effect. The automatic stay prevents all creditors from undertaking any action to collect a debt from a debtor. Effectively, the automatic stay often prevents creditors from even contacting the debtor. If a creditor has filed a law suit against in order to collect unpaid debts, the lawsuit is stopped. If the bank has initiated foreclosure proceedings to take back your home, the foreclosure process comes to a halt. If creditors have been calling incessantly, those calls stop. If your wages have been garnished, the automatic stay stops garnishment proceedings.

How does filing bankruptcy affect credit scores?

A Chapter 7 bankruptcy generally remains on the debtor’s credit for ten years and bureaus may stop reporting a Chapter 13 after seven years. While this sounds pretty bad, usually by the time a person gets to the point of filing bankruptcy their credit is already shot. While the bankruptcy filing will negatively impact a debtor’s credit score at first, the “clean slate” offered by wiping out debts provides the opportunity to build good credit by maintaining current on payments and avoiding delinquencies. Many debtors experience an improvement in their credit rating soon after bankruptcy, because all their debts are gone.

A Chapter 13 bankruptcy allows individual consumers with regular income to retain their property and pay back debts over a period of time, usually three to five years. Under this chapter, the debtor and his attorney examine the debtor’s income, necessary expenses and debts to develop a repayment plan to make monthly installment payments to creditors over the life of the plan. If the debtor’s current monthly income is less than the state median - currently $51,161 in Washington State - the plan will usually last for five years. If the debtor successfully completes all payments during the life of the plan, any debts not repaid at the end of the bankruptcy are discharged.

A Chapter 7 bankruptcy, often referred to as “liquidation”, is a relatively fast proceeding: debtors can usually file and obtain their discharge within several months. A trustee, appointed by the U.S. Trustee’s Office to represent the bankruptcy estate on behalf of the creditors, will take control of non-exempt assets, liquidate them, and distribute proceeds to creditors. The exempt property (i.e., the property the debtor is entitled to retain) generally includes a certain amount for a car, a certain amount of equity in a home, certain household goods and appliances, life insurance contracts, social security, alimony, pensions or annuities, and a certain amount of personal property.

A power of attorney is a document that allows you ( the “Principal”) to appoint a person or organization (the “Agent”) to handle your affairs for you. Sometimes, the power of attorney can take effect immediately. Sometimes, it only takes effect if for some reason you're unavailable or unable to handle you affairs yourself. A power of attorney can be as specific or as broad as you desire, and can confer whatever power you desire.

For those of use who have faced the hospitalization and death of a loved one, final health care decisions can be heartbreaking things. Decisions regarding life support, artificial nutrition, artificial hydration and medication can be difficult and troubling, and they hit families at the time when the families are the most emotionally overwhelmed.

A living trust, also known as a revocable trust, revocable living trust, or inter vivos trust, is a popular way to own property during life and transfer it at death. The living trust generally substitutes for a will or other traditional estate planning document. With a living trust, all assets, such as real estate, bank accounts and stock accounts are transferred to the trust and administered for the benefit of the trustmakers during their lifetime, and then transferred to the trust beneficiaries when the trust beneficiaries die. For those who want to take the time to take care of business and get their affairs in order before they die, as well as make things easier for their heirs, a living trust is a good tool.

Washington has a property division contract that is available only to married couples. It is called a community property agreement, and it's commonly used to avoid probate. Here’s how it works.

Having a legal will is the traditional way to pass one’s property to heirs or beneficiaries. A will is a legal document that gives the decedent’s (the decedent is the one who has left us for -hopefully - a better place) directions regarding the disposition of the decedent’s property at death. A will states who receives property, in what amounts, and any special provisions for distribution.

Boy, do we get this question a lot.

Probate is the process by which legal title of property is transferred from the decedent to his/her beneficiaries. As the old blues song says, “ I’ve seen bad and I’ve seen worse, but I ain’t never seen no U-Haul behind a hearse.” Since you can't take it with you, the court determines who gets it.