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.