5 Myths About Bankruptcy

There are many myths and misconceptions surrounding the bankruptcy process. When making the decision whether to initiate the bankruptcy process, it’s important to be able to separate fact from fiction. Here are 7 of the most common myths surrounding bankruptcy.

  1. Bankruptcy will ruin my credit.

For many people considering filing, this may be a moot point as they likely already have a low credit score. In any event, filing for bankruptcy can actually sometimes improve your credit score. As far as your credit report goes, a Chapter 7 bankruptcy will show on the report for 10 years. Again, this may not be a bad thing. Borrowing opportunities may actually increase when prospective lenders see that you filed and are in the process of rebuilding your credit.

  1. I make too much to file for bankruptcy.

Even if you’re taking home more than your state’s median income, you may still be eligible for Chapter 7 bankruptcy. To qualify for Chapter 7, you need to pass a mean test. Basically, this entails that if you have a certain amount of cash left over after subtracting your expenses from income you will be denied. However, you may very well have significant expenditures that outweigh your income. This is where a good bankruptcy attorney comes in; your attorney can prove your need for bankruptcy relief in spite of your income.

  1. I’d be better off paying all of my debts.

While filing for bankruptcy is undoubtedly a serious financial step to take, it may still be the right one. The easing of financial stress and the sense of “wiping the slate clean” can provide a huge sense of relief. According to Time’s Money column,

“If your debts are more than 50% of your annual income and you see no way to pay them off within five years, bankruptcy is likely your best path toward living debt-free.”

  1. Filing for bankruptcy means I’m lazy or a deadbeat.

Many people buy in to the myth that bankruptcy is a personal failing. In fact, bankruptcy is simply a tool that can help people regain control over their financial state. Many people who file for bankruptcy have exhausted all other options in trying to resolve their debt problems. With stagnant wages and medical costs that continue to sky rocket, the truth is that bankruptcy is nothing more or less than a remedy for a specific set of financial conditions that can happen to anyone.

  1. If I file, I’ll lose everything.

The truth is you may be able to keep a lot more than you think. The majority of Chapter 7 bankruptcies are no-asset cases where the debtor doesn’t have to give up any possessions. In these cases, you are allowed to carve out exemptions for basic assets that are necessary for your daily life. This can vary depending on the state; for people in Oregon or Washington, your best bet is to contact a reputable bankruptcy attorney in your state to learn more.

Chapter 13 vs. Chapter 7: Which is Right for You?

When deciding whether to pursue a Chapter 7 or Chapter 13 bankruptcy, it is wise to sit down with a bankruptcy attorney and analyze your income, assets, debts, and your financial goals. For example, your situation might be such that you don’t qualify for Chapter 7, and would be better off repaying your debt over a period of time in a Chapter 13 repayment plan approved by a bankruptcy court.

A Chapter 7 is a liquidation bankruptcy designed to erase a person’s unsecured debts (e.g. credit card debt and medical bills). To qualify, you must have little to no disposable income. A Chapter 13 is a reorganization bankruptcy designed for debtors who still have a regular income and are capable of repaying at least some of their debt through a repayment plan. This is the option for those who cannot pass the Chapter 7 means test. Another reason to opt for a Chapter 13 is that it offers some benefits that a Chapter 7 does not (like the ability to catch up on mortgage payments you’ve fallen behind on). Below are some additional factors to consider.

Reasons why you might file for Chapter 7:

  • You do not have the ability to repay your debt in a repayment plan.
  • You urgently need relief from your creditors. After you file for Chapter 7, the bankruptcy court can issue a discharge order in as little as 3 months; following the discharge order, you will no longer be personally liable for any dischargeable debt.

Reasons why you might file for Chapter 13:

  • You are not eligible for Chapter 7 in the first place, or have significant debts that are not dischargeable under a Chapter 7 discharge.
  • You want to avoid home foreclosure, stop your car from being repossessed, or keep property that would be nonexempt under Chapter 7.
  • You want to repay your debt, rather than have it discharged.

Are All Debts Discharged in Chapter 7?

