Frequently Asked Questions About Bankruptcy

What are the different types of bankruptcy? And which chapter should I file?

For most clients, there are only two bankruptcy options: Chapter 7 or Chapter 13. The type of bankruptcy you should file depends on your specific circumstances. It is a complex determination that factors in your income and expenses, assets, types and amount of debt, as well as a number of other factors. Call our office for a free consultation so we can determine which option is best for you.

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Do I get to keep my stuff if I file bankruptcy?

This is an important question for anyone thinking about filing bankruptcy: what happens to your property - your money, personal items, car, house, guns, retirement, etc. - when you file bankruptcy? The good news is that it is almost always possible to protect your home, car and other assets in a bankruptcy. The federal bankruptcy laws and the related laws in each state allow you to protect some or, in most cases, all of your personal property through what are called "exemptions." How the exemptions are used in a bankruptcy petition makes all the difference. Call our office to discuss your options and how we can protect your assets.

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Can I keep my car in a Chapter 7 bankruptcy if I have a car loan?

What happens if you have to file bankruptcy but you owe money on your car and need to keep the car? While you are required to list all of your debts in a bankruptcy petition, not all debts are treated equally in a bankruptcy. If you want to keep your car, you will need to make sure you are current on your loan payments. You will also need to sign a reaffirmation agreement with the car creditor. A reaffirmation agreement is a voluntary agreement that a secured creditor enters into with the Chapter 7 debtor which, if approved by the Bankruptcy Court, will allow the debtor to keep and pay for the car even after the bankruptcy. It establishes a new, legally binding loan after the bankruptcy, subject to all of the same rights and remedies the creditor had before the bankruptcy filing.

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Can filing bankruptcy stop a foreclosure?

The short answer is: Yes, filing bankruptcy will stop a foreclosure. However, filing a Chapter 7 bankruptcy will only temporarily stop a foreclosure for a few months. This may give you enough time to relocate to a new residence or attempt a short sale.

A Chapter 13 bankruptcy on the other hand may give you a chance to catch up on missed mortgage payments. Chapter 13 bankruptcy gives you 3-5 years to pay off the arrears (missed payments and fees) while you continue to make your regular monthly mortgage payments.

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What debts can I wipe out in bankruptcy?

A Chapter 7 bankruptcy will wipe out most of your unsecured debts, including credit card bills, medical bills, collections, personal loans, payday loans, prior vehicle repossessions, etc. A Chapter 7 does not get rid of your traffic tickets, parking tickets, past-due child support and certain tax debts.

A Chapter 13 bankruptcy can wipe out any non-criminal traffic tickets and parking tickets. Chapter 13 can also help you get your license reinstated within a few months if it is suspended due to non-payment of tickets. In a Chapter 13 bankruptcy, your unsecured creditors typically get pennies on the dollar or nothing at all. However, there are some instances in which a debtor will pay 100% of his or her debts over the course of the 3-5 years.

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If I am married, is my spouse required to file bankruptcy too?

If you are married and you need to file bankruptcy, your spouse is not required to file bankruptcy as well. However, it often makes sense for both spouses to file a joint bankruptcy. For starters, our fee for an individual filing is the same as for a joint filing. One of the primary reasons for filing a joint bankruptcy petition, however, is medical bills - in Oregon, medical debt accrued by one spouse is treated by law as joint debt. In other words, both spouses are liable for any medical debt incurred while they are married. If only one spouse files bankruptcy, his or her obligation to pay a particular medical bill is wiped out, but the other spouse will still be held responsible to pay the bill.

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Can filing bankruptcy wipe out my old tax debt?

In some cases, bankruptcy can wipe out old tax debt. However, there are very specific and complex rules that determine whether tax debt remaining from a particular year may be discharged. If certain requirements are not met for a particular tax year, filing a Chapter 7 bankruptcy will not discharge the tax debt for that particular year.

Filing a Chapter 13 bankruptcy, however, may be a great option for you. Chapter 13 gives you the opportunity to repay tax debt over 3-5 years.