Can Bankruptcy Prevent Utility Shut-Offs?

If you are in danger of losing your gas, electric, and/or water services because you have fallen behind on your bills, can you file bankruptcy to stop the utility companies from shutting off your services? This is a good question, and we hear it quite frequently when we consult with clients in Medford, Eugene, Portland, Bend, and the other cities that we serve. Unfortunately, the answer is a less-than-definitive yes and no.

A Chapter 7 bankruptcy is a liquidation bankruptcy, which means that unsecured debts can be wiped away if you qualify and you file successfully. You get an automatic stay when you file for this type of bankruptcy, which freezes creditors in their tracks while the process is underway. They can no longer try to collect on unpaid unsecured debts. Utility bills are unsecured debts and can be eliminated in a chapter 7 or 13.

Utility companies cannot cut off your services immediately after you file, but you only have 15 days to provide them with “adequate assurance” that you will be able to pay your bills going forward. This usually equates to paying them a deposit of twice your average monthly bill. If you fail to comply with this adequate assurance provision, they can indeed suspend your service. Conversely, if you do meet the requirement, shut-offs are prohibited, and this remains intact when your outstanding utility balances are discharged when the bankruptcy is finalized.

We should point out the fact that bankruptcy is not your only option if you want to take action to prevent utility companies from terminating your service due to unpaid bills. In Oregon, if a health care condition is present, a medical certificate can prevent disconnections for a limited period of time. Utility companies also offer deferred payment plans for people who are experiencing financial hardships that can prevent service terminations.

If you are concerned about a loss of utility services and other negative consequences that can come about as a result of mounting financial problems, we are here to help. We have been providing bankruptcy assistance in this area for more than three decades, and we provide each and every one of our clients with personalized attention. Our firm offers free initial case evaluations, and you can set up an appointment right now if you call us toll-free at 1-800-682-9568.

Bankruptcy Is Not a Badge of Dishonor

There are certain trigger words that can have negative connotations in some circles, and bankruptcy is one of them. As attorneys who help people who are struggling with debt in Portland, Vancouver and other cities in Washington and Oregon, we definitely understand this dynamic, but it is misguided. Bankruptcy is a legal tool. If you are experiencing financial difficulties for any reason, the law allows for corrective actions so that you can get back on track financially.

At the same time, a very significant percentage of people who file for bankruptcy handled their finances perfectly well until they were confronted with unexpected health care bills or other expenses. A study that was conducted in 2016 by T.H. Chan School of Public Health at Harvard along with National Public Radio and The Robert Wood Johnson Foundation shed some interesting light on the subject. Over a quarter of the respondents stated that health care expenses that accumulated over the preceding two years yielded very negative financial consequences. Four out of ten received collection calls from health care providers, and 23 percent of the poll participants were forced to take on credit card debt that will be hard to manage. Seven percent of these individuals had to file for bankruptcy.

Regardless of the underlying circumstances, bankruptcy can give you a fresh start, and you are not necessarily being unfair to your creditors if you take this route. With a Chapter 13 bankruptcy, you simply reorganize your debt and make payments that you can afford. The court requires you to utilize all of your disposable income after you pay for the basic necessities of life to pay down your debt. Creditors really can’t ask for anything more than that. A Chapter 7 bankruptcy does wipe away unmanageable debt, but you can’t qualify for this type of bankruptcy if your income will allow you to pay back your creditors.

We understand the fact that we discuss very delicate financial matters when we consult with our bankruptcy clients in Portland, Eugene, TriCities, Vancouver, and the other cities that we serve. This area of the law is our passion because we sincerely enjoy helping people. There is no need to feel any sense of uneasiness or trepidation. If you will like to obtain more information about bankruptcy before you proceed further, you can learn a lot if you read through our frequently asked questions. When you are ready to move forward, you can send us a message through our contact page to request a complementary, no obligation case evaluation.

Which Type of Bankruptcy Should I Choose?