You may have heard that you can extinguish all of your debt completely in one fell swoop if you file a Chapter 7 bankruptcy. In many cases, most of your debt can be discharged through a successful Chapter 7 filing, and all debts could potentially be discharged depending on the nature of the encumbrances. However, there are some debts that can never be discharged through bankruptcy.


For the most part, tax debts are not dischargeable. Tax liens and property taxes that have been assessed within a year of your bankruptcy filing date cannot be discharged.  If you are an employer, taxes that you are required to pay on behalf of your employees, like payroll taxes, can’t be discharged. Plus, sales taxes that have been paid to you by customers that you are supposed to pass along the government are not dischargeable. Though taxes are usually non-dischargeable, when very specific circumstances exist, it is possible to discharge some income tax debts.


If you are required to pay spousal support or alimony, the bankruptcy filing will do nothing to shield you from your responsibilities. The same thing is true for child support or any debts that you owe to your spouse that came about due to a dissolution of marriage. Any legal fees that you may have incurred during a child custody or child support matter would not be dischargeable. If you have financial obligations as a result of a judgment against you after a drunk driving accident that caused an injury, the debt will not be discharged in bankruptcy. You can see a complete list of non-dischargeable debts if you visit this page on the Cornell University Law School website.


The debts that we have been looking at simply cannot be discharged, but there can also be procedural barriers that prevent discharges when they could have otherwise been granted. You have to fill out detailed financial disclosure forms when you file for bankruptcy, and if anything is done incorrectly or dishonestly, discharges can be denied. You also have to complete a debtor education course to qualify for a discharge.


Set Up a Complimentary Bankruptcy Case Evaluation


A ready legal resource is just a phone call away if you would like to explore the debt relief avenues that may be available to you. We have locations in many metropolitan areas in Oregon, including Albany, Medford, and Eugene, and we also have offices that serve the Tri-Cities and Vancouver in Washington. To schedule an appointment, send us a message through the contact page on this website.


What Are Bankruptcy Exemptions?

Our firm has bankruptcy law offices in many different cities throughout the state of Oregon, including Medford, Grants Pass, Coos Bay, Bend, and Portland. If you are filing for a Chapter 7 bankruptcy in the state of Oregon, you are required to surrender certain types of property to a bankruptcy trustee so it can be liquidated. However, in many cases, there is no property that can be liquidated, because many forms of property are exempt for bankruptcy purposes.


In Oregon, you have the option of using the federal exemption, or the state exemption. However, you cannot flit from one to the other depending on the piece of property that is in question. The most significant exemption involves your home or any real property that is eligible for a homestead exemption. Call us today do discuss which exemption law would best apply to your situation.


Personal property is exempt with rather modest limits. For example, as much as $1800 worth of clothing, jewelry, and other apparel items would be exempt. If you have a piano, some artwork, and/or a book collection, the exemption is $600. Furniture and other assorted household items are exempt with a limit of $3000. A single firearm would be completely exempt if it is not worth more than $1000.


Additionally, Social Security payouts, individual retirement accounts, and pensions are included under the exemption umbrella. Any money that you may have in a health savings account would be untouchable, and alimony payments and the tools of your trade would be exempt as well. In addition to the exemptions that we have itemized here, there are a number of others.


Now is the time for action if you have been thinking about filing for bankruptcy. As you can see, you are not necessarily forced to give up everything that is important you in return for a fresh financial start. If you would like to discuss your situation with a licensed bankruptcy attorney, call us at 1-800-682-9568 to set up a free, no obligation case evaluation.



Bankruptcy in Washington State

We practice law in the state of Washington with offices in Vancouver and Kennewick. Bankruptcy proceedings are typically covered by federal laws, but there are certain state-by-state peculiarities. Let’s take a look at some of the steps that you would take if you are going to be filing for bankruptcy in Washington state.


Credit and Debtor Education Counseling


The government wants to make sure that you have a firm grasp on exactly what you are getting into when you file for bankruptcy. To this end, you are required to complete a pre-bankruptcy credit counseling course. These courses are offered by a number of different sources that are approved to provide courses for Washington residents. Plus, you can complete the course online, so they try to make it as convenient as possible. You can see a list of the approved credit counseling agencies on the United States Department of Justice website. To adhere to the guidelines, you have to complete this course within 180 days of your bankruptcy filing.


