Chapter 7 Bankruptcy Attorney in Bend
Serving Clients in Hermiston, Bend, and Surrounding Areas
No one wants to be in a position where considering bankruptcy is on the table as an option — you may feel so overwhelmed by the choices ahead of you that you don’t know your next steps. However, declaring bankruptcy doesn’t have to mean an end to your financial future.
Many people associate bankruptcy with failure, but when used correctly, it’s actually a tool that can help set you up for future success. In Oregon, there were 3,214 people who filed for Chapter 7 in 2020. With the right Bend Chapter 7 bankruptcy lawyer by your side, this can be the best choice for you, too.
Call (541) 262-0040 to see what Oregon Fresh Start can do for you.
Are You Drowning in Debt in Hermiston?
Chapter 7 is the most common form of bankruptcy for individuals. It usually doesn’t require any of the unsecured debt to be repaid. It’s also usually the quickest and easiest way to declare bankruptcy. It allows an individual to discharge debt, meaning it will be wiped out after the bankruptcy is complete, regardless of whether it was fully paid off.
Bankruptcy Laws in Oregon
Each state will approach bankruptcy filing a bit differently. In Oregon, when you file for Chapter 7, it can take an average of 120 days to get your discharge, which is the goal; however, more complicated cases may take between four and six months. Oregon currently charges $338 to file Chapter 7 — but remember, this is independent of any attorney fees you may take on.
What Chapter 7 Does
In almost all Chapter 7 cases, you will get to keep all your assets. In rare instances (maybe you have a boat that is owned free and clear), a trustee will liquidate your non-exempt assets. The net proceeds will then be distributed among your creditors with a small portion taken by the trustee. Oregon law permits filers to keep essential assets like your primary residence, everyday vehicles, household items, pensions, bank accounts, tax refunds, clothing, and more, but these assets must meet equity limits set out by state and federal law.
Filers in Oregon can choose between federal or state exemptions and equity limits, but not both. Under Oregon law, you can exempt up to $40,000 of equity in your property if filing alone, or a combined $50,000 for two debtors who reside in the same homestead. You may also exempt up to $3,000 in a motor vehicle, up to $3,000 in household goods, up to $5,000 in tools of the trade for your profession, and other personal property exemptions.
Federal equity limits, as set by the US Bankruptcy Code, allow you to protect $27,900 in equity for your home, $4,450 in your motor vehicle, $2,800 for tools of the trade, in addition to other exemptions for personal property. Deciding whether to use federal or state exemptions depends on your unique situation and circumstances.
You should also note that not all debts are dischargeable under Chapter 7. You’ll still be on the hook for legal obligations like child support, alimony, or student loans. However, it can help with debts like back rent, medical bills, personal loans, and credit card debt. Furthermore, the day you file, your creditors must stop pursuing their collections, as well as any wage garnishments.
Most judges will allow you to keep making payments on a secured loan (car, house, etc.) by signing a “reaffirmation agreement,” even while the bankruptcy is going through. These agreements usually bar you from declaring bankruptcy on these items in the future for at least eight years.
Understanding the Chapter 7 Bankruptcy Process
If you are overwhelmed by debt and considering filing for Chapter 7 bankruptcy, it is important to understand the process and how it can provide you with a fresh financial start. Our experienced Chapter 7 bankruptcy attorney in Bend is here to guide you through every step of the process and ensure that you fully understand your rights and options.
Here's a brief overview of the Chapter 7 bankruptcy process:
- Consultation: Schedule a consultation with our bankruptcy attorney to discuss your financial situation and determine if Chapter 7 bankruptcy is the right solution for you.
- Filing: If you decide to proceed with Chapter 7 bankruptcy, our attorney will prepare and file the necessary paperwork with the bankruptcy court.
- Automatic Stay: Once your bankruptcy petition is filed, an automatic stay goes into effect, which halts all collection actions and provides immediate relief from creditor harassment.
