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When is Filing for Bankruptcy a Good Option?

Downs, McDonough, Cowan & Foley Feb. 24, 2022

Depressed businessman lost his business.Bankruptcy is one option available to individuals and families going through financial difficulties to seek debt relief and get the financial fresh start they deserve. However, there are different factors to consider to determine whether bankruptcy is the ideal debt relief option for your situation. A skilled Oregon bankruptcy attorney can evaluate your specific financial situation and help you understand if filing for bankruptcy is a good option.

At Oregon Fresh Start, I have devoted my career to providing experienced legal services and reliable advocacy to clients in bankruptcy-related matters. I'm available to discuss your financial situation, explore your possible options, and determine whether bankruptcy is right for you and your loved ones. I will guide you through the legal process involved in filing for bankruptcy from start to finish. My firm is proud to serve clients across Bend & Hermiston, Portland, and Eugene, Oregon.

Assess Your Current Financial Situation

If you are trying to determine whether bankruptcy is the ideal option for you—or you are already considering filing your bankruptcy petition—you need to assess your current financial situation. Here are some factors to consider:

Money Coming In vs. What is Owed

Depending on your circumstances, a simple lifestyle change may be just what you need to correct your financial situation. Compare your income with your debts. Are you making a reasonable amount of money but don't know where it goes? Simple lifestyle changes—such as spending less and saving more—may be just what you need to pay off your debts.

How Much Debt You Have

Consider the amount of debt you owe. If your debt load is over 40% of your annual earnings, you could easily become overburdened with debts. Likewise, you may struggle to make your monthly payments. In a situation like this, you should consider your different debt-relief options, including bankruptcy.

Are Collectors Calling?

Receiving constant phone calls, demand letters, and emails from creditors and debt collectors can be not only annoying, but a cause of great stress and anxiety. When you file for bankruptcy, an "automatic stay" order goes into effect. This is a court injunction that prevents collectors from calling or harassing you.

What Bankruptcy Chapter Are You Eligible for?

Your current financial situation will also determine your eligibility for bankruptcy. If you have mostly unsecured debts, Chapter 7 may be right for you. Conversely, if you have enough income, you may settle your debts through a Chapter 13 repayment plan.

Chapter 7 and Chapter 13 are among the most common bankruptcy options for individuals and families facing financial distress in Oregon.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, or "liquidation" bankruptcy, is designed to help individuals eliminate most of their general unsecured debts and achieve a "fresh start" financially. In a Chapter 7 case, the Oregon court will appoint an independent contractor (known as a trustee) to oversee your bankruptcy case. In most cases, you will get to keep all of your assets.

Chapter 13 Bankruptcy

Also known as a "wage earner's" plan, Chapter 13 bankruptcy is available to individuals who earn a reasonable income but are overwhelmed with debt. Under Chapter 13, the consumer can set up a structured repayment plan to repay both secured and unsecured debts while keeping their home, car, and other assets.

In a Chapter 13 case, you, together with my help if I sign on to be your attorney, propose a repayment plan— scheduled over three to five years—to your creditors. This way, you can have sufficient time to repay part or all of the outstanding debt using your future earnings. Chapter 13 bankruptcy is only available to regular income earners who have a debt burden.

Applicants for either bankruptcy chapter must complete mandatory counseling in credit management from an approved credit counseling agency in Oregon.

Which Debts Won't Be Forgiven?

Not all kinds of debts, however, can be eliminated through bankruptcy. The following debts may not be forgiven:

  • Child support

  • Alimony or spousal support

  • Divorce settlement debts

  • Criminal restitution

  • Student loans

  • Tax debts

  • Fines and penalties

  • Fraudulent debts

Whether you file for Chapter 7 or Chapter 13 bankruptcy, you may still be required to pay back these debts.

Identifying Which Assets Could Be Affected

Filing for bankruptcy won't leave you destitute. However, some of your major assets and property may be affected.

Your Home – With some of your debts forgiven, you will find it relatively easy to pay your mortgage. Hence, you will be allowed to keep your home upon filing for bankruptcy.

Your Pension – For the most part, pension plans, retirement accounts, and life insurance policies are protected in a bankruptcy case. Thus, when you file for bankruptcy, your pension, life insurance, and retirement accounts won't be affected.

Your Car – What happens to your car after filing for bankruptcy depends on Oregon's property exemption laws and what you did with the vehicle. Generally, your primary car is an exempt asset, and you can keep it after filing for bankruptcy. However, if your vehicle is collateral for a loan and you want to keep your car, you will need to work out a deal, with my help, with the creditor.

Let Oregon Fresh Start Help You

Facing financial hardship can be a really complicated situation. While bankruptcy remains a viable option to achieve the fresh start you deserve, you need to know whether bankruptcy is right for your unique financial situation. Consulting with an experienced bankruptcy attorney is important for proper guidance.

At Oregon Fresh Start, I have the diligence, knowledge, and resources to advise clients in the legal matters of debt relief and bankruptcy. As your legal counsel, I can evaluate your financial condition, enlighten you about your different bankruptcy options, and determine the right bankruptcy chapter for your situation.

Additionally, I will help file court forms and documentation and represent you during legal proceedings. I will work meticulously with your creditors and the trustee to negotiate a fair debt resolution or establish a feasible repayment plan. I will outline a strategic plan to protect your assets, build a solid financial future for you and your loved ones, and help you prepare for life after bankruptcy.

Call my firm—Oregon Fresh Start—today to schedule a free case assessment. I can offer you the experienced legal counsel you need to make intelligent choices and seek financial relief. My firm is proud to serve clients across Bend & Hermiston, as well as Portland, Eugene, and the rest of Oregon.