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.

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.

Can’t Pay Student Loan Debt? Here Are Your Options

If you have not looked at the subject in a while, you may be unpleasantly surprised when you learn about the current state of college tuition costs. The College Board has compiled some very meaningful statistics that shed light on the subject. During the 2016-2017 school year, the average annual cost for private college tuition was over $33,000. The average tuition charge for a public university was about $9600 for in-state students, but that figure skyrocketed to almost $25,000 for students from out-of-state who are attending public institutions of higher learning.

The cost of a college education is considerable, but at the same time, the price that you will pay if you go through life without an educational underpinning will probably be much more significant. However, when you digest these tuition figures (and they don’t include living expenses and supplies), you can understand why so many students accumulate significant student loan debt. According to Forbes, the average amount of student loan debt that was being carried by students in 2016 was just over $37,000. Of course, this is the average, so some students owed much more.

Can Bankruptcy Help?

Many students who graduate from college don’t earn enough money to keep their student loan payments current. Plus, there are individuals who are carrying student loan debt who never actually graduated. It would make sense to assume that you could file bankruptcy to wipe away your student loan debt, but in fact, bankruptcy is rarely going to be an option. Student loan debts are not discharged through a Chapter 7 or Chapter 13 bankruptcy filing unless you can prove that paying the debts would create an undue hardship for you. Very few people will be able to convince the court that they are in this position.

Outside of Bankruptcy

There are a few actions that you can consider if you are drowning in a sea of student loan debt. A lender may grant you a deferment or a forbearance that would suspend your payment plan for a temporary, agreed-upon interim. Plus, a number of federal student loan forgiveness programs exist, and this is an avenue that is worthy of exploration.

Schedule a Consultation Today

If you would like us to review your financial situation, including your student loans, we would be glad to provide a free case evaluation. We have offices in many different cities in Oregon including Eugene and Portland, and we also have locations in the state of Washington. To set up an appointment, send us a message through our contact page.

Bankruptcy Silver Lining: Learn From Your Mistakes

They say that experience is the best teacher, and this is certainly true when it comes to the way that you handle on your financial affairs. If you never make any serious mistakes, that’s the best-case scenario. However, there is a silver lining of sorts that you could draw from if bad decision-making leads you to a bankruptcy filing. Many people who have this experience use it to their advantage, and they become very responsible and financially conservative going forward.

You could start to apply a new perspective right away when you are creating post-bankruptcy budget. If you file for Chapter 13 bankruptcy, which is a reorganization, you will be required to stick to a repayment plan over a three to five-year period. The structure in and of itself will help you to develop a sense of financial discipline. After the bankruptcy has been discharged, you will invariably emerge with a better understanding of your monetary limitations as you continue to rebuild your credit standing.

The other type of bankruptcy that is most commonly used by individuals who are overwhelmed by debt is a Chapter 7 bankruptcy. With this type of bankruptcy, unsecured debts like credit cards and health care bills can be completely discharged. You would be allowed to maintain ownership of your home and your car if you are current on the payments. Once you are free of the burden of the unsecured debt, you will probably find it much easier to pay your other bills.

Perhaps surprisingly, you may be able to obtain lines of credit shortly after you file, because your debt to income ratio will improve. Plus, you would not be able to file for another Chapter 7 bankruptcy for eight years, and this would be a positive in the eyes of lenders. However, this is a dangerous area to get into right after filing for bankruptcy. Plus, the interest rates and fees will be higher to reflect the perceived risk.

If you are having trouble keeping up with your bills, you should certainly explore the legal options that are available to you. We have offices in Tacoma, Vancouver, Tri-Cities, and many different cities in the state of Oregon. Our firm offers complementary consultations, and you can set up an appointment if you send us a message through our contact page.

Develop Good Habits to Prevent Unmanageable Debt

Advertising has always made an impact on consumers, but the influence has been taken to another level now that we all spend a lot of time on the Internet. Search engines inundate you with images of products that you have showed interest in through your browsing history, so you are constantly tempted. Plus, in many cases, when you do decide to make a purchase, you are offered a discount if you apply for a line of credit with the company. Before long, it can seem as though you can buy anything you want without reaching into your pockets to lay out any cold hard cash. Over time, this misguided perspective can lead to unmanageable debt.

Without question, the system is set up to invite people to spend beyond their means, but you don’t have to fall into the trap. If you develop good habits when you are a young adult, you can utilize credit wisely when it is prudent, and steer clear of behavior that can leads to unmanageable debt and a subsequent bankruptcy filing. To keep a finger on the pulse of your financial health, you should always be aware of your credit score. Many credit cards provide cardholders with free credit scores on a monthly basis, and there are also websites that you can visit to obtain your score, and some of them are free.

You get the score itself, but you also get an explanation of the factors that are influencing your credit score either positively or negatively. These would include the timeliness of your payments, the length of time that you have had credit, the percentage of your credit lines you have used, and the number of recent credit inquiries. If you keep these core factors in mind when you are making financial decisions that involve the utilization of credit, you will develop the right habits. Of course, the ebb and flow of your credit score will inform you with regard to the impact of your recent credit usage, so you can adjustment your behavior when necessary. Some people will set credit score goals, and this can definitely help to keep you on track.

Without question, good habits can allow you to steer clear of monetary problems, but you do have recourse if you simply cannot pay all your debts for one reason or another. Bankruptcy will be the right choice for many, and our firm can help you understand your options so that you can make sound decisions that get you on a path that leads to financial wellness. We have offices in Eugene, Portland, and a number of other cities throughout the state of Oregon, and we also have locations in Washington. If you would like to schedule a free, no obligation case evaluation, give us a call right now at 1-800-682-9568.