Should I Stop Paying Creditors If I’m Going to File for Bankruptcy?

Woman looking through bills. OlsenDaines, serving Oregon and Washington explains if you should stop paying creditors if you're going to file for bankruptcy.

If you’re choosing to file for bankruptcy, and you’re current on your debts, you may be asking yourself if you should stop paying creditors now.

Automatic Stay

The short answer is, no you shouldn’t stop paying creditors until you’ve officially filed. When you file for bankruptcy, the court will order an automatic stay which will prohibit lenders from making harassing collection calls, sending threatening letters, and trying to file lawsuits against you. But until then, they can continue to harass you so don’t be surprised if you suddenly stop making payments.

In most cases, the automatic stay remains in effect until your bankruptcy case is concluded. Keep in mind, it won’t stop every debt collector. Automatic stay orders will not halt child support, loans against your pension, or back taxes. And if you filed for bankruptcy in the previous year, the order will expire after 30 days.

  • Auto Loans: if you stop making payment on your auto loan, at some point the creditor will attempt to repossess your vehicle. If you want to keep the vehicle, you may want to continue making payments so you don’t run the risk of getting it repossessed.
  • Credit Cards: in most cases, people are fine not making their credit card payments, but you will likely be subjected to collection calls until you file for bankruptcy. If you just used a card before you realized you were going to file, you may want to continue to make payments. We recommend consulting with a bankruptcy attorney.
  • Home Loans: as with auto loans, if you stop making your mortgage payments, at some point the creditor will attempt to foreclose the home. If you want to keep it, you may want to continue making your monthly payments. Every case is different.

Bank Setoffs

If you’ve taken out loans through your bank or credit union and you’ve stopped making payments, they can institute a setoff. This allows them to withdraw money from one of your accounts to another to cover the loan payment. You may want to move your money around before missing a debt payment.

Experienced Bankruptcy Attorneys

Filing for bankruptcy can help you “start fresh” if you’re facing mounting debt and pressure from creditors. However, there are many missteps you should avoid in the months and weeks leading up to filing.

To ensure you reach your financial goals, it’s best to work with an experienced bankruptcy attorney. OlsenDaines has vast experience with bankruptcy. In fact, we’re the top bankruptcy filer in Oregon. We’ll help you navigate the process and get your life back on track. To schedule your free initial consultation, contact us today!

Life After Bankruptcy

Woman sitting on her sofa in relief, relaxing. OlsenDaines in Oregon and Washington talks about life after bankruptcy.

Filing for bankruptcy can provide you with relief if you’ve struggled with unmanageable debt but it also comes with some new challenges, such as dealing with a low credit score. The bankruptcy attorneys at OlsenDaines want you to start off strong after filing for bankruptcy, so follow these tips as you prepare for life after bankruptcy.

Think Positive

First of all, don’t be ashamed after filing for bankruptcy. We understand there’s a stigma involved with bankruptcy, which is mostly just misconceptions. Think positive, get back up, and try again. Many people and businesses have overcome bankruptcy and you will too.

Start Saving

Sit down and calculate your income and expenses. This will help you determine how much disposable income you have. After you’ve determined that figure, make it a point not to spend more than that every month.

Cut Down on Expenses

If you filed for Chapter 13 bankruptcy, you’ll repay secured debts through a court-managed payment plan. This means you’ll have to change your lifestyle a bit and you cannot take on a new car loan or credit card without the court’s permission first.

Rebuild Your Credit

Now that you’re starting off with a clean slate, you’ll want to rebuild your credit. Keep in mind, this is especially hard the first year following a bankruptcy filing. Apply for a secured credit card. Unlike a typical credit card, secure credit cards require a cash deposit. Pay off the balance each month and over time you’ll improve your credit score. OlsenDaines will set you up on a credit rebuilding program after filing bankruptcy.

Bankruptcy Experts

Any bankruptcy is difficult. Whether you’ve just finished discharging your debts or are thinking about declaring bankruptcy, OlsenDaines can help. We’ve been helping people throughout Oregon and Washington for over 40 years. Visit our website for more about bankruptcy and schedule your free bankruptcy consultation today!

Signs You Should File Bankruptcy

Woman looking stressed about debt. OlsenDaines serving Oregon & Washington talks about the signs you should file for bankruptcy.

