Debt Snowball vs Debt Avalanche

Wooden blocks spelling out the word "debt"

Eliminating debt can feel like an overwhelming task – especially without the right plan in place. Thankfully, there are many different repayment strategies that you can choose in order to begin rapidly paying off your balance. Two of the most popular and effective debt repayment plans are known as the “snowball” and “avalanche” methods. While these tactics are similar, they have some key differences that can help you decide which strategy is best for you.

What is the Snowball Method?

With the debt snowball method, you pay off debts in order of smallest to largest balances. By putting the majority of your money toward loans with smaller balances and making minimum payments to all other debts, you can swiftly cut through your debts. This method is popular because it is easy to implement and provides quick results, which is great for building momentum and motivation.

What is the Avalanche Method?

In the debt avalanche method, you pay off loans based on interest rates. By targeting loans with higher interest rates first while making minimum payments to any other debts, you can quickly pay off debt while cutting down on the amount of interest you pay over time.

Though this tactic is great for eliminating debt quickly and with the least amount of interest, it is a little more difficult to implement and keep up with. The debt avalanche method also produces slower short-term results, which may be challenging for individuals who struggle with motivation.

Which Debt Repayment Method is Best?

Unfortunately, there is no “one-size-fits-all” plan when it comes to debt payment plans. It all comes down to which plan you can feasibly implement and keep up with – after all, no plan is useful if you won’t be able to stick to it. To help you determine which tactic may be better for you, here are some pros and cons of both debt repayment strategies:

Debt Avalanche

  • Eliminates debt faster
  • Reduces total interest paid
  • More difficult to implement
  • Takes more time to see results

Debt Snowball

  • Produces results quickly
  • Builds motivation and momentum
  • Takes more time to eliminate debt
  • Requires you to pay more interest

When to File for Bankruptcy

If you have a mountain of debt that you are struggling to pay, these repayment strategies may still feel too overwhelming. In some cases, filing for bankruptcy is the best way to take control of your financial situation. Here are some signs that you should file for bankruptcy:

  • You’re at risk of foreclosure
  • Your liabilities exceed your income
  • You don’t have any savings
  • You’ve already tried negotiating

Get Legal Help Today

Don’t let your life become bogged down by unmanageable debt. If you’re struggling to make ends meet because of debt, it may be time to contact a legal expert who can help you assess your options. That’s where the trusted attorneys at OlsenDaines can help. Our team has over 40 years of experience serving Oregon and Washington, and we strive to make it easy for you to get back on your feet. To get started, schedule a free legal consultation today.

 

Do You Still Owe Taxes if You File for Bankruptcy?

Bankruptcy petition in Oregon - OlsenDaines Debt Relief Lawyers

Filing for bankruptcy is one of the most effective ways to eliminate debt, save your home, and rebuild your financial security. It can also help you sleep easier at night knowing that you won’t have to worry about repossession or mounting bills. However, if you’re considering bankruptcy, it’s important to know what it does and does not cover – and that includes taxes.

How Do Taxes Work After Bankruptcy?

Many people overlook their tax situation when filing for bankruptcy, but it’s crucial to know what to expect before moving forward with your case. Your tax requirements will look different depending on which type of bankruptcy you are filing for. Here is a brief overview of how taxes work after filing for the two most common types of bankruptcy:

Chapter 7

This chapter of bankruptcy is meant to help those with lower income and fewer assets, and individuals must pass a “means test” in order to qualify. If granted chapter 7 bankruptcy, individuals will be assigned a trustee that will be responsible for reviewing your petition and seizing any nonexempt assets that can be sold to benefit your creditors.

Taxes are still a requirement even if you are granted chapter 7 bankruptcy. If you are unable to pay your taxes and accrue new debt, it can have a negative impact on your case and may even result in your case being dismissed. However, if you are expecting a tax refund but are granted chapter 7 bankruptcy, then you may need to turn the funds over to your trustee who will use them to pay your creditors.

Chapter 13

This chapter of bankruptcy is meant to help those with higher income and more assets, and it is often considered a “reorganization” of debt. Individuals who are granted chapter 13 bankruptcy will need to establish a monthly payment plan with their creditors to repay a portion of their debts.

Taxes are also still required if you are granted chapter 13 bankruptcy. If you owe more than you can pay, you may be able to set up a payment plan with the IRS lasting between three and five years. Meanwhile, if you receive tax refunds while in Chapter 13 you’ll usually be able to keep these refunds for your own benefit.

Can Bankruptcy Discharge Tax Debt?