When bills pile up and creditors start calling, it’s natural to feel lost and unsure of what steps to take next. One option you might be considering is bankruptcy, which can help you regain financial stability by eliminating or restructuring your debt. But with several types of bankruptcy available, how do you know which one to pick? Here are the most common chapters of bankruptcy to help you determine which is best suited to your needs.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is intended to provide relief for individuals with limited assets and low income from their unsecured debts. In order to qualify for this chapter, you must be able to pass a means test, which generally means your income does not exceed the median income in your state of residence. Under Chapter 7 bankruptcy, you may be able to eliminate debts such as:

  • Medical bills
  • Overdue utilities
  • Outstanding credit card debt
  • Lease agreement deficiencies
  • Collection agency accounts

Even though this chapter can wipe away many kinds of debt, it doesn’t cover everything. Some types of debt may stick around even after filing for bankruptcy. For example, most people still need to pay secured debts, taxes, child support or student loans.

How Does Chapter 7 Bankruptcy Work?

Chapter 7 bankruptcy is commonly referred to as a liquidation bankruptcy because the courts will assign a trustee to sell any of your non-exempt assets. The proceeds from those sales will go toward paying off your creditors. Non-exempt assets can include items such as:

  • Valuable artwork
  • Jewelry or expensive clothing
  • Investments outside of retirement accounts
  • Valuable collections or musical instruments
  • Properties outside of your primary residence
  • Newer-model vehicles in which you have equity

It’s important to note that it is possible to retain your house and your vehicle when filing for this type of bankruptcy. Though it may be difficult to face liquidation, doing so could allow you to eliminate debts while retaining the assets that are most important to you and your family.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is intended to provide debt relief for individuals with more assets or higher disposable income. This is a good option for anybody who has enough income to make reasonable payments toward debts even after basic living expenses are met. If you are unable to pass the means test required for Chapter 7, then this chapter may be right for you.

How Does Chapter 13 Bankruptcy Work?

Chapter 13 is often called a reorganization bankruptcy because it restructures debts to make them more manageable, rather than completely eliminating them. If you file for this chapter, you will create a payment plan proposal to repay your creditors. Unsecured debts, such as credit card balances or unpaid medical bills, may be partially forgiven to provide some relief.
However, certain debts need to be paid in full. These can include:

  • Alimony
  • Child support
  • Mortgage delinquencies
  • Motor vehicle payments
  • Taxes

With this type of bankruptcy, you can keep all of your property while paying down debts and reaching financial stability. Though the process can feel overwhelming, you don’t have to face it alone. The debt relief attorneys at OlsenDaines can help you each step of the way.

Chapter 11 and Chapter 12

While Chapter 7 and 13 are the most common types of bankruptcy, there are two other options that could be a better fit depending on your circumstances:

  • Chapter 11 is intended for businesses and individuals who do not qualify for another chapter. Similar to Chapter 13, this type of bankruptcy works by reorganizing your debts under a payment plan. However, the debtor will generally have a longer repayment period than those filing for Chapter 13.
  • Chapter 12 is specifically for farmers and family fishermen. It is a lot like Chapter 13, but is designed specifically for farm and fishing operations. Additionally, it gives debtors more opportunity to modify secured debts on property such as home mortgages and equipment loans.

Get Legal Assistance from a Bankruptcy Attorney

Considering bankruptcy, but still unsure of which chapter is right for you? That’s where we can help. At OlsenDaines, it’s our mission to educate, inform, and empower people about their legal options for dealing with debt. We have proudly served residents throughout Oregon for over 40 years with the goal of helping them reach financial stability and security. Whether you want to learn more about your bankruptcy options or you’re ready to start filing, we’re here to make every step easier. Give us a call today to schedule your free legal consultation!

Say Goodbye to FDCPA

Supreme Court Justice Neil Gorsuch issued his first opinion this week.  We learned a lot from this opinion.  Unfortunately, the most important thing we learned was that he can come to any conclusion he wants – that makes him a perfect fit for the Supreme Court.  This opinion is being heralded as well written and Gorsuch is praised for his “Melodic Phrasing”  (ABC) and his “Writing Flair” (FOX).  What was lost in all the praise was the simple fact that with one opinion, Justice Gorsuch eliminated the whole of the FDCPA (Fair Debt Collection Practices Act – 15 USC 1692).