Bankruptcy is typically a taboo subject, but filing for bankruptcy has helped thousands of people get the financial freedom they need. It will help repair your credit score, allow you to be stress-free, and most importantly, it will allow you to get on with the rest of your life.

Let’s take a look at some signs you should file bankruptcy.

You’ve Tried Negotiating Already

If you’ve already tried negotiating with creditors and they haven’t budged and you don’t have the funds to make your payments, it may be best to file for bankruptcy.

You’re Facing Foreclosure

If you’re behind on your mortgage payments and your lender is now threatening to foreclose on your home, filing for bankruptcy can help. It will allow you to keep your home and catch up on your mortgage payments.

Your Liabilities Exceed Your Income

If your debt amount is more than the monthly amount you have coming in, you may want to consider filing for bankruptcy. Underemployment and unemployment are major reasons why many individuals file for bankruptcy.

You’re Being Sued

If your unpaid debts have led to creditors filing a lawsuit against you, it’s a good idea to file for bankruptcy. Creditor lawsuits are often the start of aggressive tactics to seize your assets.

You Don’t Have Any Savings or Retirement Funds

If you’ve already used all of your savings and retirement funds to repay your debts, filing for bankruptcy may be a good idea because it will free up some of your income so you can better prepare for your future. You should talk with us before using up all of your retirement as those accounts can be protected from your creditors.

Experienced Bankruptcy Attorneys

If you have more debt than you can repay and are weighing your options, filing for bankruptcy may be your best option but it shouldn’t be taken lightly. Before making a decision, you should consult with a reputable credit counselor like OlsenDaines. We have knowledgeable and experienced bankruptcy attorneys all throughout Oregon and Washington ready to help. We’ll give you candid, honest, and caring advice. So contact us today for your free debt relief consultation.

What You Need to Know About Bankruptcy

Woman holding document, thinking. The bankruptcy lawyers at OlsenDaines serving Oregon and Washington talk about what you need to know about bankruptcy.

If you’re dealing with serious debt issues, filing for bankruptcy may be an option. It’s like getting a second chance. But it cannot wipe out all of your debt and it comes with some consequences, so keep reading to learn more about bankruptcy as you weigh your options.

What is Bankruptcy?

Bankruptcy is a legal court proceeding when a person is unable to repay their debt. A judge and court trustee will examine the person’s liabilities and assets and determine to discharge the debts. If they find the person cannot repay their debts, the person will have to declare bankruptcy.

Filing for bankruptcy can stop repossessions and foreclosures, and it can temporarily halt evictions.

There are two main types of bankruptcy people file for:

  • Chapter 7 Bankruptcy: this is the most common type of bankruptcy. You must earn less than the median income for family size in your state to qualify for this type of bankruptcy. In Chapter 7 Bankruptcy, the court will sell all of your assets, so you can pay off as much debt as possible.
  • Chapter 13 Bankruptcy: Also called a wage earner’s plan. To qualify, you must have a steady income and unsecured debt (less than $394,725) and secured debt (less than $1,184,200).

How do I know If I Should File for Bankruptcy?

While job loss and medical debt are the most common reasons people file for bankruptcy, here are some other situations which could cause you to consider bankruptcy.

  • Your wages are being garnished
  • You’re getting a divorce
  • You are unable to negotiate your debt
  • You have no assets or they’re worth less than your debt
  • You’re being sued
  • You can only afford to pay for things using a credit card
  • You use one credit card to pay off another credit card

If you’re facing serious debt, contact OlsenDaines for your free consultation because every situation is unique. As experts in bankruptcy law, we’ll address your financial difficulties and help you determine whether bankruptcy is right for you. We also offer a complimentary credit rebuilding program.

Bankruptcy and Student Loans

 

Ahh, the American dream. You start with nothing, get an education, work your assets off, and end up rich and successful. But is that really how it goes? Everyone knows that it is absolutely critical that you get a good education in order to get ahead. The average price of a college education can range anywhere from  $24,610 to $49,320! So what happens when you have little to no money yet need a college education or advanced degree to live the American dream? Many times, you take out student loans. And sometimes you end up living the American nightmare instead of the American dream. You find yourself drowning in student debt and despair.

Does that mean that you are you destined to drive a truck, work in the factory, be a farmworker, waitress, or work construction forever? Or that you have to always live near the poverty line in order to pay back your student loans?

