Can an LLC File for Chapter 7?

Many individual debtors file for Chapter 7 bankruptcy because they will obtain some financial breathing room through the discharge of their unsecured debts. For example, credit card debt can spiral upward over time, and it can reach the point where you simply can’t pay all of your credit card bills and the other debts that you have. If you successfully file for a Chapter 7 bankruptcy, the credit card debts could be discharged, and you will find it easier to keep your other obligations current. Credit card debts are just one type of unsecured debt that can be discharged through a Chapter 7 bankruptcy filing. Others would include medical bills, unpaid lease obligations, past due utility bills, personal loans, and payday loans.

A Chapter 7 bankruptcy can also be filed by a limited liability company. However, things work a little bit differently when it comes to the details. A Chapter 7 bankruptcy is a liquidation bankruptcy, so nonexempt property must be turned over to a bankruptcy trustee. It is liquidated, and the proceeds are used to pay the debts. When an individual files for this type of bankruptcy, many forms of property are exempt, including up to $40,000 of home equity (in the state of Oregon, or $50,000 for a married couple), $3000 of equity in a motor vehicle.

There are no such exemptions when you file a business bankruptcy, and there is no discharges. The purpose of a business Chapter 7 filing is to permanently shut the doors and liquidate the assets to pay as much of the outstanding debt as possible. The bankruptcy trustee handles the liquidation tasks, so the business owner does not have to interact directly with the creditors. You have to understand the fact that an individual owner of an LLC will still be liable for any business debt that was personally guaranteed if the proceeds from the liquidation were insufficient to pay these debts in full. Under these circumstances, you will want to consider a Chapter 7 as an individual.

If you would like to discuss a business or personal bankruptcy with a licensed attorney, we would be happy to accommodate you. Our firm offers free, no obligation consultations, and you can request an appointment if you send us a quick message through this page: Portland, OR bankruptcy attorney.

Do I Keep My Property in a Chapter 7?

A Chapter 7 bankruptcy is a liquidation bankruptcy. Speaking in a very general sense, this means that your property is turned over to a trustee when you file for this type of bankruptcy. The trustee is required to liquidate the property and the proceeds will be used to pay back as much of your debt as possible. This may sound like a rather unfavorable arrangement, but it is not as bad as it sounds, because most or all of your property is considered to be exempt. This means that you won’t have to surrender this property to the bankruptcy trustee.

If you own your own home, it is probably your most important possession. We practice law in the state of Oregon, with offices in Portland, Eugene, Salem, Medford, and several other cities. In Oregon, up to $50,000 in equity in your home including a mobile home is exempt when you file for a Chapter 7 bankruptcy.  We also have offices in the state of Washington serving Vancouver and Tri-Cities residents.  In Washington, the exemption for homeowners is $125,000.

Your home is not the only type of property that will be exempt when you file for Chapter 7 in Oregon.  Money you received from alimony and child support payments, social security or pensions is all exempt. There are additional exemptions if you receive a settlement for a bodily injury claim.  In addition, if you receive compensation to account for a loss of future earnings, you will not be required to surrender it to the trustee. There are additional exemptions for cars, furniture, personal items, guns and other items.  If a person does not need to use the State homestead exemption (see above), then Federal exemptions can be used which include a “wildcard” exemption in the amount of $13,100 which can be used to protect any asset.

Discreet, Confidential Legal Counsel

We understand the fact that it can be disconcerting to speak about sensitive financial matters with an attorney that you just met. The members of our team have been assisting people for many years, and we chose this area of the law because we sincerely want to help others. When you engage our services, you will speak with a friendly, down to earth bankruptcy attorney who will answer all of your questions and help you make the right decisions. If you would like to set up a complimentary case evaluation, send us a message through the following link:  bankruptcy lawyer.

How Will a Bankruptcy Filing Impact My Credit?

Clearly, a bankruptcy filing is going to have a significant impact on your credit, and the exact details will vary depending upon many different factors. When it comes to your FICO score, if your score was low prior to your bankruptcy filing, the reduction will be minimal. Some people end up with better credit scores immediately after the bankruptcy. If you had a good credit rating before your bankruptcy, the score is going to plummet significantly. While your credit score is definitely going to go down if you file, there can be a silver lining. If you do nothing, your credit score will continually cascade downward month after month. On the other hand, if you take the bull by the horns and file a bankruptcy, you can begin to rebuild your credit sooner rather than later.

Chapter 7 bankruptcy is a liquidation bankruptcy, and it will wipe out all of your unsecured credit card debt. Chapter 13 is a form of bankruptcy that is called a reorganization. You continue to pay your bills with your disposable income when you file for a Chapter 13, but the debts are restructured to be more manageable. Depending on how soon after filing a bankruptcy you need good credit, a chapter 7 and chapter 13 will have different result. The type of bankruptcy that you file for also has an impact on the length of time that it will remain on your credit report. According to, a Chapter 13 will be deleted seven years after the filing, and the duration is 10 years for Chapter 7 bankruptcy.

Many people think that they will not be able to get any type of credit for years after a bankruptcy filing, but this is not the case. Depending on the circumstances, you may be able to get credit cards and car loans shortly after your bankruptcy is finalized. However, you will wind up paying inflated rates of interest, and there will typically be significant annual fees and high interest rates on the credit cards. If you have no bad debt after the bankruptcy you will be able to qualify for a good mortgage in as little as 2 or 3 years.

Yes, a bankruptcy is going to have an impact on your credit, but it is not as severe as many individuals are led to believe. We offer no obligation, free case evaluations to people in Medford, Coos Bay, Klamath Falls, and a number of other communities in Oregon and Washington. If you will like to set up an appointment, send us a message through our contact page and we will get back to you in short order.

Feeling at Ease With Your Bankruptcy Attorney

Money matters are sensitive and personal, and there are not too many people that are anxious to discuss their financial affairs with someone they have just met for the first time. This is certainly a prudent way to conduct yourself, but the “close to the vest” approach can have a downside if you are having financial difficulties. A bankruptcy attorney can guide you toward an effective debt management solution, but you may feel a bit uncomfortable asking for help.

This is understandable and it is human nature, but you don’t have to be concerned. Our bankruptcy law firm has been assisting people for more than three decades, and we have worked with tens of thousands of clients in Oregon and Washington. Given our vast experience, there is no scenario that we haven’t seen before, and we always go the extra mile to make our clients feel comfortable throughout the whole process.

We get to know our clients, we put them at ease, and we answer all of their questions in a thorough but down to earth and understandable manner. For some individuals, a Chapter 7 liquidation bankruptcy will be the best choice. With this form of bankruptcy, unsecured debts are discharged entirely, and you can usually maintain ownership of your home and your car if you are up-to-date on the payments. Other people will be better served by a Chapter 13 reorganization that allows a person to make payments over time until the debts are paid or discharged.

Our firm offers free case evaluations, so you have the opportunity to meet us and get to know your bankruptcy attorney before you make any firm commitments. This is a simple but effective way to break the ice, and we also make personal interactions quite convenient for people in many different parts of Oregon and Washington. We have offices in Portland, Eugene, Medford, Grants Pass, Coos Bay, Tigard, Bend, Klamath, Salem, Vancouver, and Tri-Cities, so you won’t have to travel very far to get sound legal counsel. If you will like to take the first step toward a comfortable financial future, send us a message through our contact page to request a consultation with a licensed OlsenDaines bankruptcy attorney.