The frequently asked questions and answers below are a guideline to help you assess filing for bankruptcy. Please ask an attorney specific questions.
1. Can I file for bankruptcy and still keep my house? What about my car/truck? Can I keep my retirement funds?
Many families file for bankruptcy and do keep their homes. This answer depends on the current equity in your home and whether you are current on your mortgage payments. The mortgage payments will need to be paid while you are in and after discharge from bankruptcy to keep your home. Oregon statutes protect the first $40,000 in home equity for an individual filer’s homestead (where you are living), and $50,000 for a married couple filing a case. If you are not current on your mortgage payments, you should consider discussing this with an attorney who may suggest a Chapter 13 filing. If your home value is less than the first mortgage debt and you also owe a second, third or HELOC debt, you should consider discussing this with an attorney. A lien strip in a Chapter 13 case could help you permanently remove these additional secured debts from your home.
You are entitled to a maximum amount of equity in each family vehicle. Most families will keep their autos while filing a bankruptcy case. If your auto has debt against it, you need to continue to make all auto payments to keep the vehicle. You should consider discussing your auto equity with an attorney if you have questions on this issue.
All Employee Retirement Income Security Act (ERISA)-qualified retirement accounts are exempt. Generally, your federal and state pensions are also exempt. If you are not sure if your retirement funds are exempt, please discuss that question with an attorney.
2. How do I know if I should file bankruptcy?
Generally, when you are unable to pay your monthly bills as they come due, considering bankruptcy would make sense. You will need to analyze your belongings (assets), income, debts (liabilities) and budget. An attorney can help you analyze these issues. Filing bankruptcy should result in an order of discharge (most debts legally gone forever) and a fresh start for the person filing. If you are considering talking to a debt reduction or debt consolidation company, please also meet with a bankruptcy attorney so you will understand all of your legal options. A debt consolidation program could result in your paying more money over time than a bankruptcy would require.
3. What debts cannot be discharged?
Debts that will not automatically discharge include back taxes, payroll taxes, damages owed as a result of drunk driving, spousal support and child support, student loans, fines, penalties and criminal restitution, and debts that result from an act of fraud.
4. What will it cost me to file?
The federal court filing fee for a Chapter 7 bankruptcy case is $335 and the court filing fee for a Chapter 13 bankruptcy case is $310. Attorney fees to assist a client in filing a case and representing a client can range depending on the specific facts in the case.
Cases with complex, overdue, back tax issues; tax liens; business cases; auto undue hardship budget issues; recovery of prefiling wage garnishments; and cases where there are liens to be removed from real estate (due to a circuit court judgment) are examples of cases that may cost more for attorney fees. It will require a full intake appointment for me to give you an individual price for your personal, individual or married couple, or small-business bankruptcy case. My rates are competitive and reasonable.
I charge a reasonable, competitive fee upfront before filing a Chapter 13 case (the upfront fee includes the $310 court filing fee). A Chapter 13 case then requires additional attorney fees to be paid over time, as a portion of a client’s regular Chapter 13 monthly plan payments to the case trustee. I keep track of my time and office staff time spent working on your case, and I send out monthly bills so you are aware of all of the work being done. Some Chapter 13 cases will require a larger payment upfront before filing. I am a priority creditor in Chapter 13 bankruptcy cases so I receive a check from the Chapter 13 trustee on the balance of attorney fees owed at case confirmation and ongoing additional attorney fees during the open bankruptcy case, until the case is closed and discharged.
I currently charge $4,750, as a flat attorney fee for the life of a Chapter 13 case.
5. Do I have to pay attorney fees and the bankruptcy court filing fee before my case files?
Generally, this answer is yes. My office policy is to collect all filing fees and attorney fees prior to filing a Chapter 7 case (Chapter 13 cases will have a specific prefiling payment required before the case files) according to the criteria outlined above. Please call or email for a personal intake appointment to get an exact price for attorney fees for your individual or joint bankruptcy or business bankruptcy.
Some cases may involve the recovery of an involuntary wage or bank garnishment in the 90-day preference period, prior to filing. In certain circumstances, I will accept an assignment of a portion of such wage garnishment recovery to apply toward case attorney fees. This issue is fact-specific and can only be assessed in an individual intake appointment. This issue will also require your discussing these questions with your payroll office. Ask for a written summary that includes the name of the creditor that garnished you, the dates the creditor was mailed checks, the amount of each check and whether the checks already cleared the employer’s bank account.
6. What happens to my credit if I file?
Your credit reporting agencies are legally able to list your bankruptcy case as part of your credit history for up to 10 years. You can generally get an auto loan or secured credit card loan soon after discharge to rebuild your credit history.
7. Will I get fired from my job if I file? Who will know that I have filed?
No, you should not get fired due to your bankruptcy case filing. Some professions/positions/ employers may require you to disclose to your employer if you file a bankruptcy case. Discuss this issue with an attorney prior to filing if you have questions.
Generally, no one will know that you have filed bankruptcy except creditors affected or those that later pull your credit report. If you file a Chapter 13 case, a wage order is usually sent to your employer to have the monthly payments come out of your paycheck directly, like a garnishment.
8. What are the credit counseling and financial management courses?
To file for bankruptcy, a debtor must complete a credit counseling certificate within six months before the case files. This can be done in person, over the phone or on the internet. There is generally a fee for the course. This certificate must be filed with the Bankruptcy Court.
To receive the bankruptcy order of discharge, a debtor must also complete a financial management course before the case has concluded. This can be done in person, over the phone or on the internet. There is generally a fee for the course. This certificate must be filed with the Bankruptcy Court.
9. What is means testing?
Means testing is used to assess which chapter of bankruptcy is appropriate to file for different debtors. Debtors who have six months’ worth of income (multiplied by 2) that exceeds the median income for their family size are deemed able to pay back a portion of their debt so they are eligible for Chapter 13 bankruptcy relief rather than Chapter 7. Families that earn below the median for their family size are deemed unable to pay their debts back and generally file for Chapter 7 bankruptcy relief. If there is disposable income of over $100 a month for any family, this will require a Chapter 13 case filing.
10. When can I file another bankruptcy?
If you filed for bankruptcy after Oct. 17, 2005, the following information will answer how often you can file a new case:
Chapter 7 to new Chapter 7: eight years after date of original Chapter 7 case filing
Chapter 7 to new Chapter 13: four years after date of original Chapter 7 case filing
Chapter 13 to new Chapter 13: two years after date of original Chapter 13 case filing
Chapter 13 to new Chapter 7: six years after date of original Chapter 13 case filing
11. How long does it take to get a discharge?
A Chapter 7 order of discharge generally issues in 90 to 120 days after the case was filed. A Chapter 13 order of discharge generally issues between 36 to 60 months after the case was filed.
If you have additional bankruptcy questions, please call 541-393-2790 or email me and I will be happy to answer them.