We don’t think so. We believe that the poor should have access to good financial advice and be empowered with the financial information they need to not be taken advantage of when it comes to student loans or anything else.

Student Loan Debt.

We know that it is difficult to discharge student loan debt in bankruptcy. Most debtors won’t be able to discharge student loan debt through a Chapter 7 or Chapter 13 filing. But that does not mean you don’t have any options or possibilities.

The Undue Hardship Test.

Most courts are reluctant to discharge student loan debt. However, if you can qualify for the “undue hardship” exception, you may get your student loans discharged in bankruptcy. To qualify for undue hardship in Oregon, you have to be able to prove to the court that:

  • You have no money left over each month to pay your student loans
  • Your money problems aren’t going to get any better in the future
  • Over the years, you made a good faith effort to repay your student loans.

If you can answer these and other questions honestly, you may be able to qualify to have your student loans discharged.

Defenses to Student Loan Debt.

Another possible source of relief from student loan debt lies in unfair and illegal treatment. If you have defenses, such as a breach of contract, unfair business practices or fraud against your loan companies, you may not have to pay the debt at all.

Learn Your Options.

When it comes to student loan debt, there is no magic wand you can waive to get rid of them. But that does not mean you do not have hope or options. We are Oregon and Washington bankruptcy attorneys. We offer free consultations and we can help you. To set up an appointment, call us toll free at: 1-800-682.9568.

What You Can Keep After Filing for Bankruptcy

Many people believe that they will lose everything they own if they file for bankruptcy. Not true. In fact, most people who file for bankruptcy do not lose anything they own at all.

How can that be?

Well, the secret lies in…

Exemptions.

Most consumers file for Chapter 7 (or “liquidation”) bankruptcy. In a Chapter 7, exemptions determine what property you get to keep. If your property is exempt, whether it is your home, your car, your pensions, furniture, your clothes, etc., you can keep it during and after the bankruptcy. Exemptions protect your property and put it beyond the reach of the bankruptcy trustee (“trustee”).

If the property is nonexempt, then the trustee is entitled to sell it to pay your unsecured creditors.

In a Chapter 13 bankruptcy, it is the exemptions that determine how much you will have to pay to nonpriority, unsecured creditors.

If you are considering bankruptcy in Oregon or Washington, it’s important for you to understand how exemptions work and to know what property is exempt in those states. We can help. We have offices in Tigard, Salem, Albany, Grants Pass, Klamath Falls, Bend, and several other cities in Oregon. We also have offices in Vancouver and Tri-Cities in Washington.

A Little More About Exemptions.

Every state has its own set of bankruptcy exemptions and most states require that you use the state exemptions only. However, some states allow a debtor to choose whether to use state exemptions or federal bankruptcy exemptions. Like all states, Oregon has its own set of bankruptcy exemptions. But in Oregon, if you file for bankruptcy you can elect to use the federal bankruptcy exemptions instead of the Oregon state exemptions. In Washington, you can use either the federal exemptions or the state exemptions.

How Exemptions Work.

There is a lot to know about exemptions, but briefly, this is how it works: if you have property that is worth a certain dollar amount that is equal to or less than the exemption, you will be allowed to keep the property. If, on the other hand, the property’s value exceeds the exemption, it is highly likely that the trustee will sell that property and use it to pay your unsecured creditors. Why? Because the federal government assumes that honest debtors try to pay off their debts. So, if a debtor has excessive property, the federal government believes it should be sold to pay those debts. On the other hand, the bankruptcy laws are designed to give debtors a “fresh start” —– not to leave them destitute. As a result of these dual concepts, both state and federal bankruptcy laws provide debtors with property exemptions.  Generally, Chapter 7 exemptions are far lower, stricter and are less flexible than Chapter 13 exemptions.

 We Can Guide You Through It.

If you are considering bankruptcy and want to know what property exemptions you would be entitled to, contact us. We have offices throughout Oregon and in Washington, and we offer free consultations.

 

 

Bankruptcy in the Context of Divorce

Statistics show that 55% of all marriages end in divorce. And 39% of all divorced couples say that conflict over finances was the reason the marriage fell apart. Fights over money ruin relationships. That’s why we so often see divorce occurring when there is a bankruptcy. It’s because of this that it is critical to understand the intersection of the bankruptcy laws and divorce laws.