There is another form of testing required when you file for bankruptcy in Washington. The ultimate objective is to have certain debts discharged, which means they are essentially wiped away. After the bankruptcy has been filed, you have to complete a debtor education course, and if you fail to do so, your debts will not be discharged. You can access the list of approved course providers here.


Document Completion and Filing


As you might imagine, you have to complete and submit bankruptcy forms that are specific to the state of Washington. Your assets, your debts, and your income will be recorded on the forms, but you have to be aware of the fact that some of your property is exempt for bankruptcy purposes. The exact nature of the exemptions and will vary from state to state, and a Washington bankruptcy attorney can help you navigate these complicated waters.


There is also a means test applied when you file for bankruptcy in Washington. To qualify for a Chapter 7, you must be able to prove that you can’t afford to keep up with a repayment plan that could be part of a Chapter 13 filing. You automatically pass the test if your income is less than the median income in the state of Washington at the time of the filing. According to the Washington State Department of Social and Health Services, as of the end of the 2016 calendar year, the median income for a single individual was $3797 per month, which factors out to $45,564.


Give Us a Call Right Now!


Now that you have a bit of basic information, you may want to take the next step toward debt relief. If you would like to schedule a no-obligation case evaluation with a licensed Vancouver or Kennewick, Washington bankruptcy attorney, give us a call at 1-800-682-9568

What Your Credit Union Won’t Tell You

“The hogtie is a method of tying the limbs together, rendering the subject immobile and helpless. Originally, it was applied to pigs (hence the name) and other young four-legged animals[i].”

If you are a member of a credit union there is a good chance you have been hogtied by them without even knowing it.  Many of you believe that the money deposited in your credit union account is yours to do with as you please.  I am sorry to say you are sadly mistaken.  In Oregon and Washington credit unions operate by their own set of laws[ii].  Both states allow credit unions to assert liens on the accounts and to take your money when they feel like it.  It is called “cross collateralization[iii].”

For example – A client recently had his checking account frozen at a local credit union because his wife had told a friendly teller she was “worried about how they were going to make the truck payment due later that month and maybe it would be better just to turn the truck in” [ie. give it back to the credit union].  Unfortunately while she was telling this to the teller her husband had over $5,000 in his account and was in fact current on the truck and the visa they had with the credit union.  Despite all of this they froze his account, denied him access to the funds and left him in limbo.  When asked about the legality of the credit union’s actions their lawyer’s reply was short and simple, they cited ORS 723.454.  This Oregon law that gives credit unions an automatic lien on your accounts – and thus makes it legal for them to take your money even though you are not in default on any loans with them.  Don’t breathe easy if you’re in Washington, they have the same law (RCW 31.12.416).

Another client ran into financial trouble and missed her credit card payment to her credit union.  In response they froze all of her accounts, seized the money and applied it to the credit card debt.  She could live with that but when they took the money from her kids’ separate accounts she felt they had crossed the line.  She tried explaining it was not her money it was birthday money from grandparents and allowance money the kids had saved up.  When the credit union was contacted they again cited the lien statute and said because the mother’s name was on the account they could seize the funds.

It’s one thing to go knowingly into an agreement fully aware of all the ups and downs.  It’s another to have them glossed over and their meaning minimized.  Years ago I needed a short-term loan from my credit union to purchase a car.  As I was reading the contract (I am a lawyer after all) I saw the words “cross collateralization.”  When I asked the young credit union clerk what that meant she smiled excitedly and replied “it means you could come down and get a visa credit card without even filling out an application!”  I started to reply asking “But, if I default on my car loan does it mean you could then clean out all of my accounts?”  But after the word “default” my wife grabbed my leg under the table which in those situations means “don’t interrogate the nice young clerk who is giving us a loan” so I stopped my question, smiled and thanked her for the loan.

The moral of the story is that while some credit unions may do a fair job of managing your accounts you should never (and I mean NEVER) borrow money from the one where you primarily do your banking.

[i] https://en.wikipedia.org/wiki/Hogtie


[ii] (ORS Chapter 723 “Credit Unions” for Oregon and RCW 31.12 “Washington State Credit Union Act” in Washington).

