When you accrue so much debt in Oregon that you have no realistic way of paying back what you owe, you may start looking into bankruptcy and considering whether it might help improve your situation. Consumer bankruptcies come in two types: Chapter 7 and Chapter 13 bankruptcies. A Chapter 7 bankruptcy is also considered a “liquidation” bankruptcy, while a Chapter 13 bankruptcy is a “reorganization” bankruptcy.
If you want to file for debt erasure through a Chapter 7 bankruptcy, you first need to take a means test that determines if you are eligible to do so.
The first step in the means test
If you successfully pass the first step in the means test, you do not have to worry about the second step. The first step requires that you compare your household income from the last six months against the median household income for residents of Oregon. If yours is lower, you already pass the means test and may skip step two. If yours is higher, but you still want to file Chapter 7, you must proceed with taking the second step in the means test.
The second step in the means test
The second step in the means test requires you to see how much “disposable income” you have after paying your basic living expenses. You may need to gather bills and other documentation for this step. How much disposable income you ultimately have determines if you may file for Chapter 7.
If you do not pass the means test, you may be able to file for Chapter 13. If you prefer not to do that, you have the option of waiting six months to see if circumstances change before retaking the means test.