- What is Chapter 7 bankruptcy?
Chapter 7 or a "straight" bankruptcy is the most common type of bankruptcy. It eliminates unsecured debt and gives you a fresh start. Some debts, such as child support and alimony, are not discharged in Chapter 7. Other debts, such as taxes, may be discharged under certain circumstances. Vanden Bos & Chapman, LLP can review your tax debt to determine if any of the tax debt can be discharged. Student loans are not dischargeable except in rare cases. Chapter 7 usually lasts approximately 90 to 120 days from the day you file the bankruptcy until the date you get your discharge.
A trustee is appointed to review your financial affairs and assets. You are entitled to keep certain types of your property (known as "exemptions") up to specific maximum dollar values. See our list of allowed exemptions and the exemption analyzer for an idea of what property is protected. One of the services that Vanden Bos & Chapman, LLP can provide to you is a review of your assets and the exemptions available to you. Vanden Bos & Chapman, LLP can also provide "exemption planning" to help you maximize the property and assets you can retain when you file bankruptcy.
The Trustee has the power to sell ("administer") assets not included in the allowed exemptions. If the trustee determines that there are no assets available for him to sell (this happens about 95% of the time), the case is reported as a "no asset" case and the case is closed. The Bankruptcy Court will issue your discharge about 60-90 days later. All debts listed in the bankruptcy are discharged and the creditors are forever prohibited from trying to collect those debts from you.
- Will I be able to keep all or most of my assets if I file for bankruptcy?
You can keep your assets to the extent they are within the exemptions available under the law to debtors. In many cases, clients are permitted to keep their personal belongings, including your house, your car and all household goods. If you owe more on your house and car than they are worth, the bankruptcy trustee will not sell them because there would be no money left over after a sale to pay your creditors. If you have equity in your house, car and personal property, the exemptions may protect your property. Vanden Bos & Chapman, LLP's attorneys can help you implement strategies to allow you to save property which you own free and clear of liens, and to make sure you claim all of the exemptions that are available to you.
- Can I transfer or dispose of my possessions before I file bankruptcy?
No! If you give away, sell for less than fair value or transfer an asset to someone before you file for bankruptcy, the bankruptcy trustee may be able to reverse that transfer. Transfers made within one year of bankruptcy may be grounds for the trustee to disqualify you from receiving your bankruptcy discharge. If you have already taken such actions, you should speak with an attorney of Vanden Bos & Chapman, LLP to determine if steps can be taken to undo the harm you may suffer because of an improper transfer.
- I have previously filed for bankruptcy before and I am in a desperate financial crunch. Can I file again?
Under bankruptcy law, you can only file a Chapter 7 bankruptcy if you have not received a bankruptcy discharge within the last eight years (the eight-year period runs from your previous discharge date, not your filing date). You can file a Chapter 13 after receiving a Chapter 7 discharge, but you can not receive a discharge in Chapter 13 if you received a discharge in a Chapter 7 case filed within four years of the petition date of your Chapter 13.
- Will a Chapter 7 discharge all of my debts?
No, Chapter 7 does not discharge all of your debts. Chapter 7 is designed to discharge unsecured debts like medical bills and credit card debt. Other debts like student loans, some types of taxes, and debts associated with driving under the influence of intoxicants generally cannot be discharged in Chapter 7. Debts incurred through fraud or false pretenses may not be dischargeable in Chapter 7. Chapter 13 can discharge some of the debts that Chapter 7 will not. You should meet with Vanden Bos & Chapman, LLP to determine the exact nature of your debts and which bankruptcy chapter is the best fit for you.
- Does my spouse have to file with me?
No. Either spouse can file alone. If you and your spouse are both jointly obligated on certain debts, your bankruptcy will prevent the creditor from trying to collect from you, but the creditor can still attempt to collect from your spouse.
- I keep hearing that a Chapter 7 Trustee will take my "non-exempt" property. What is my "non-exempt" property?
When you file a Chapter 7, the Trustee is only interested in property that he can sell and use the proceeds to pay unsecured creditors. If you own a car worth $4,000, and you still owe $4,000 to the lender, the Trustee won't take the car because he would have to pay all of the sale proceeds to the car lender and there would be nothing left for unsecured creditors.
Public policy mandates that no one should be deprived of all of their property, and therefore the Oregon legislature has created certain "exemptions." Exemptions are a dollar value in certain property that is protected from all of your creditors, including a bankruptcy trustee. If the value of your property is within the exemption limits, the Trustee will not take and sell the "exempt" property. See our list of allowed exemptions and the exemption analyzer for an idea of what property is protected. One of the services that Vanden Bos & Chapman, LLP can provide to you is a review of your assets and the exemptions available to you. Vanden Bos & Chapman, LLP can also provide "exemption planning" to help you maximize the property and assets you can retain when you file bankruptcy.
- What is a "secured" debt?
A "secured" debt is a debt where you have agreed, or pledged, collateral (property) to ensure your payment of the debt. In other words, if you are unable to pay the debt, the lender can take the property instead. Common examples of secured debt are your mortgage loan (secured by your house) and your car loan (secured by your car). Sometimes household goods (TV, appliances, etc.) can also be secured to pay the debt owed to the seller of the goods.
Do I have to get a certificate from a credit counseling agency to be qualified to file bankruptcy?YES. No individual may be a debtor in bankruptcy unless the individual first undergoes a consumer credit counseling consultation and receives a certificate of completion. The certificate must be presented to the Bankruptcy Court at the time the bankruptcy is filed or the Bankruptcy Court will refuse to accept the bankruptcy petition. The requirement for "consumer" credit counseling applies even where the debtor's debts are primarily business related and where the reasons for the debtor's financial distress have nothing to do with "consumer" debt issues. The debtor is obligated to locate an "approved" counseling agency (see the U.S. Trustee's list for Oregon at the link below) and pay for the cost of the session. - Do I have to complete a "debtor education course as a condition to getting a Chapter 7 discharge?"
Yes. The prescise nature and cost of these courses is unclear at this time. A list of approved education providers can be found on the US Trustee's website at the link below.
What is the "Means Test" for a Chapter 7?Under the new law, a debtor will be ineligible for Chapter 7 if his or her income is above a certain level based on the median income of the state of residence AND allowed expenses exceed certain guidelines. Under the new law there is a complicated process for evaluating a debtor's income and whether or not the debtor meets certain other criteria. Information on the standards used can be found at the U.S. Trustee's website link below. If you do not "pass" the requirements for the Chapter 7 Means Test, you will probably have to file a Chapter 13. You should consult a lawyer at Vanden Bos & Chapman, LLP for guidance through the complicated process of determining if you "pass" the Means Test for Chapter 7.
US Trustee's Credit Couseling List: http://www.usdoj.gov/ust/bapcpa/ccde/cc_approved.htm#OR) US Trustee's Debtor Education List: http://www.usdoj.gov/ust/bapcpa/ccde/de_approved.htm#OR U.S. Trustee's standard for Means Test: www.usdoj.gov/ust/bapcpa/meanstesting.htm
|
|