The primary requirement when a judge is interpreting a law is to give the law some meaning.   What the Court ruled was that to avoid the FDCPA completely, all a debt collector has to do is buy the debt instead of collect the debt for another.  Nothing in the opinion states that a collector can not have a sell back provision and sell a debt back to the original lender if the collector is unable to collect.

Bottom line:  A lender and a debt collector can now write their agreement in such a way as to completely avoid the FDCPA.  Justice Gorsuch has now given the FDCPA no meaning.  For the 50% of adults in America who have debts:  You just lost your right to not be harassed.

Does Bankruptcy Discharge Alimony Responsibilities?

A bankruptcy filing can provide debt relief, but it is not a magic wand that makes every type of debt disappear forever. Certain types of debts are looked upon as priority debts that cannot be discharged via a bankruptcy filing. If you are required to pay your spouse alimony or child support, this would be a priority debt, and it could not be discharged. You would still be required to make your alimony payments. However, the bankruptcy filing could help if you are finding it difficult to keep your alimony obligation current.

To explain by way of example, let’s say that you are divorced, and you are required to make alimony payments. Over a period of time, you have accumulated a number of credit cards, and the payments are more and more difficult to make. You are also making payments on some large medical bills. These expenses eat up a large chunk of your disposable income, so it is hard for you to keep your other responsibilities current.

Under these circumstances, if your income is less than the median income in your state, you could choose to file for a Chapter 7 bankruptcy. We should point out the fact that it is possible to qualify even if your income is more than the median if you have very little disposable income left after you pay for the basic necessities of life. You get an automatic stay when you file for this type of bankruptcy, so most creditors have to suspend their collection efforts. However, this does not extend to alimony payments.

Your nonexempt property would be liquidated by the trustee to pay back unpaid debts under a Chapter 7, but most people who file have little to no property that is not exempt. Going back to our example, if you don’t have much property that can be liquidated, the credit card debt and medical expenses would be discharged permanently after the bankruptcy became final. Since you would not have to pay these debts anymore, it would be much easier to make your alimony payments on time.

Schedule a Free Consultation

If you reside in Tacoma, Vancouver, or tri-cities Washington, we have an office near you, and we also have locations throughout the state of Oregon. We offer free bankruptcy case evaluations, and we would be glad to gain an understanding of your situation and make the appropriate recommendations. To schedule an appointment, give us a call at 1-800-682-9568.

What Can I Keep When I File for Bankruptcy?

If you are thinking about filing for bankruptcy, you may be concerned about the possibility of surrendering all your property so that it can be liquidated to pay back your debts. In fact, you may be able to keep some or all of your property when you file for bankruptcy. It will depend on the circumstances and the type of bankruptcy that you file. First, let’s look at the way that property is handled when a Chapter 7 bankruptcy is filed.

This type of bankruptcy is called a liquidation bankruptcy. Property that is not exempt would become part of the bankruptcy estate, and it would technically be liquidated by the trustee to pay back some of the outstanding debt. However, in many cases, there is no nonexempt property to speak of, so there are no losses. You could keep exempt property when you file for Chapter 7, including your home and your motor vehicle, assuming you have limited equity and you are up to date on your payments. Limited personal property and the tools of your trade are exempt, there are a number of other exemptions.

To qualify for a Chapter 7 bankruptcy, you must pass a means test, because you have to make an effort to pay back your debts if you have the means to do so. If your income is less than half the median in your state of residence, you would pass this test. You could possibly pass the test even if your income exceeds the median if your financial responsibilities severely limit your disposable income. A formula is utilized to make this determination.

Chapter 13 bankruptcy would be an option for you if you cannot pass the means test. This is a reorganization bankruptcy. Your debt is restructured to become manageable, and you use your disposable income to make payments over a three-year or five-year period. It can also be the right choice if you are behind on your mortgage and you want to prevent a foreclosure. You can’t pay back the arrearage to stop a foreclosure if you file a Chapter 7 when you are behind on your mortgage payments. However, you can fold it into a repayment plan if you file for Chapter 13. With a Chapter 13, you can keep all your property if you honor your repayment plan and keep your ongoing obligations current.

