What is Bankruptcy?

Bankruptcy is a process designed to help consumers and businesses eliminate their debts.¬† Generally,¬† most consumers are eligible for either a chapter 7 (liquidation) bankruptcy or a chapter 13 (payment plan) bankruptcy.¬†¬† Besides receiving a discharge of most of their debts, debtors in bankruptcy also enjoy an “automatic stay” upon filing, which prevents creditors from taking any adverse action in trying to collect a debt, such as evictions, utility shutoffs, wage garnishments, repossessions, and even harassing phone calls.

Chapter 7

A chapter 7 bankruptcy is a liquidation proceeding.¬† A debtor’s non-exempt is transferred to the bankruptcy Trustee who then converts it (sells it) for cash and distributes the proceeds to creditors.¬†¬† An asset is non-exempt only if its value exceeds the exemption amount established by Oregon law.

Chapter 13

A chapter 13 bankruptcy is¬† a payment plan.¬† To be eligible for a chapter 13 bankruptcy, a debtor must have sufficient income to be able to support a plan of repayment, and the debtor’s debt total must be below certain limitations.¬† Upon successful completion of the repayment plan (a repayment period lasts either 36 or 60 months) the remaining debts will be discharged.¬†¬† If you have questions on whether¬† a chapter 13 bankruptcy is appropriate for you, contact me to schedule a consultation.

Will ALL of my debt be discharged?

There are certain types of debt that cannot be discharged through bankruptcy.   These debts include but are not limited to domestic support obligations, most student loans and tax debts, and debts incurred through fraudulent means.   If you have a question on whether any of your debts cannot be discharged, contact me to schedule a consultation.