[iii] https://en.wikipedia.org/wiki/Cross-collateralization

Does Bankruptcy Wipe Out Lawsuit Judgements?

If you fall behind on a debt, the creditor can file a lawsuit in an effort to get a judgment against you.  A judgment allows a creditor to garnish wages and bank account and it also allows them to put a lien on your home.  Many people who are in this situation consider the possibility of a bankruptcy filing. When you file for bankruptcy, you get an automatic stay immediately. This prohibits creditors from trying to collect on their debts while the stay is in place, and a pending lawsuit would be stalled. Even if there is an existing judgment, if the debt is dischargeable, bankruptcy would in fact wipe it away when the discharge is granted, so you will be free going forward.

Dischargeable debts are typically unsecured debts like credit card balances, certain types of personal loans, and unpaid health care bills. There are other types of debts that cannot be discharged. For example, the laws are very strict when it comes to family law matters. Child support payments are never going to be to be discharged through bankruptcy, and spousal support is also a non-dischargeable debt.

Many people struggle with student loan debt and unfortunately this type of debt cannot be discharged through bankruptcy (with limited exceptions). If you have a judgment against you due to an injury or death that was caused by an instance of drunk driving, your liability will not go away if you file for bankruptcy. Plus, if you owe any type of debts to the government, like back taxes or fines, they would not be discharged through a bankruptcy filing. These are all debts that are automatically non-dischargeable, but a creditor can file an objection to a discharge on a debt that is not always non-dischargeable when certain circumstances exist.

Schedule a Complimentary Case Evaluation Today!

There is no reason to sit around wringing your hands when you reach the conclusion that your debt has become overwhelming. Bankruptcy can be the solution that provides you with a new lease on life so that you can move forward and start to rebuild your credit history. We have an office that serves the Tri-Cities in Washington, and we have a Vancouver location. Our firm also assists clients throughout the state of Oregon, and we offer free, no obligation consultations. Give us a call right now at 800-682-9568 and we will to be glad to schedule an appointment that fits into your schedule.

Can a Collection Agency Call Me at Work?

There are few things more annoying than unbridled collection attempts from very rude and aggressive collectiong companies. In far too many cases they cross over the line, and there is indeed a line in place. It was drawn through the passage of the Fair Debt Collection Practices Act (FDCPA). This piece of legislation spells out the rules with regard to fair debt collection practices, and you should understand your rights if you are under siege by collection agencies.

First of all, to address the specific question that serves as the title of this blog post, collection agents may not contact you at your place of employment IF they have been made aware of the fact that you are not allowed to receive these calls. You must tell them to not call you at work.  You also have rights when it comes to the times of day that collection agencies are allowed to contact you. Generally speaking, they can only try to get in touch with you between 8:00 a.m. and 9:00 o’clock in the evening. However, if you work unusual hours and they know it, they would be required to adjust their actions accordingly.

Collection agencies are not allowed to threaten you in any way, and they cannot publish your name on any type of lists that are meant to embarrass you or diminish your reputation.   Additionally, collection companies are not allowed to call you repeatedly, and they are breaking the law if they use foul or abusive language when they are speaking with you.

These are all important and useful provisions for debtors, but there is one section of the law that may be the most valuable of all. If you send a collection agency a cease and desist letter demanding that they stop contacting you, they are required to comply.  The only contact they can make after that time is to serve you with a lawsuit.

Lastly, if they know you have hired an attorney, they can only discuss your debt with the attorney and the must leave you alone.

Retain a Bankruptcy Attorney!

As you can see, there are many restrictions placed on collection agencies by the federal government. Again, if you have a lawyer representing you, collectors will be required to contact your attorney, so you wouldn’t have to deal with them at all.  In addition, when they know you have an attorney, they know you have the ability to sue them for violating the FACPA,  We have offices in many different cities in Oregon, including Coos Bay, Klamath Falls, Bend, and Portland, and we would be glad to provide you with a free initial consultation. You can set the wheels in motion if you call us right now at 800-682-9568.

Do I Keep My Property in a Chapter 7?