Tax debt is considered “unsecured debt”, which means that it generally cannot be discharged even if you are granted bankruptcy. That said, if your tax debt meets a few specific criteria, you may be able to discharge it when filing for chapter 7 bankruptcy. Your debt may be considered for discharge if it meets these requirements:

  • The tax return filing was due three or more years ago.
  • The tax return filing was two or more years ago.
  • The tax assessment is at least 240 days old.
  • The tax return was not fraudulent.
  • The taxpayer did not attempt tax evasion.

Your Local Bankruptcy Attorneys

Filing for bankruptcy can be overwhelming, but you don’t have to navigate it all alone. The experienced bankruptcy attorneys at OlsenDaines are prepared to help get you through the process as quickly and easily as possible while answering all of your questions. We have proudly served Oregon and Washington residents for over 40 years, and we are ready to use our expertise to help you relieve your debt. To get started, schedule your free and no-obligation legal consultation with one of our attorneys today!

Bankruptcy and HOA: What You Need to Know

What you need to know about filing for bankruptcy with an HOA - OlsenDaines bankruptcy attorneys in Oregon

If you live on a property with a homeowner’s association and are overwhelmed with late dues or fees, then you may be wondering if bankruptcy is a viable way to eliminate these debts. While this may seem like a straightforward question, there are several factors that can impact whether or not your HOA debts can be discharged through bankruptcy. To help give you an idea of what your situation might look like, the experts at OlsenDaines have put together a guide on what you need to know about bankruptcy and HOA.

Can I Discharge My HOA Debt Through Bankruptcy?

Your specific circumstances will impact whether or not you can dismiss HOA debt by filing for bankruptcy. To determine if your HOA fees can be discharged, begin by asking yourself these questions:

Which chapter of bankruptcy are you filing for? The two most common chapters of bankruptcy are Chapter 7 and Chapter 13. While Chapter 7 bankruptcy is intended for lower-income individuals with fewer assets, Chapter 13 is geared toward those with more assets and disposable income. Knowing which chapter you qualify for will give you a better understanding of what your debt relief options are.

Do you plan to keep the property? With both chapters of bankruptcy, you should be able to wipe out past HOA dues by forfeiting the property. However, if you plan to keep your condo or home, you will still be responsible for paying your HOA debts.

With Chapter 7 bankruptcy, you should treat the HOA like a bank holding a mortgage and plan to make payments both before and after you file. It’s important to know that the HOA could still foreclose on your home if they have a lien on your property, even if your debts are discharged.

Meanwhile, if you are filing for Chapter 13 bankruptcy and plan to keep the property, your repayment options may look a little different. Since this chapter allows you to reconfigure your debts into a payment plan, your past HOA fees should be included in your monthly installment.

Can an HOA Foreclose on My Property After Bankruptcy?

Even if you are granted bankruptcy, an HOA may be able to foreclose on your property depending on your specific situation. Here are some instances where an HOA can foreclose on your property after bankruptcy:

  • Your foreclosure has already taken place: Bankruptcy cannot undo a foreclosure that has already taken place. So, if the HOA has already foreclosed on your property and the home is no longer in your name, the outcome of your bankruptcy petition will not be able to reverse the process.
  • The HOA filed a lien against your property: Once an HOA files a lien against your property, they may begin the foreclosure process. Though you are granted an “automatic stay” while filing for bankruptcy – meaning that the HOA cannot move forward with the foreclosure process during your petition – they may be able to resume the process once you are granted bankruptcy. Bankruptcy cannot get rid of a lien filed against you even if your debts are discharged, so your property may still be foreclosed on.
  • You accrue more fees after bankruptcy: Bankruptcy will only discharge debts accrued prior to your petition, so you will be responsible for any fees due after you are granted bankruptcy. This is true even if you are forfeiting the property; you will have to pay any fees that accumulate between the time you are granted bankruptcy and the sale of your home. To avoid accruing more fees and debt, it is best to wait until the property is sold before filing for bankruptcy if you are planning to surrender the home.

Your Local Bankruptcy Experts

Here at OlsenDaines, we understand how stressful and complicated it can be to file for bankruptcy. That is why our experienced attorneys are always here to help. We strive to make the process as fast and easy as possible while ensuring that you are getting the most out of your petition. With over 40 years of experience serving people throughout Oregon, we are very familiar with local bankruptcy laws and are prepared to help you regain control over your finances so you can truly start fresh. If you are looking into bankruptcy and would like to speak with an expert, contact us today to set up a free legal consultation!

Does Debt Disappear After Bankruptcy?

Does debt disappear after filing for bankruptcy? Debt relief attorneys at OlsenDaines in Oregon State

If you’ve found yourself battling against a mountain of debt, you may be considering bankruptcy as a way to get back on your feet. After all, filing for bankruptcy can be an effective method for relieving debt and regaining control over your finances. But, should you file for bankruptcy, will all of your debt disappear?

