Reclaim Your Financial Future with Trusted Washington Bankruptcy Counsel

Facing unmanageable debt is one of the most stressful experiences an individual or family can endure. Relentless collection calls, mounting medical bills, credit card interest spirals, or the looming threat of losing your home can make it feel like there is no way forward.

At Sterbick & Associates, we want you to know: You are not alone, and you are not a failure. Financial hardship almost always stems from circumstances outside your control—unexpected illness, job loss, marital changes, or economic disruption. Bankruptcy is not a punishment; it is a constitutionally established legal right created under Article I, Section 8 of the United States Constitution and the Title 11 U.S. Bankruptcy Code specifically designed to give honest citizens a clean slate.

Attorney John Sterbick has spent over 29 years guiding Washington families and business owners through the federal bankruptcy courts, protecting their vital assets, halting aggressive collections, and delivering genuine financial relief.

The Power of the Federal Automatic Stay (11 U.S.C. § 362)

The moment your bankruptcy petition is filed with the U.S. Bankruptcy Court for the Western District of Washington, federal law automatically creates an immediate, court-enforceable protective injunction known as the Automatic Stay.

Protection Granted Immediate Effect upon Filing Petition under 11 U.S.C. § 362
Halts All Wage Garnishments Paycheck deductions stop immediately; employers are formally notified to release holds.
Cancels Foreclosure Auctions Freezes pending trustee sales, giving homeowners the legal right to cure mortgage defaults.
Stops Vehicle Repossessions Prevents auto lenders from towing vehicles and halts ongoing repossession actions.
Freezes Collection Lawsuits Puts an instant stop to state court lawsuits, debt trials, and creditor default judgments.
Terminates Creditor Harassment Third-party collectors, credit card companies, and lenders are legally prohibited from calling.

Any creditor who willfully violates the Automatic Stay can be held in contempt of federal court and forced to pay damages, attorney fees, and punitive sanctions.

Choosing the Right Path: Chapter 7 vs. Chapter 13

Federal bankruptcy law provides two primary avenues of consumer debt relief. During your initial consultation, we analyze your income, assets, and goals to determine which chapter delivers maximum protection:

Feature Chapter 7 (Liquidation & Fresh Start) Chapter 13 (Reorganization Plan)
Primary Purpose Complete statutory wipeout of qualifying unsecured debts. Restructuring past-due balances into an affordable 3-to-5 year plan.
Timeline to Discharge Fast resolution: typically 90 to 120 days from filing date. Supervised repayment plan spanning 36 to 60 months.
Eligibility Standard Must pass the Chapter 7 Means Test based on WA median income. Requires a regular source of disposable monthly income.
Home Foreclosure Cure Delays foreclosure sale; does not cure delinquent arrears over time. Freezes foreclosure and cures mortgage arrears across the plan.
Discharged Liabilities Credit cards, medical bills, personal loans, older income taxes. Unsecured balance remaining after completion of approved plan payments.

Chapter 7 Bankruptcy: Total Debt Elimination

Known as the “Fresh Start” bankruptcy, Chapter 7 eliminates 100% of qualifying unsecured liabilities—including credit cards, medical bills, payday loans, personal judgments, and deficiencies from repossessed vehicles—without requiring monthly repayments.

  • The Means Test: Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), your household income is compared against the Washington State median income for your family size. If your income falls below the median, you automatically qualify. If your income exceeds the median, we perform a detailed calculation of your allowable living expenses, housing costs, and taxes to establish eligibility.
  • Protecting Your Property with Exemptions: A common myth is that you lose your possessions in Chapter 7. In Washington, debtors have the unique legal advantage of choosing between Washington State statutory exemptions (RCW 6.13 / 6.15) or Federal Bankruptcy Exemptions (11 U.S.C. § 522(d)). Using these exemption shields, our clients routinely keep their primary home equity, vehicles, retirement accounts (401k, IRA, pensions), household goods, and personal belongings.

Chapter 13 Bankruptcy: Reorganization & Foreclosure Defense

Chapter 13 is a powerful debt consolidation and asset preservation tool for individuals with regular income who want to protect equity, cure mortgage delinquency, or restructure debts that cannot be discharged in Chapter 7:

  • Save Your Home from Foreclosure: If you have fallen behind on mortgage payments, Chapter 13 allows you to freeze foreclosure sales and spread past-due arrears across a manageable 36-to-60 month interest-free repayment plan while resuming normal monthly mortgage payments.
  • Vehicle Loan Cramdowns: If your car was purchased more than 910 days before filing, we can often “cram down” the balance of the loan to the actual market value of the vehicle and lower the interest rate, significantly decreasing your monthly payment.
  • Manage Non-Dischargeable Tax Debt: Certain recent tax liabilities cannot be wiped out in Chapter 7; Chapter 13 forces the IRS and state taxing authorities into an interest-free, penalty-free repayment plan over up to five years.

Can You Discharge Tax Debt in Bankruptcy?

Yes. As both an experienced tax attorney and bankruptcy counsel, John Sterbick specializes in eliminating tax obligations through bankruptcy when administrative settlements like an Offer in Compromise are not optimal.

Income taxes can be completely discharged in Chapter 7 if they meet the strict 3-Year / 2-Year / 240-Day Rule:

  1. The 3-Year Rule: The tax return was due (including valid extensions) at least three years before your bankruptcy filing date.
  2. The 2-Year Rule: You actually filed the legitimate tax return at least two years before the filing date.
  3. The 240-Day Rule: The tax debt was assessed by the IRS at least 240 days prior to filing.
  4. No Fraud or Evasion: The returns were not fraudulent, and you did not engage in willful tax evasion.

Learn more about the intersection of tax defense and debt relief in our dedicated guide: Tax Resolution & IRS Disputes.

The Sterbick 4-Step Bankruptcy Roadmap

Step Procedural Milestone & Legal Defense
Step 1: Confidential Case Audit & Means Test Complete forensic analysis of all assets, debts, monthly income, and statutory exemption shields.
Step 2: Petition Assembly & Emergency Filing Precise preparation of schedules; instant activation of the federal court Automatic Stay.
Step 3: 341 Meeting of Creditors Representation Attorney John Sterbick represents and protects you before the assigned Chapter 7 or Chapter 13 Trustee.
Step 4: Official Discharge Order & Clean Slate Official federal court order extinguishing qualifying debt, followed by credit restoration guidance.

Serving Debtors Across Western Washington

Our bankruptcy practice serves individuals, families, and sole proprietors throughout Western Washington. Read our local community guides:

Frequently Asked Questions

Will filing bankruptcy ruin my credit score forever?

No. While a Chapter 7 filing remains on credit reports for 10 years (and Chapter 13 for 7 years), most clients find that their credit score actually begins improving within 12 to 18 months following their discharge. Eliminating high debt-to-income ratios and delinquent accounts allows you to begin rebuilding positive credit through secured cards and on-time payments immediately.

Will I lose my home or car if I file for Chapter 7 in Washington?

In the vast majority of consumer Chapter 7 cases handled by our office, clients keep both their home and vehicle. Washington law and federal exemption statutes provide generous equity protections. So long as your equity falls within statutory limits and you remain current on your underlying secured loan, your property is safe.

What is the 341 Meeting of Creditors like?

The 341 meeting is a brief administrative proceeding conducted by a federal bankruptcy trustee—not a courtroom trial with a judge. The trustee verifies your identity and asks straightforward questions regarding your petition schedules. Attorney John Sterbick prepares you thoroughly in advance and sits by your side throughout the entire proceeding.