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?


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.

Can a Bankruptcy Wipe Out Income Tax Debt?

People sometimes assume that a bankruptcy filing is a panacea that will wipe out all debts permanently, including tax debts. In fact, this is not the case. The details will depend upon the form of bankruptcy that is filed and the type of tax payment that is delinquent.

Chapter 7

A Chapter 7 bankruptcy can potentially result in a discharge of income tax debt if certain conditions are met. There are many rules, but the 3 primary rules are: 1) the tax year must be more than 3 years old at the time of the bankruptcy filing, 2) actual filing of the return has to have taken place in a timely manner, and the internal IRS or state assessment has to have been entered at least 240 days before the bankruptcy filing. If all of these conditions are met, the tax debts can usually be discharged.

Chapter 13

In a chapter 13 reorganization bankruptcy priority debts will be paid first. An income tax delinquency will be a priority debt, so your repayment plan can be structured to pay the taxes back over time and avoid any tax garnishments. The other benefit is that we can usually eliminate all future interest and penalties while paying the taxes back through a chapter 13.

Schedule a Case Evaluation

Our firm serves people in many different cities throughout the states of Oregon and Washington. If you are in Tri-Cities, Vancouver, Eugene, Salem, Portland, Bend, Medford or any other community in the Oregon our southern Washington, we are just a phone call away. We offer free, no obligation bankruptcy case evaluations, and you can set up an appointment right now if you give us a call at 1-800-682-9568.

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!

How Can I Avoid Foreclosure?

If you are concerned about the possibility of losing your home because the payments are becoming unmanageable, there are steps that you can take to avoid foreclosure. It is wise to contact your mortgage lender proactively if you come to the realization that you are not going to be able to meet your upcoming obligations. The lender may be able to work with you and make some adjustments so that you can get back on track.

For example, let’s say that you cannot make your payment, but you will be receiving an inheritance in a couple of months after your father’s estate has been probated. Your mortgage holder may be willing to allow you to pay what you can afford for a limited period of time until you receive the bequest. Under different circumstances, you may be able to work out a long-term loan modification. A conversion from a debilitating adjustable rate mortgage to a fixed rate loan could also be a possibility.

The Bankruptcy Solution

Negotiating with your mortgage lender will sometimes be possible, but a bankruptcy filing will be the best choice for many consumers. If you are current on your mortgage payments, but unsecured debts like medical bills and credit card balances are making it hard for you to fulfill all your responsibilities, you may want to file a Chapter 7 bankruptcy. You could maintain ownership of your home, but unsecured debts would be discharged. You would then have more disposable income to pay priority debts like your mortgage.

If you are behind on your mortgage payments, you could choose to file for a Chapter 13 bankruptcy. This is a reorganization bankruptcy. With this type of bankruptcy, your debt is restructured, and you make affordable payments over a 3 to 5-year period. Your mortgage arrearage could be paid back over time as part of the reorganization arrangement, and you would be able to maintain ownership your home as long as you keep the ongoing monthly payments current.

Now that you have digested this information, you may be ready to take direct action. Our firm offers free consultations to people in Salem, Grants Pass, Klamath Falls, Tigard, Roseburg, and several other cities in Oregon and Washington. If you would like to set up an appointment, send us a message through the contact page on this website or call us at toll-free at 1-800-682-9568.