No one wants to be in a position where considering bankruptcy is on the table as an option; you may feel so overwhelmed by the choices ahead of you that you don’t know your next steps. However, declaring bankruptcy doesn’t have to mean an end to your financial future.
Many people associate bankruptcy with failure, but when used correctly, it’s actually a tool that can help set you up for future success. In Oregon, there were 3,214 people who filed for Chapter 7 in 2020, and with the right bankruptcy attorney by your side, this can be the best choice for you, too. Call my office in Bend or Hermiston, Oregon today to see what Oregon Fresh Start can do for you.
Chapter 7 is the most common form of bankruptcy for individuals. It usually doesn’t require any of the unsecured debt to be repaid. It’s also usually the quickest and easiest way to declare bankruptcy. It allows an individual to discharge debt, meaning it will be wiped out after the bankruptcy is complete, regardless of whether it was fully paid off.
Each state will approach bankruptcy filing a bit differently. In Oregon, when you file for Chapter 7, it can take an average of 120 days to get your discharge which is the goal; however, more complicated cases may take between four and six months. Oregon currently charges $338 to file Chapter 7—but remember, this is independent of any attorney fees you may take on.
In almost all Chapter 7 cases, you will get to keep all of your assets. In rare instances (maybe you have a boat that is owned free and clear), a trustee will liquidate your non-exempt assets. The net proceeds will then be distributed among your creditors with a small portion taken by the trustee. Oregon law permits filers to keep essential assets like your primary residence, everyday vehicles, household items, pensions, bank accounts, tax refunds, clothing, etc. but they must meet equity limits set out by state law.
Note that not all debts are dischargeable under Chapter 7. You’ll still be on the hook for legal obligations like child support, alimony, or student loans. However, it can help with debts like back rent, medical bills, personal loans, and credit card debt. Furthermore, the day you file, your creditors must stop pursuing their collections as well as any wage garnishments.
Most judges will allow you to keep making payments on a secured loan (car, house, etc.) by signing a “reaffirmation agreement,” even while the bankruptcy is going through. These agreements usually bar you from declaring bankruptcy on these items in the future for at least eight years.
Despite popular misconceptions, Chapter 7 doesn’t leave you with nothing. In most cases, clients get to keep all of their assets like their home, furniture, clothing, bank accounts and car, but it can’t prevent all foreclosures and those with a mortgage in jeopardy may want to look into a Chapter 13 option. Under Oregon law, the exemption limits are based on the value of your property currently - not what you paid for it when you bought it. This is generally beneficial for items like cars or furniture, but if your home has appreciated since you first bought it, you may have more equity than is allowable under Oregon statute and will need to discuss filing a chapter 13.
To qualify for Chapter 7 bankruptcy in Oregon your household income must be less than the state’s median income. For 2021, this is $62,059 for an individual and $101,773 for a family of four. Those with an annual household income lower than this will almost always qualify. Those with incomes higher than the state median will be required, as part of the bankruptcy process, to do a little more budget evaluation with my help to determine if a Chapter 7 filing is still possible.
Filing for bankruptcy is never anyone’s first choice, but sometimes it’s the right choice. If you’ve already tried other options to get a hold of your finances like debt settlement and are still left underwater or with creditors still trying to collect from you, Chapter 7 might be the best choice for your circumstances. Additionally, other scenarios like if you suddenly lost employment, if your debt totals more than half of your income (excluding student loans and mortgages), or if it will take you longer than five years to pay off your outstanding debt, all may signal that a Chapter 7 filing is right for you.
With the right help, filing for bankruptcy could be just the thing you and your family need to clear the way for a brighter financial future. Don’t let the stigma of debt weigh you down. Although my main offices are located in Hermiston and Bend, Oregon, I serve as a bankruptcy attorney for clients up and down the Willamette Valley from Portland to Eugene. I work solely with those seeking financial relief through bankruptcy and have 42 years of experience to help you through it. Call me today to ensure debt relief for tomorrow.