The answer to that question is a little complicated. Though bankruptcy can help relieve many different kinds of debt, there are some kinds that will stick with you. If you are considering filing for bankruptcy, it’s important for you to know what kinds of debts are covered and which kinds are not.

What Debts Can Be Forgiven by Bankruptcy?

Bankruptcy can help you regain financial stability by relieving a wide variety of debts. Your exact amount of relief, however, will largely depend on your specific situation and what kind of bankruptcy you qualify for. If you aren’t sure which path would be best for you, a bankruptcy attorney can help you find a solution that relieves as much debt as possible.

Chapter 7

Chapter 7 bankruptcy is intended for individuals with a lower income and fewer nonessential assets. To qualify for this type, you have to pass a means test, which verifies your income. The types of debt that this chapter can cover include:

  • Medical bills
  • Overdue utility charges
  • Outstanding credit cards
  • Collection agency accounts
  • Lease agreement deficiencies
  • Checks written on insufficient funds

Chapter 13

Chapter 13 bankruptcy is intended for individuals with more disposable income and more nonessential assets. This type of bankruptcy is considered “reorganization”, where you will create a payment plan to repay secured debts – such as alimony, child support, and mortgage delinquencies.

Depending on your specific situation, other types of debt may be reduced, but that is not always the case. Chapter 13 bankruptcy can be tricky to navigate, so it is best to contact a skilled bankruptcy attorney to determine the best approach for debt relief.

What Debts Cannot Be Forgiven by Bankruptcy?

Though bankruptcy can absolve many kinds of debt, there are a few types that usually cannot be discharged. The types of debt that bankruptcy generally cannot cover are:

  • Student loans
  • Alimony and child support
  • Tax debts

While these debts are generally not forgiven through bankruptcy, each person’s situation is different. A knowledgeable and experienced bankruptcy attorney can examine your unique circumstances to help you relieve as much debt as possible.

Experienced Debt Relief Attorneys

Bankruptcy can be difficult to navigate, and without the right guidance, you may miss
opportunities to relieve debt. If you are considering filing for bankruptcy, contact the skilled bankruptcy attorneys at OlsenDaines in Washington and Oregon today. Our experienced lawyers understand the ins and outs of bankruptcy law, and they can help you get the best outcome possible for your situation. We can help you through any step of the process so you can regain financial security as easily and effectively as possible. Call us today to schedule your free legal consultation.

How to Avoid Debt This Holiday Season

How to avoid debt this holiday season in Salem OR - OlsenDaines bankruptcy attorneys

The reality of holiday debt usually doesn’t sink in until you get the bills or check accounts. Too much unpaid debt can cause your credit score to drop so we are sharing some tips to follow to avoid racking up holiday debt.

Pay in Cash When Possible

Statistics show 57% of Americans with credit card debt are willing to accrue more debt during the holidays. Gifts and décor commonly cause the most holiday debt, and since consumers rarely save for this, they charge for it.

Avoid this added debt by setting a little money aside each month to pay for gifts and holiday décor in cash. Leave your credit card at home to reduce the temptation to make spontaneous purchases, and use debit cards. Several studies have shown consumers spend less with cash, and it comes with less security risk.

Create a Budget and Make Lists

Decide how much you are going to spend, including travel, and ensure it doesn’t prevent you from making necessary payments. Make a list of things you need, a list for gifts, stick by it, and cross them off as you go.

Consider having some gifts be homemade, such as mixes in a jar, which you can often make for less than buying. If you are easily influenced by others, go shopping alone to avoid going over budget.

Use Credit Wisely

If you must use a credit card, try to stay within less than 20% of the limit, and don’t max them out. Set a budget the same as you would for cash, but check the remaining balance on the cards.

Use credit cards that give rewards for purchases and apply points you have already accumulated to gifts. Don’t be tempted to take out cash advances on your credit cards, because they often have high-interest rates.

Experts in Bankruptcy Law

With some careful planning, you can avoid falling into the holiday debt trap and you will enjoy the holidays better without the stress of debt.

We hope you have a great holiday season and if you need debt relief, consider OlsenDaines. We have offices all throughout Oregon and Washington with highly experienced bankruptcy attorneys ready to help! Just give us a call today to schedule a 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.

How to Move Forward After Bankruptcy

Going through a bankruptcy —– from decision to discharge— can be a long and stressful ordeal. Eventually, though, you get the breathing room you so desperately need. And after Chapter 7 or Chapter 13 comes the next chapter: putting your life and your credit back together.

How can you do that? A bankruptcy stays on your credit report forever, and you’ll never be able to get a mortgage or another credit card, right?

Wrong.