A Chapter 7 bankruptcy is a liquidation bankruptcy. Speaking in a very general sense, this means that your property is turned over to a trustee when you file for this type of bankruptcy. The trustee is required to liquidate the property and the proceeds will be used to pay back as much of your debt as possible. This may sound like a rather unfavorable arrangement, but it is not as bad as it sounds, because most or all of your property is considered to be exempt. This means that you won’t have to surrender this property to the bankruptcy trustee.

If you own your own home, it is probably your most important possession. We practice law in the state of Oregon, with offices in Portland, Eugene, Salem, Medford, and several other cities. In Oregon, up to $50,000 in equity in your home including a mobile home is exempt when you file for a Chapter 7 bankruptcy.  We also have offices in the state of Washington serving Vancouver and Tri-Cities residents.  In Washington, the exemption for homeowners is $125,000.

Your home is not the only type of property that will be exempt when you file for Chapter 7 in Oregon.  Money you received from alimony and child support payments, social security or pensions is all exempt. There are additional exemptions if you receive a settlement for a bodily injury claim.  In addition, if you receive compensation to account for a loss of future earnings, you will not be required to surrender it to the trustee. There are additional exemptions for cars, furniture, personal items, guns and other items.  If a person does not need to use the State homestead exemption (see above), then Federal exemptions can be used which include a “wildcard” exemption in the amount of $13,100 which can be used to protect any asset.

Discreet, Confidential Legal Counsel

We understand the fact that it can be disconcerting to speak about sensitive financial matters with an attorney that you just met. The members of our team have been assisting people for many years, and we chose this area of the law because we sincerely want to help others. When you engage our services, you will speak with a friendly, down to earth bankruptcy attorney who will answer all of your questions and help you make the right decisions. If you would like to set up a complimentary case evaluation, send us a message through the following link:  bankruptcy lawyer.

Q & A Session With a Bankruptcy Attorney


As bankruptcy attorneys, we are asked many of the same questions by our clients. In this blog post, we will present a hypothetical example of a typical question and answer session with a bankruptcy lawyer so that you can come away with a basic foundation of useful information.

Will collection calls stop if I file for bankruptcy?

The answer to this question is a resounding yes. When you file for bankruptcy, you get an automatic stay. This prevents most creditors from making any attempts to collect debts while the bankruptcy process is unfolding. It goes into effect immediately. Additionally, if you have legal representation, collection agencies are not allowed to call you. They are required to contact only your attorney.

Does a bankruptcy filing prevent a foreclosure?

Yes, bankruptcy can prevent a foreclosure. If you are behind on your mortgage payments, you can pay back the arrearage over time through a repayment plan in a Chapter 13 filing. In Chapter 7, up to $50,000 in equity in your Oregon home is exempt, so you can maintain ownership of your home as long as you are current on your payments if you have less than $50,000 equity ($50,000 for a married couple, $40,000 for an individual).

What is the difference between Chapter 13 and Chapter 7?

We will provide a short answer here. Chapter 13 is a reorganization bankruptcy. You are allowed to keep your property, and your debts are reorganized so that you can make affordable payments over a three-year or five-year period. Many debts are eliminated in a chapter 13 just like a chapter 7. Chapter 7 is a liquidation bankruptcy. Nonexempt property (if there is any) will be liquidated by the bankruptcy trustee to pay back as much of your debt as possible. Unsecured debts like credit card bills, old utility balances, medical charges, and unpaid lease obligations would be discharged completely.

How long will a bankruptcy filing remain on my credit report?

It depends on the type of bankruptcy that you file. A Chapter 7 bankruptcy will remain on your credit report for 10 years, and a Chapter 13 will last for seven years. The time period starts the day we file the case with the bankruptcy court.

Take the First Step Toward a Fresh Financial Start!

Now that you know some of the basics, you may be ready to move forward and have a detailed discussion with a licensed bankruptcy attorney. We have offices in Tigard, Salem, Klamath Falls, Albany, Grants Pass, Bend and several other cities in Oregon, and we also have locations in Vancouver and Tri-Cities in Washington. If you would like to schedule a free consultation, give us a call at 800-682-9568.