 What Comes First – Divorce or Bankruptcy? No Simple Answer.

If you are facing divorce and a bankruptcy, the first thing you need to consider is timing. You must decide whether to file for divorce first or for bankruptcy first. (Filing the two together causes significantly more problems.) How you answer that question depends on a number of things: your income, your spouse’s income, what type of bankruptcy you are filing for or qualify for (Chapter 7 or Chapter 13), what assets you have, the costs of divorce and bankruptcy, and more.

There is no easy answer to this question. You must take into account both the facts of your situation, the divorce laws, and the bankruptcy laws before you can come to a final decision. That’s why you should sit down with an experienced bankruptcy attorney to discuss your situation and what is best for you. We have offices throughout Oregon and in Washington, and we offer free consultations.

Here are just two things you need to think about when facing bankruptcy and divorce:

Divorce and the Automatic Stay
Once a bankruptcy is filed, whether it is a Chapter 7 or a Chapter 13, the “automatic stay” immediately goes into effect. The automatic stay stops all attempts to collect on your debts and it freezes your assets and your property. The purpose of the stay is to allow the bankruptcy court time to sort through what debts you owe and what assets you have (if any) to pay them with. The automatic stay remains in place until your bankruptcy case is fully resolved (by discharge, dismissal or the case is closed).

Since dividing up a couple’s assets and property (in addition to other things) is what the divorce is all about, bankruptcy’s automatic stay means that the family court will be prevented from making any decisions or dividing up the marital property until the bankruptcy is completed. And that means that the divorce will take longer.

 What Type of Bankruptcy?

Another factor to consider is the type of bankruptcy that you should file for. A Chapter 7 (“liquidation”) bankruptcy requires that you meet the income requirements of the “means test.” If your income compared to certain expenses is too high, you will be required to file for Chapter 13 (“reorganization”) bankruptcy instead.

If there is a big difference between what you earn and what your spouse earns, it might make more sense to file for divorce before you file for bankruptcy. On the other hand, if you earn significantly less than your spouse and you file for bankruptcy individually after the divorce is final, you may have a better chance of qualifying for Chapter 7 bankruptcy.

Then there is the fact that if you both agree to file for bankruptcy jointly, you may not qualify for Chapter 7 as a couple, because the income amounts are based on household size, and the income maximum for two people is not twice that of one person.

The intersection of bankruptcy and divorce may be a common occurrence, but it is not a simple one to navigate. But the good news is that you do not need to try to figure all this out on your own. We are here to help.

 Let Us Help You Decide.

If you are facing filing a bankruptcy and either your spouse has filed for divorce, or you have both agreed to divorce, let us help you think through your options. We are bankruptcy attorneys with offices in a number of cities in Oregon. We also have offices in Vancouver and Tri-Cities in Washington. We offer free consultations and we can help you. To set up an appointment, call us toll free at: 1-800-682.9568 or contact us here.

Core Proceedings and the Bankruptcy Court

Let’s say you’re having a really, really, bad week. You were injured in a car accident, the extension the contractor put on your house fell apart and now you’re suing him for breach of contract, your wife just found out about your (latest) girlfriend and has filed for divorce, and you can’t pay your creditors, so you just filed a Chapter 7 or Chapter 13 bankruptcy. In the middle of reeling from all of this you think to yourself, when I get into bankruptcy court, is the judge going to decide the liability, breach of contract and divorce cases too?

Good question.

When you file for bankruptcy, it is important to understand what matters the court will decide and what matters it won’t decide. Knowing the extent of the court’s  jurisdictional authority is one reason why it is important that you hire competent bankruptcy counsel to represent you. We have offices throughout Oregon and in Washington State. Our attorneys are experienced bankruptcy attorneys and they know the law.

The Bankruptcy Court’s Jurisdiction. Core Proceedings.

Bankruptcy courts are courts of limited jurisdiction. That means that they do not hear and decide everything and anything. Congress granted bankruptcy judges jurisdiction over certain issues, which are called “core proceedings.” A bankruptcy judge’s decisional power is generally limited to bankruptcy matters.

Core proceedings are proceedings or issues that are entirely related to the bankruptcy case. The bankruptcy judge has the power to hear and decide these matters and enter judgment on them. Some examples of core proceedings are: the bankruptcy trustee’s duties, matters concerning debtor exemptions, or proceedings to determine, decide or recover fraudulent transfers. There are many more, but this should give you some idea of what the bankruptcy court will hear and decide.