Set Up a Free Case Evaluation

We have shared some of the basics with regard to property retention in this brief blog post, but you probably have more questions if you are thinking about a bankruptcy filing. If you would like us to provide you with answers, we would be more than glad to do so. Our firm offers free consultations to people in Portland, Eugene, Bend, and a number of other cities in the state of Oregon. To set up an appointment, call us right now at 1-800-682-9568.

Can Bankruptcy End a Garnishment?

If your wages are being garnished by a creditor, your life can become very difficult. After all, if you were in a comfortable financial situation, you never would have fallen behind on your debts in the first place. The last thing you need is to see a smaller number every time you receive a paycheck or a direct deposit from your employer. While this is going on, you probably have other debts you must pay, so you have to try to do more with less. The situation can be impossible to manage, but the good news is that there are legal steps that you can take to end a garnishment to create some financial space for yourself.

Bankruptcy can provide a host of benefits, and a filing can have an immediate positive impact. When you file for bankruptcy, you receive an automatic stay right away. This stops most creditors from proceeding with their collection efforts. As a result, let’s say that you fall behind on your credit card debt, and the credit card company files a lawsuit against you. They receive a judgment from the court, and it includes a wage garnishment.

If you file for a Chapter 7 bankruptcy, you would get an automatic stay. This disallows most types of creditors from seeking payment as long as the stay is in effect. It would extend to the wage garnishment the court imposed as part of the judgment. With a Chapter 7 bankruptcy, unsecured credit card debts can be discharged by the court after the stay is lifted, so the garnishment would end permanently if the debt is discharged.

While it is true that a bankruptcy filing can put an end to a garnishment, it is not necessarily going to be the right choice under all circumstances. You have to remember that a Chapter 7 will remain on your credit report for 10 years, and it will be very difficult for you to get lines of credit at reasonable interest rates.

The decision can be a difficult one, and this is why it is wise to explore all your options with the benefit of professional legal counsel. As bankruptcy attorneys, we hear a lot of the same feedback from our clients after we have helped them get back on track. Though they are quite relieved, many of them share a common regret: They wish that they had reached out to us sooner.

Indeed, seemingly insurmountable problems can be quickly and efficiently addressed if you have strong advocacy by your side. We have offices in Portland, Grants Pass, Medford, and several other metropolitan areas in the state of Oregon, and we also have offices in Tri-Cities and Tacoma, Washington. If you would like to schedule a complimentary, no obligation case evaluation, send us a message through our contact page and we will get back in touch with you to nail down an appointment time.

 

Small Business Bankruptcy FAQs

If you are involved in the operation of a small business and things are not going very well financially, you may have questions about the potential benefits of bankruptcy. We provide this type of assistance to people in Tacoma, Tri-Cities, and Vancouver, Washington. Our firm also has offices in many different locations throughout the state of Oregon, including Portland, Eugene, and Medford. We have successfully counseled countless small business people over the years, and we are often asked many of the same questions. In this blog post, we will take a look at a few of them so that you have a basic foundation of information to draw from going forward.

Am I personally responsible for debts that have been incurred by my business?

The answer to this question depends upon the business structure that you are utilizing. If you are the sole proprietor of your business, you would in fact be held personally liable for the business debts. The same thing is true if you are a general partner in a partnership. On the other hand, if your business is a limited liability company, a corporation, or a limited partnership, generally speaking, you would not be personally responsible.

What types of bankruptcies are available to small business people?

There are three types of bankruptcies that are often used: Chapter 7, Chapter 13, and Chapter 11. Chapter 12 bankruptcy is also a possibility, but it is only available to family fishing businesses and family farmers.

What kind of bankruptcy should I file if I want to shut down my small business?

In many cases, a Chapter 7 will be the most efficient and effective choice under these circumstances. This is a liquidation bankruptcy that is available to limited liability companies, corporations, and partnerships. If your business qualifies and you file for a Chapter 7 bankruptcy, the bankruptcy trustee would liquidate the business property to pay back as much as possible, and the business would not be responsible for any debt that may remain.

You can also use a Chapter 7 bankruptcy if you are a sole proprietor, but it would be personal bankruptcy that encompasses your business debts.

