Oregon residents who are in debt may wonder when is the right time for them to file for bankruptcy. They might have $20,000 or $30,000 in credit card debt or a car loan for a few thousand dollars.

First, the individual may want to consider their income and asset level. Having $30,000 in debt to pay off is a lot for someone who only makes $30,000 a year. However, an individual who makes more than $100,000 a year may find that paying off this debt is doable depending on other expenses they have. Bankruptcy could be considered by some to be a drastic step, but it may be what a person needs in order to restore their financials.

It is good for a person to exercise caution before going the debt settlement route. Creditors may be eager to work with someone who is not represented by an attorney because they are able to create settlements that are in the favor of the creditor but not the debtor.

Many credit card companies and debt collectors are reluctant to settle with their clients when they are not represented by an attorney. When a person is represented by an attorney, credit card companies and debt collectors may be more willing to settle debt to avoid litigation costs.

Something to remember is that if a person is able to settle their accounts with a credit card company or creditor, they might get hit with a large tax bill at the end of the year because the forgiven debt is considered taxable income. This is one of the benefits of filing for Chapter 7 bankruptcy if a person qualifies.

A bankruptcy attorney may be able to work with their client and help them see if they qualify for filing for bankruptcy in the first place. They may be able to help their client understand how bankruptcy laws will be applied in their case and explain the paperwork and filing requirements connected to bankruptcy.