There is a lot of misinformation out there about bankruptcy. Many people believe they are no longer eligible to file for bankruptcy. The truth is that most people with debt problems can still file for bankruptcy under the U.S. Bankruptcy Code.
Your initial consultation is absolutely free. There is no need to feel embarrassed or condemned. Hundreds of people have come through our doors and we have seen just about everything. You will be received with kindness and your options will be explained with compassion.
Don’t worry about collecting documents for your first consultation. If bankruptcy is the best option for you, we will send you home with a list of the required documentation needed, so that your time is not wasted gathering unnecessary papers. Not everyone needs to file a bankruptcy. If there is a better option for you, you will be informed.
When you come to our office, in downtown Bend, Oregon, we will sit down with you and listen to your concerns. We do not use a one-size-fits-all approach. We know that every person and every situation is different. You will receive advice individually tailored to your needs.
What is a Bankruptcy?
A Bankruptcy is a legal process in which a person owing debts can legally be relieved of the obligation to pay those debts. Completion of a bankruptcy results in a ‘discharge’ of a person’s indebtedness. Creditors are then permanently barred from any further attempts to collect from the debtor. There are two primary considerations in bankruptcy. One is to give you a fresh start and the other is to ensure that all the creditors are treated equally and fairly.
What can you keep?
Most people are concerned about keeping their house or their car. They wonder if someone is going to come in their house and take stuff. Most people can keep their house and cars and no one is going to come snooping around your house, unless it looks like you are hiding valuable stuff. If there are concerns around the possibility of the trustee wanting one of your assets, we can discuss options that may allow you to keep it. Pre-bankruptcy planning is important in getting positioned where you can get the most benefit from your bankruptcy with the least loss.
Stop using the credit cards. Don’t take cash advances. Don’t cash out your retirement accounts to pay bills.
You are required to disclose all your creditors, including family and friends to whom you owe money. Getting a credit report can help you identify most of your creditors. You are also required to disclose all your assets.
Pre-bankruptcy planning does NOT include giving away your property, putting it in someone else’s name or hiding it out at Uncle Bob’s. Don’t do that! It is fraud and can result in criminal charges. Also, payments made to creditors or family members can be grabbed by the trustee, so don’t make any large payments ($200 or more per month) without consulting your attorney. Wait until we can discuss your options and make plans to preserve as much of your assets as possible.
Types of Bankruptcy
There are a number of different kinds of bankruptcy available. However, the most common is the Chapter 7 bankruptcy. Most individuals will either file a Chapter 7 or a Chapter 13 bankruptcy.
Chapter 7 is called a ‘liquidation’ bankruptcy. It is the preferred option as it is faster to complete and much less expensive. A trustee is appointed in every bankruptcy and his job is to convert assets into cash to pay to your creditors. The trustee can sell any property that exceeds certain values which you are allowed to keep under the law. Most people do not have enough equity in property to actually lose anything. Chapter 7 bankruptcies are usually completed within 4 months of filing.
Chapter 13 is often called a ‘wage earner’ or ‘debtor reorganization’ bankruptcy. This kind of bankruptcy is often used to stop foreclosures or repossessions and to catch up house or car payments which are behind or overdue. It can also be used to keep property that the trustee would have sold in a Chapter 7 bankruptcy. To qualify for a Chapter 13, a debtor must be able to show a consistent stream of income from which to make payments. This kind of bankruptcy usually runs for 36 to 60 months and is much more expensive than a Chapter 7.
The other kinds of bankruptcy are so infrequent that there is no need to take your time to discuss them here.
At the end of a bankruptcy, debtors receive a discharge of their obligation to pay most of their debts. This means that you no longer owe the debt and creditors can no longer force you to pay them. There is a list of ‘exceptions to discharge’ and you can be required to pay these debts even after a bankruptcy. Some of these exceptions are child support, alimony, court fines, criminal restitution, personal injury damages for driving drunk or under the influence of drugs, debt incurred by fraud, most student loans, and most taxes. Significant tax debts can be discharged if the timing is right, so don’t assume you will be stuck with them.