Non-core Proceedings.

Non-core proceedings are issues that arise in a bankruptcy case that are not technically bankruptcy matters. These are called “non-core proceedings.” Examples of non-core proceedings in our fact pattern above would be your divorce, the car accident and the breach of contract action against your contractor. These matters are not governed by bankruptcy law but by other state laws and they are not directly related to your bankruptcy.

However, that does not mean that the bankruptcy court cannot hear and decide issues that may be non-core proceedings yet are matters directly related to your bankruptcy. For example, in our fact pattern above, while the bankruptcy court will not decide your divorce (in other words, it won’t enter a dissolution of marriage), it may decide issues in the divorce case that are related to your bankruptcy— like division of the marital property.

If the bankruptcy judge makes a decision in a non-core proceeding, that decision cannot become a final judgment unless all parties consent. If the parties don’t consent, then the bankruptcy judge must submit proposed findings of fact and conclusions of law to the Superior or Circuit court.

We Know the Law!

If you find any of this confusing, don’t worry. We are bankruptcy attorneys with offices in Tigard, Salem, Albany, Grants Pass, Klamath Falls, Bend, and several other cities in Oregon. We also have offices in Vancouver and Tri-Cities in Washington. We offer free consultations and we can help you. To set up an appointment, call us toll free at: 1-800-682.9568.

What the Automatic Stay Can and Cannot Do

One of the immediate benefits of filing bankruptcy is the relief that the Bankruptcy Code’s “automatic stay” gives to a debtor. The automatic stay brings all collection efforts against the debtor to a screeching halt. It prevents creditors from collecting on their debts until discharge, the case is closed, or the stay is lifted. The automatic stay goes into effect immediately— without need for a court order —and it applies to all of the chapters of the Bankruptcy Code. It has a very broad reach. But it’s reach is not limitless.

As you might expect, there are many things the automatic stay can do, but there are also some things it cannot do.

Let’s take a closer look at the powers of the automatic stay.

What the Automatic Stay Can Do.

The automatic stay is found in Section 362 of the Bankruptcy Code. It prevents creditors from taking pretty much any action outside the supervision of the bankruptcy court that would give one creditor an unfair advantage over any other creditor.

Here are just two of the things the automatic stay prohibits:

  • Anyone from bringing or continuing any judicial, administrative, or other action or proceeding against the debtor that either was commenced before the bankruptcy was filed, or which could have been commenced before the bankruptcy was filed.
  • Enforcement of a pre-petition judgment against the estate (i.e., the bankruptcy estate), property of the estate, or the debtor. It prohibits all collection activity including: levies, garnishments, restraining notices and all post-judgment collection remedies.

What the Automatic Stay Cannot Do.

While the automatic stay applies to many actions against a debtor, as we said, it is not limitless. Here are just three things that the automatic stay cannot do:

  • Stop criminal proceedings. The automatic stay does not apply to criminal proceedings or criminal investigations against the debtor.  
  • Prevent tax audits or some actions to collect taxes. The automatic stay does not apply to prevent tax audits, notices or demands. It does not prevent all acts to collect any tax, or to enforce, create or perfect any tax lien. It doesn’t restrict the government from continuing with any tax audits. It won’t prevent the issuance of notices of tax deficiencies or a demand for tax returns or tax assessments.
  • Last forever. Generally, the automatic stay terminates on the happening of one of these events:

1. The case is dismissed;
2. The case is closed;
3. A discharge order is entered or denied by the court;
4. The property is no longer property of the bankruptcy estate; or
5. An order is entered that terminates, vacates or modifies the automatic stay.

Understanding the automatic stay— its reach and its limits —is very important. We have attorneys in Portland, Eugene, Coos Bay, Medford, and a number of other cities in Oregon and in Vancouver and the Tri-Cities in Washington, who can explain the reach of the automatic stay to you.

We Are Here To Help You.

If you are looking for relief from collections calls and creditors coming after you, the automatic stay may give you the break you need. We are experienced bankruptcy attorneys with offices in Washington and throughout Oregon. We offer free consultations, reasonable fees, and are committed to getting our clients the relief they need. To set up an appointment, call us toll free at: 1-800-682.9568 or contact us through our website.