Bankruptcy Is Not a Badge of Dishonor

There are certain trigger words that can have negative connotations in some circles, and bankruptcy is one of them. As attorneys who help people who are struggling with debt in Portland, Vancouver and other cities in Washington and Oregon, we definitely understand this dynamic, but it is misguided. Bankruptcy is a legal tool. If you are experiencing financial difficulties for any reason, the law allows for corrective actions so that you can get back on track financially.

At the same time, a very significant percentage of people who file for bankruptcy handled their finances perfectly well until they were confronted with unexpected health care bills or other expenses. A study that was conducted in 2016 by T.H. Chan School of Public Health at Harvard along with National Public Radio and The Robert Wood Johnson Foundation shed some interesting light on the subject. Over a quarter of the respondents stated that health care expenses that accumulated over the preceding two years yielded very negative financial consequences. Four out of ten received collection calls from health care providers, and 23 percent of the poll participants were forced to take on credit card debt that will be hard to manage. Seven percent of these individuals had to file for bankruptcy.

Regardless of the underlying circumstances, bankruptcy can give you a fresh start, and you are not necessarily being unfair to your creditors if you take this route. With a Chapter 13 bankruptcy, you simply reorganize your debt and make payments that you can afford. The court requires you to utilize all of your disposable income after you pay for the basic necessities of life to pay down your debt. Creditors really can’t ask for anything more than that. A Chapter 7 bankruptcy does wipe away unmanageable debt, but you can’t qualify for this type of bankruptcy if your income will allow you to pay back your creditors.

We understand the fact that we discuss very delicate financial matters when we consult with our bankruptcy clients in Portland, Eugene, TriCities, Vancouver, and the other cities that we serve. This area of the law is our passion because we sincerely enjoy helping people. There is no need to feel any sense of uneasiness or trepidation. If you will like to obtain more information about bankruptcy before you proceed further, you can learn a lot if you read through our frequently asked questions. When you are ready to move forward, you can send us a message through our contact page to request a complementary, no obligation case evaluation.

What Can I Keep When I File for Bankruptcy?

If you are thinking about filing for bankruptcy, you may be concerned about the possibility of surrendering all your property so that it can be liquidated to pay back your debts. In fact, you may be able to keep some or all of your property when you file for bankruptcy. It will depend on the circumstances and the type of bankruptcy that you file. First, let’s look at the way that property is handled when a Chapter 7 bankruptcy is filed.

This type of bankruptcy is called a liquidation bankruptcy. Property that is not exempt would become part of the bankruptcy estate, and it would technically be liquidated by the trustee to pay back some of the outstanding debt. However, in many cases, there is no nonexempt property to speak of, so there are no losses. You could keep exempt property when you file for Chapter 7, including your home and your motor vehicle, assuming you have limited equity and you are up to date on your payments. Limited personal property and the tools of your trade are exempt, there are a number of other exemptions.

To qualify for a Chapter 7 bankruptcy, you must pass a means test, because you have to make an effort to pay back your debts if you have the means to do so. If your income is less than half the median in your state of residence, you would pass this test. You could possibly pass the test even if your income exceeds the median if your financial responsibilities severely limit your disposable income. A formula is utilized to make this determination.

Chapter 13 bankruptcy would be an option for you if you cannot pass the means test. This is a reorganization bankruptcy. Your debt is restructured to become manageable, and you use your disposable income to make payments over a three-year or five-year period. It can also be the right choice if you are behind on your mortgage and you want to prevent a foreclosure. You can’t pay back the arrearage to stop a foreclosure if you file a Chapter 7 when you are behind on your mortgage payments. However, you can fold it into a repayment plan if you file for Chapter 13. With a Chapter 13, you can keep all your property if you honor your repayment plan and keep your ongoing obligations current.

Set Up a Free Case Evaluation

We have shared some of the basics with regard to property retention in this brief blog post, but you probably have more questions if you are thinking about a bankruptcy filing. If you would like us to provide you with answers, we would be more than glad to do so. Our firm offers free consultations to people in Portland, Eugene, Bend, and a number of other cities in the state of Oregon. To set up an appointment, call us right now at 1-800-682-9568.

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.

Do I Need a Lawyer to File for Bankruptcy?

Many people like to engage in do-it-yourself projects, and they have different motivations. Some individuals genuinely enjoy certain types of DIY challenges, and there are others who decide to go it alone because they want to save some money. There is nothing wrong with doing some things for yourself, and the information that can be easily obtained on the Internet makes it easier than it has ever been. However, you do have to know where the draw the line. You may feel confident replacing the alternator on your car, but do you think that you have the know-how to file for bankruptcy for yourself?

Technically speaking, you don’t have to have a license to practice law to file for bankruptcy. However, these are some rather complicated waters to try to navigate on your own as a layperson. First of all, do you know what type of bankruptcy to choose? You may hear about the fact that a Chapter 7 can make your credit card debts and medical bills disappear. This can be true, but are you sure you qualify for a Chapter 7? You have to pass a means test to qualify for this type of bankruptcy. If your income exceeds the median income in your state of residence, you won’t automatically qualify. A complex formula would be utilized to determine whether you are eligible to file a Chapter 7.

A Chapter 13 bankruptcy could be the right choice for you if you do not qualify for a Chapter 7. It can also be a better option if certain circumstances exist. For example, you cannot stop a foreclosure if you are behind on your mortgage through a Chapter 7 filing, but a Chapter 13 could allow you to repay the arrearage over time. When a Chapter 13 bankruptcy is filed, a complicated repayment plan is submitted to the court. This form of bankruptcy is so complex that there are some bankruptcy attorneys that do not handle them, so it is very unlikely that you could effectively file a Chapter 13 bankruptcy by yourself without any legal guidance.

We understand the fact that people who are experiencing financial difficulties are not particularly anxious to put out money to engage a bankruptcy lawyer. This is why we have established a very affordable fee structure, and our clients find that the value that we provide is extraordinary. Our firm offers free consultations to people in Portland, Eugene, Grants Pass, Bend, Tigard, and a few other Oregon cities, and we have locations in the state of Washington as well. If you would like to set up an appointment, send us a quick 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.