WHAT IS BANKRUPTCY?
Bankruptcy laws are passed by the United States Congress with the goal of giving the honest but unfortunate debtor a fresh start. Bankruptcy will wipe out or discharge your debts which means a bankruptcy judge will issue an order forbidding your creditors from contacting you.
WHAT ARE THE DIFFERENT TYPES OF BANKRUPTCY?
There are several types of bankruptcy: chapter 7, chapter 13, chapter 11 and chapter 12. Most individuals who file bankruptcy file a Chapter 7. Some individuals file a Chapter 13.
Chapter 7 is sometimes called a straight bankruptcy. Filing chapter 7 will discharge your medical bills, credit cards, and other general debt, whether or not the creditor has a judgment against you.
In a Chapter 13 bankruptcy, most of your unsecured debts are discharged like in chapter 7. Chapter 13 bankruptcy can allow you to stop foreclosure and repossession so you can keep your home or car.
HOW LONG DOES A BANKRUPTCY TAKE?
A Chapter 7 takes about 4 months until you receive a discharge.
A Chapter 12 takes 3-5 years depending on different factors.
WILL I LOSE MY PROPERTY?
It is rare for you to lose your property in bankruptcy. Most people who file chapter 7 have no assets that the bankruptcy trustee will liquidate. The most common property taken is a tax refund. However, by working with us we can plan to protect your assets to the greatest amount allowed by law.
In chapter 13 you are allowed to keep all of your assets.
WILL I HAVE TO GO TO COURT?
About a month after your case is filed you will need to attend the “Meeting of Creditors.” This is conducted by a trustee who will ask you questions about your assets and debts. Your attorney will attend with you. This meeting lasts about 5-10 minutes. For most people this is the only hearing you will attend.
WHAT DO I TELL MY CREDITORS?
Once you have retained our office for a minimum of $100 you can tell your creditors to call our office. You do not need to speak to them after that. In fact, it is illegal for a debt collector to communicate with you once you have an attorney.
CAN I KEEP MY HOUSE?
The answer is almost always yes, if you can afford your home payments. During your first consultation we will discuss the options for dealing with your home. However, as long as you can make the payments on your home you can almost certainly keep it.
CAN I KEEP MY CAR?
You can keep your car as long as you remain current on the loan. If you are filing chapter 13 you will likely be able to reduce the payments through the bankruptcy plan.
CAN I KEEP MY RETIREMENT ACCOUNTS
Yes. Your IRA, 401(k) and other retirement accounts are protected from your creditors.
DO I HAVE TO LIST ALL MY DEBTS?
Many people owe money to a doctor or friend that they don’t want to include in the bankruptcy filing. However, the law requires that you list all people to whom you owe money. Your documents are signed under penalty of perjury and therefore it is required that you list all of your debts.
WHAT DO I DO ABOUT DEBTS I WANT TO PAY AFTER BANKRUPTCY?
If you have a doctor, friend or relative that you want to repay after bankruptcy, you may do so. The bankruptcy discharge is an order from the judge forbidding your creditors from collecting from you. The discharge does not forbid you making any payments to your creditors.
IF I FILE BANKRUPTCY DOES MY SPOUSE HAVE TO FILE?
No. If you file bankruptcy it will not affect your spouse. This means that property that belongs only to your spouse will not be considered by the court. It also means that if you and your spouse owe a debt jointly that only your liability will be discharged. After the bankruptcy your creditors will still be able to collect from your spouse or other cosigners.
WILL BANKRUPTCY STOP LAWSUITS?
Yes. Once a bankruptcy is filed all lawsuits against you must stop. This is true if the lawsuit was just filed or if there has been a judgment entered against you. Whatever the status of the case against you, bankruptcy will stop all collection as soon as the case is filed.
WHAT TYPES OF DEBT WILL BANKRUPTCY DISCHARGE?
Bankruptcy will discharge most debts. There are certain debts that cannot be discharged. They are: recent taxes, child or spousal support, criminal fines or restitution, debts incurred by fraud or false pretenses, debts incurred if you injured someone while you were under the influence of drugs or alcohol or debts incurred through willfully injuring another person.
Student loans are not discharged unless you file a separate lawsuit against your lenders in the bankruptcy court. To do this you will need to show that paying the student loans would result in an undue hardship.
I AM BEHIND ON MY TAXES, WILL BANKRUPTCY HELP?
Yes. Income taxes that are over 3 years old can typically be discharged. If your taxes are more recent than 3 years or if they are employee withholding taxes, chapter 13 will allow you to repay your taxes without penalty or interest. If your only financial problems are your taxes, then consider hiring us to work settling your tax debts instead of filing bankruptcy.
WHAT ABOUT MY CREDIT SCORE?
Filing bankruptcy will have a negative impact on your credit score. However, we are committed to helping you rebuild your credit after your case. After your case is over you should review your credit report to insure that all of the debts that have been included in your bankruptcy show that you owe no money and do not show ongoing delinquent payments. We will be happy to review your credit report free of charge. If your credit report is inaccurate please contact us for help. For more information about credit reports click here.
I AM BEING GARNISHED, WHAT CAN I DO?
As soon as a bankruptcy case is filed creditors must immediately stop all garnishments and other collection activity. If you are being garnished, provide us the name of the creditor and we will contact them as soon as the case is filed.
I AM BEING HARASSED HOW CAN I STOP IT?
It is illegal for creditors to harass you. Once you have retained our office for as little as $100 it is illegal for creditors to communicate with you. Once you file bankruptcy, creditors may not take any act to collect a debt. To read more about collection harassment click here.
CAN’T I GIVE MY PROPERTY AWAY TO PROTECT IT FROM THE BANKRUPTCY COURT?
No. When you give away your property before bankruptcy it will only cause problems for you and the person that received the property. If the judge believes you gave away the property with the intention of defrauding your creditors, you will not receive a discharge. Also, the bankruptcy trustee can and almost certainly will sue the person that received the property and liquidate the property and pay the money to your creditors.
WHAT IS A REAFFIRMATION?
Reaffirmations are typically done with car lenders. Since 2005 if you want to keep your vehicle after you file bankruptcy the lender can require you to reaffirm the debt. A reaffirmation is basically removing the bankruptcy protection from that one debt. If you default, the creditor can repossess your car and sue you for any money left owing. If you do not reaffirm, the creditor may repossess the vehicle for failing to reaffirm; however, the creditor cannot collect any money from you if you do not reaffirm.
WHAT ABOUT DEBT SETTLEMENT COMPANIES?
Be very careful about dealing with debt settlement companies. The federal and state governments receive a high volume of complaints about their practices. In Oregon, debt settlement companies have very specific requirements about what they can offer, what they can charge and what they can do. Many of the debt settlement companies are not licensed to operate in Oregon. Our firm has received many complaints about these companies taking money and doing nothing in return.