The following is an overview of some of the issues relating to consumer or small business Chapter 7 and Chapter 13 bankruptcies. It is solely for the purpose of giving the reader generalized information as to what most consumer bankruptcies are like and what is required of each individual filing bankruptcy.
If you are making an appointment for an initial consultation, please either complete or at least review the questionnaire which we use in our office to draft a debtor's bankruptcy. While it is not necessary that it be completed before you come in, the more you complete the better our office can advise you regarding your personal financial situation. While I can readily provide you with answer to your questions about bankruptcy in general, specific questions about your individual situation cannot be answered without the information about you contained in the questionnaire. Complete our online questionnaire for a case evaluation, or you may pick up a copy of our questionnaire at the office or one can be mailed to you.
The purpose of a Chapter 7 bankruptcy is to eliminate or discharge debt which you owed prior to filing. Some debts are not discharged in a bankruptcy and you still owe them even after filing bankruptcy and receiving a discharge. Secured debts, such as mortgages or car payments, have to be paid even after the filing of a Chapter 7 if you intend to keep the property which secures the debt. Student loans are not discharged in bankruptcy unless a difficult hardship standard and must be paid after the case is closed. (review Student Loan Information). Not every consumer qualifies for Chapter 7 bankruptcy. A Chapter 13 bankruptcy is essentially a supervised repayment plan; you make payments to a trustee who forwards them to your creditors in amounts specified in your Chapter 13 plan. A Chapter 13 plan requires you to pay your creditors all or a portion of their claims within 36 to 60 months under court supervision. Once the plan is completed, dischargeable debts are eliminated, even if you did not pay all your creditors in full. Chapter 13 bankruptcies are often filed instead of a Chapter 7 when you are behind on home loans or car payments, when you need to pay non-dischargeable debts such as taxes, child support or other domestic support obligations, or when you have a temporary debt problem and you need time for your income to improve or to sell assets to pay your debts. With the 2005 changes to the bankruptcy law, some debtors no longer qualify for Chapter 7 and must file a Chapter 13. Every situation is different and it can change over time, so please see an attorney before deciding whether to file a Chapter 7 or a Chapter 13. Chapter 7 bankruptcy may not be available if your debts are primarily consumer debts and the court finds that granting relief would be an abuse of the bankruptcy laws. The US Trustee's office monitors bankruptcy cases where high income and excessive budgeted expenses suggest that a debtor could make substantial payments to the creditors through a Chapter 13 plan. In such a case, the US Trustee will file a motion to dismiss the bankruptcy and will usually give the Debtor an option to convert to a Chapter 13 proceeding.
In the great majority of the consumer bankruptcies, all or most of your property is protected by exemptions under state or federal law. In bankruptcy, you are allowed to keep exempt property. Exemptions in Oregon are governed, to a substantial degree, by state law. However, some federal laws protect assets or even exclude them from the bankruptcy estate. However, to use Oregon exemptions, you must have lived in the state for two years before the bankruptcy is filed. Under a Chapter 13 bankruptcy, you may be allowed to retain assets that are not exempt, such as equity in your home in excess of the $30,000 homestead exemption for an individual or $39,600 exemption for a married couple. Other important exemptions are an automobile to the value of $2,150 (for each debtor if a joint filing), child and spousal support, criminal restitution, personal injury settlements to the amount of $10,000, social security benefits, disability benefits, unemployment compensation, tools of the debtor’s trade to the value of $3,000, and qualified retirement plans. You can see a more detailed exemption list here.
Call 541 683-5100 in Eugene, Oregon today or complete our submission form and schedule an appointment to receive a case evaluation.