The only legal way to receive debt relief due to an unexpected hardship is to file bankruptcy, according to the United States Bankruptcy Court Western District of Washington and the book "How to File for Chapter 7 Bankruptcy." If you're experiencing financial hardship and can prove it, you likely qualify for permanent forgiveness of most of your debts under Chapter 7. You can also pursue a type of debt restructuring under Chapter 13 bankruptcy, but you'll have to pay at least part of your outstanding financial obligations.
Student Loans
You must prove extreme hardship, usually due to a serious and permanent disability, to receive any kind of debt relief for federally-issued student loans, according to the book "How to File for Chapter 7 Bankruptcy." A Washington bankruptcy judge has the option to accept your claim of undue hardship and permanently discharge your legal obligation to repay federal student loans. However, keep in mind that such forgiveness is extremely rare.
Chapter 7 Income Qualification
If you're in a hardship situation, you probably qualify for Chapter 7 but you should check the annual median income levels for Washington, according to the United States Bankruptcy Court Western District of Washington and the book "How to File for Chapter 7 Bankruptcy." As of 2010, a single Washington resident who earned no more than $51,344 a year could automatically qualify to file a Chapter 7 debt relief case, according to the U.S. Trustee Program. A family of four living in Washington could bring in a total of $82,716 each year and the head of household could declare Chapter 7. If your last income tax return reflects larger annual income amounts, you must complete the federal means testing formula successfully to prove your hardship. If you can't prove the financial difficulties you've experienced to your local Washington bankruptcy court staff's satisfaction, you must repay part of your bills under Chapter 13 if you want to experience legal debt relief.
Additional Basics
If you can prove you don't make enough money to fully pay the required bankruptcy court costs, the United States Bankruptcy Court District of Washington court staff might waive your required bankruptcy fees or allow you to pay the costs under an installment plan. As of 2010, it cost $299 to declare Chapter 7 and $274 to file Chapter 13. You also must complete pre-bankruptcy credit counseling and cannot include debts like child support, alimony, court fines and tax bills less than three years old. If you committed a crime like fraud or drunken driving, you also can't get rid of any resulting debts.
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