A Chapter 7 bankruptcy stays on your credit report for 10 years; a Chapter 13 for 7. Maybe restoring your credit won’t be easy, and maybe it won’t be instant, but you can put your life and your credit back together after bankruptcy. We can help you figure out what strategies will work best for you. 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. How quickly you recover from bankruptcy depends a lot on you and what you do after discharge. We can help you develop a sound approach to your fiscal recovery.

In the meantime, here’s a few tips to help you get started down the road to emotional and financial recovery.

Let it Go. Put it Behind You and Move on.

If you’ve recently gone through a bankruptcy, you might be feeling like a failure. You might feel like you are all alone or are some kind of financial outcast. Think again. According to the United States Courts, bankruptcy filings were down in 2017 but they still totaled a whopping 794,492.  You are definitely not alone. But you are the only one that you must forgive.

In order to rebuild your life and move forward, you need to be able to come to grips with the past. You need to take a look at what happened and why, so you can prevent it from happening again, if at all possible. You should look at the past, but you don’t have to live there. Think about what happened and how you can make sure things will be different from now on. Then forgive yourself, and move on. Make a plan to live a better, more responsible fiscal life, and start living that life!

Pay Your Bills on Time. Consider Getting a Secured Credit Card.

One of the best ways to get your financial life back on track is to make a plan and be diligent about paying your nondischargeable debts (taxes, child support, alimony etc.) on time. You can also consider getting a secured credit card. Unlike other credit cards, with a secured credit card, you deposit small amounts of money in your bank account and that becomes your credit line. However, not everyone qualifies for a secured credit card and they often come with high fees.

 Talk to a Lawyer!

Don’t know where to start? If you need help making a plan to rebuild your life after bankruptcy, or if you are considering filing bankruptcy, contact us. We can give you the help and guidance you need.

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.

Bankruptcy and Medical Bills

 

As the old saying goes, “nothing is more important than your health.” When you are injured or sick, you know how true that is. When you or a loved one is facing a serious or catastrophic illness, the cost of medical care can very quickly skyrocket. Before you know it, the costs of medical care can drive you into bankruptcy.

If that’s your situation, don’t despair. We can help. A significant number of people file bankruptcy every year due to crushing medical bills. At least one study has found that nearly 1 billion people filed bankruptcy due to medical costs.

In fact, filing bankruptcy may not only be a good choice for you if your medical bills have gotten out of control, but looked at correctly, it is the right thing to do.

How can that be?

Because overwhelming medical bills are exactly the type of debt that the bankruptcy code was designed to address. The whole point of bankruptcy is to give an honest debtor relief from overwhelming and insurmountable debt. When your mountain of bills was caused by an accident or serious illness, that’s not something you deliberately sought out. It’s not your fault. It very likely could not have been avoided or foreseen. After the illness or injury, you needed medical attention to recover. Now you need bankruptcy to recover from the insurmountable costs of health care.

How Medical Debt Is Classified in Bankruptcy.

So, will bankruptcy erase all of your medical bills? Yes. When you file for bankruptcy, your debts are separated into different categories. Some debts, like child support or alimony, are not dischargeable (in other words, can’t be wiped out). But other debts, like credit card debt and medical bills are considered unsecured debt and do get discharged in bankruptcy.

Chapter 7 and Medical Bills.

Chapter 7 (often called “liquidation bankruptcy”) is the most common type of bankruptcy filed by individuals. To qualify for a Chapter 7, you must pass a “means test.” That is to say, you must be at or below a certain disposable income level. If you are, then you can qualify for Chapter 7. If you qualify for Chapter 7, there is no limit to the amount of amount of medical debt that a Chapter 7 discharge can wipe out. Just like credit card debt, medical debt is considered unsecured debt that is dischargeable. And any medical bills that you paid with your credit card can also be discharged.

In Chapter 13 Bankruptcy

Unlike a Chapter 7 which is designed to liquidate your assets and pay off your debts wiping the slate clean, a Chapter 13 bankruptcy is designed to put a repayment plan in place (“Chapter 13 Plan” or “Plan”) that will allow you to pay off your creditors over time. In a Chapter 13, your medical bills are lumped in with all the other general unsecured debts in your Plan. The amount you have to pay to general unsecured creditors depends on your income, expenses and nonexempt assets.

In Chapter 13, each creditor receives a pro rata portion of the total amount going towards these debts in your plan which is typically only pennies on the dollar. However, keep in mind that you may not qualify for Chapter 13 if your medical bills and other debt exceed the Chapter 13 limits.

We Can Guide You To The Right Decision.

If you are facing insurmountable medical bills, we can help. We have offices in Portland, Eugene, Coos Bay, Medford, and other cities in Oregon and we have offices in Washington. We offer free consultations and reasonable rates. Contact us by phone or email anytime to set up your free consultation.

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.