- Meeting of Creditors: You will be required to attend a meeting of creditors, where a bankruptcy trustee will ask you questions about your financial affairs. Our attorney will be there to represent you and ensure your rights are protected.
- Asset Liquidation: In Chapter 7 bankruptcy, certain non-exempt assets may be sold to repay your creditors. However, many individuals who file for Chapter 7 bankruptcy are able to keep all of their assets through exemptions provided by state and federal law.
- Discharge: Once the liquidation process is complete, you will receive a discharge, which eliminates your personal liability for most types of debt. This means you are no longer obligated to repay those debts.
What Chapter 7 Does Not Do
Despite popular misconceptions, Chapter 7 doesn’t leave you with nothing. In most cases, clients get to keep all their assets like their home, furniture, clothing, bank accounts, and car. But, it can’t prevent all foreclosures, and those with a mortgage in jeopardy may want to look into Chapter 13 bankruptcy. Under Oregon law, the exemption limits are based on the value of your property currently — not what you paid for it when you bought it. This is generally beneficial for items like cars or furniture, but if your home has appreciated since you first bought it, you may have more equity than is allowable under Oregon statute and will need to discuss filing a Chapter 13.
Qualifying for Chapter 7
To qualify for Chapter 7 bankruptcy in Oregon, your household income must be less than the state’s median income. For 2023, this is $64,975 for an individual and $109,713 for a family of four. Those with an annual household income lower than this will almost always qualify. Those with incomes higher than the state median will be required, as part of the bankruptcy process, to do a little more budget evaluation to determine if a Chapter 7 filing is still possible.
When Is Chapter 7 a Good Debt Relief Option?
Filing for bankruptcy is never anyone’s first choice, but sometimes, it’s the right choice. If you’ve already tried other options to get control over your finances (like debt settlement) and are still left underwater or with creditors still trying to collect from you, Chapter 7 might be the best choice for your circumstances. Additionally, other scenarios — like if you suddenly lost employment, if your debt totals more than half of your income (excluding student loans and mortgages), or if it will take you longer than five years to pay off your outstanding debt — all may signal that a Chapter 7 filing is right for you.
Call Now for Assistance
With the right help, filing for bankruptcy could be just the thing you and your family need to clear the way for a brighter financial future. Don’t let the stigma of debt weigh you down. We work solely with those seeking financial relief through bankruptcy and have 43 years of experience to help you through it.
Call us today at (541) 262-0040 for debt relief.
WHAT DOES IT MEAN WHEN A CREDITOR WANTS ME TO REAFFIRM MY LOAN WITH THEM? IS THAT DIFFERENT FROM REDEMPTION?Secured creditors (those creditors who have collateral for their loans, such as a car or boat) will want you to reaffirm the loan. When you reaffirm the loan, you re-obligate yourself to all of the loan terms just as if you were getting a new loan from the creditor. Although this may sound harmless, it has serious consequences. If you reaffirm and then later default on the loan, you are personally liable to pay the balance and you will have no protection on that debt from the bankruptcy. One of the major changes made to bankruptcy law in 2005 is that a creditor can repossess the collateral if you do not reaffirm. This change does not apply to real estate debt. Your reaffirmation agreement is subject to court approval in some circumstances. If your income is less than your monthly expenses, you may be required to participate in a telephone hearing with the court where you will be required to explain to a bankruptcy judge why the reaffirmation is in your best interest and how you intend to make the payment. More often than not, when you file bankruptcy, you owe more on the collateral securing the loan than it is worth. If your loan is more than 2 1/2 years old, under a process called REDEMPTION, bankruptcy law allows you to reduce the amount owing on the debt to the value of the collateral if you can pay it all at once. Many debtors can find a source of family financing or, perhaps, borrow from a 401K account, etc. and come up with the full value. There is also a company on the internet that specializes in redemption funding for cars. Talk with OREGON FRESH START about this for more information. WOULDN'T IT BE BETTER TO SETTLE MY DEBTS THROUGH A DEBT CONSOLIDATION PLAN? Although there may be a few reputable credit counseling services out there, most will not and cannot give you what they promise. Usually, they promise they can settle your debts for 50 cents on the dollar and that when