Schedule a Small Business Bankruptcy Consultation

Now that you understand a few of the basics, you may be ready to take the next step. If you would like to schedule a free case evaluation, give us a call at 1-800-682-9568.

What Is a Priority Debt?

If you file for bankruptcy, the different debts that you have are not all created equal in the eyes of the law. Some debts are considered to be priority debts that cannot be discharged through a bankruptcy filing. Let’s look at the details as they apply to the two most common types of bankruptcy that are filed by individuals.

Priority Debt and Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is called a liquidation bankruptcy. Property that you have that is not exempt would become part of your bankruptcy estate. This property would be sold by the trustee, and the proceeds would be used to pay back a portion of your debts. Priority debts would be the first debts that would be paid by the bankruptcy trustee. These would include recent unpaid income taxes, alimony, child support, compensation that you owe to employees, and a handful of other less common types of debt.

Priority debts such as these will never be discharged, even after the bankruptcy is finalized. As a result, the creditors can continue to seek payment if they were not paid in full by the bankruptcy trustee after the liquidation. Plus, property that you acquire after the bankruptcy will not be part of the bankruptcy estate. As a result, priority debt creditors could seek to attach your wages going forward.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is a reorganization rather than a liquidation. You present a reorganization repayment plan to the bankruptcy court, and you are given three or five years to complete the plan. Under this type of bankruptcy, you don’t necessarily lose any of your property, and you may not have to pay all your creditors in full. In fact, you may not have to pay some unsecured debts at all.

The priority debts in Chapter 13 are identical to the priority debts that we described above in the Chapter 7 section. These debts must be paid in full over the term of your reorganization plan. Though it is not technically a priority debt, secured claims, like mortgage arrearage that is folded into the repayment plan, must be paid in full as well.

Schedule a Complimentary Case Evaluation

We have offices in Eugene, Grants Pass, Klamath Falls, Tigard, Salem, Portland, and a handful of other cities in Oregon and Washington. If you would like to schedule a free consultation, give us a call at 1-800-682-9568.

Do I Need a Lawyer to File for Bankruptcy?

Many people like to engage in do-it-yourself projects, and they have different motivations. Some individuals genuinely enjoy certain types of DIY challenges, and there are others who decide to go it alone because they want to save some money. There is nothing wrong with doing some things for yourself, and the information that can be easily obtained on the Internet makes it easier than it has ever been. However, you do have to know where the draw the line. You may feel confident replacing the alternator on your car, but do you think that you have the know-how to file for bankruptcy for yourself?

Technically speaking, you don’t have to have a license to practice law to file for bankruptcy. However, these are some rather complicated waters to try to navigate on your own as a layperson. First of all, do you know what type of bankruptcy to choose? You may hear about the fact that a Chapter 7 can make your credit card debts and medical bills disappear. This can be true, but are you sure you qualify for a Chapter 7? You have to pass a means test to qualify for this type of bankruptcy. If your income exceeds the median income in your state of residence, you won’t automatically qualify. A complex formula would be utilized to determine whether you are eligible to file a Chapter 7.

A Chapter 13 bankruptcy could be the right choice for you if you do not qualify for a Chapter 7. It can also be a better option if certain circumstances exist. For example, you cannot stop a foreclosure if you are behind on your mortgage through a Chapter 7 filing, but a Chapter 13 could allow you to repay the arrearage over time. When a Chapter 13 bankruptcy is filed, a complicated repayment plan is submitted to the court. This form of bankruptcy is so complex that there are some bankruptcy attorneys that do not handle them, so it is very unlikely that you could effectively file a Chapter 13 bankruptcy by yourself without any legal guidance.

We understand the fact that people who are experiencing financial difficulties are not particularly anxious to put out money to engage a bankruptcy lawyer. This is why we have established a very affordable fee structure, and our clients find that the value that we provide is extraordinary. Our firm offers free consultations to people in Portland, Eugene, Grants Pass, Bend, Tigard, and a few other Oregon cities, and we have locations in the state of Washington as well. If you would like to set up an appointment, send us a quick message through our contact page.