you get done, you will have great credit. The facts are that (1) most people do not complete the "plans" because they usually do not work, and if you do complete the plan, (2) your credit is trashed. Creditors report to credit bureaus exactly what happened. If you get hooked on a 50% plan, your credit report will show that you did not pay all of the debt and that the unpaid balance was charged off. Most creditors do not waive interest or late fees. In addition, most credit counseling programs will charge you a fee (a portion of each payment) and they often do not send your money to the creditors for several months. This gives them an interest-free loan working with your money. Most debtors would be better off filing a Chapter 7 or Chapter 13 bankruptcy which can force the creditors to accept your terms of repayment. In addition, and this is a big one, the amount that was charged off by the creditor will likely be reported to the IRS with a 1099 tax form and you will be required to pay income taxes on the charged-off amount which will be a very unpleasant surprise for you when you file your tax returns for that year. CAN STUDENT LOANS BE DISCHARGED? Yes, but it is not easy. It will also, probably, be expensive. Once upon a time, federally guaranteed student loans were dischargeable if the loan was more than 7 years old. In 1998, the federal government changed all that. Now, federally guaranteed student loans cannot be discharged unless you can prove that being required to repay the loan will cause an undue hardship - not just a hardship, but an "undue" hardship. To have an opportunity to prove your case, you will be required to sue the federal government in bankruptcy court through an adversary proceeding. You will be required to prove all of the following: repayment of the loan would prevent you from maintaining a minimal standard of living your financial circumstances are not likely to change in the foreseeable future you made a good faith effort to repay the loan before you became unable to pay Frequently, the federal government will try to show that you could get a reduced payment plan by going through a consolidation program that will stretch out your payments for 20 years or more based upon an "ability to pay." In short, it is possible to discharge a student loan, but the government has made it very difficult. Also, remember that the government has a raft of lawyers to defend the federal government in the lawsuit who are paid for by your taxes. On the other hand, you will be required to pay for your attorney.
ARE LOANS OWING TO RELATIVES GIVEN SPECIAL TREATMENT IN BANKRUPTCY?It is not uncommon for you to owe money to a relative. As discussed in other answers to questions, you must list every debt. This includes debts you owe to your family members. The bankruptcy court looks closely at loan transactions between family members. As we all know, if we owe money to several creditors and one of them is a family member, we will probably be inclined to pay the family member first. In a bankruptcy context, this often means that family members have been paid while the other creditors have not been paid. One of the main ideas behind filing bankruptcy is that all creditors share your misfortune equally. One of the questions asked in the bankruptcy petition is whether you have repaid any loans from relatives within the past year. If you have, you are required to disclose the amount. If the amount is large enough, the bankruptcy trustee has the power to get the money back from the relative and spread it out equally among all the creditors. While there is no set rule as to what amount is "large enough," if the amount were $2,000 or more, that would definitely be "large enough." There are other factors that go into the trustee's decision, including whether you have any other assets which exceed the exemption amounts and how likely it is the trustee can obtain a return of the money from the relative. A relative who has already spent the money and whose only source of income is Social Security is not likely to be a target for the trustee. If you have a loan from a relative and are considering filing bankruptcy, stop paying on the loan until you consult with OREGON FRESH START.
CAN I TRANSFER PROPERTY TO A FRIEND OR RELATIVE TO PROTECT IT FROM BANKRUPTCY?If you transfer any of your property to a relative, even by selling it, within 1 year of filing for bankruptcy, the bankruptcy trustee can reverse that transfer if it was transferred for less than the fair market value of the property. For example, if you gave Uncle Joe your car 30 days prior to filing bankruptcy because you did not want it to show as an asset in your bankruptcy, the trustee has the power to sue Uncle Joe and get the car back. Unfortunately, some people engage in such an activity before consulting with an attorney. It is also not advisable if you have already made the transfer to attempt to transfer it back without first obtaining expert legal advice.