Welcome to our blog.
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What will happen at the bankruptcy hearing?
By Brian Turner, Attorney at Cascade Bankruptcy
When you file bankruptcy, you are required to attend a hearing where a bankruptcy Trustee places you under oath and reviews your case. The Trustee is an official appointed by the Federal government to administrate your case for the benefit of your creditors. The Trustee will ask you questions relating to your income, expenses, assets and recent transactions. Prior to your hearing, your attorney will provide required documents to the Trustee. You will be required to bring additional documents, such as a valid photo ID, social security card, recent pay stubs and current bank statements. After reviewing your case, your attorney will be able to provide more specific details about what will occur at your hearing. A Cascade Bankruptcy attorney will represent you at your hearing.
Am I going to lose my belongings when I file bankruptcy?
By Brian Turner, Attorney at Cascade Bankruptcy
Bankruptcy law provides “exemptions”, a set of laws protecting certain categories of assets up to a specific value. The purpose of our exemption laws is to allow you to obtain a fresh start while retaining the items necessary for day to day living. In most chapter 7 cases, you are able to protect common assets such as household goods, home furnishings and personal items. However, it is important to carefully discuss the value of all of your assets to determine whether they will be protected in bankruptcy.
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What will it cost to file bankruptcy?
By Brian Turner, Attorney at Cascade Bankruptcy
Costs to file bankruptcy include attorney fees, court fees and credit counseling fees. Attorney fees vary depending on the type of bankruptcy being filed as well as the facts and circumstances of each case. To find out the approximate cost of filing your case, go to Locations to call the office nearest you.
In most chapter 7 cases, you are required to pay a flat fee for basic services before the case is filed with the court. Cascade Bankruptcy offers convenient payment plans based on what you can afford to allow you to pay the fees while referring creditors to our office. This will prevent your creditors from harassing you by phone while you are preparing to file your case.
If you are filing chapter 13, Cascade Bankruptcy typically allows you to file after simply signing a fee agreement and paying an initial $100 retainer and the Court’s . The remaining fees are paid over time from your chapter 13 plan payments.
Filing fees are typically paid before the case is filed. The Bankruptcy Court publishes a list of fees on their website.
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I CAN’T AFFORD TO PAY MY SECOND MORTGAGE. IS THIS SOMETHING BANKRUPTCY CAN HELP ME WITH?
By Erin Uhlemann, Attorney at Cascade Bankruptcy
You may be able to use a Chapter 13 bankruptcy case to eliminate your second mortgage, home equity line of credit, or judgment lien. If your house is worth less at the time you file your Chapter 13 bankruptcy case than you owe against your first mortgage, you may be able to include a provision in your Chapter 13 reorganization plan to treat the second mortgage as an unsecured debt. As an unsecured debt, the second mortgage gets paid at the same rate as the other unsecured debts such as credit cards and medical debts. Unsecured creditors in Chapter 13 cases can be paid between 0% and 100%, depending on what you can afford. At the end of the Chapter 13 case after you have made all of your plan payments and complied with the other requirements of the Chapter 13 plan, unpaid unsecured debts that are eligible for discharge will be eliminated and you will no longer be responsible for paying those debts. In order to find out whether you can use Chapter 13 to relieve you of your obligation on your second mortgage, home equity line of credit, or judgment lien, it is important to consult a bankruptcy lawyer. Before your consultation with the lawyer it is a good idea to do some research to try to determine the value of your house. You might consider asking a real estate agent to prepare a comparative market analysis or using one of the tools available online that provide property value estimates based on the sale price of similar houses in the area.
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WHAT IS A REAFFIRMATION AGREEMENT AND SHOULD I SIGN ONE?
By Erin Uhlemann, Attorney at Cascade Bankruptcy
Maybe, but you should seriously consider your other options, such as redeeming the vehicle, surrendering the vehicle, and finding out whether the lender will allow you to simply retain the vehicle and remain current on the payments without signing a reaffirmation agreement.
A reaffirmation agreement is a new contract between a creditor and debtor in bankruptcy in which the debtor agrees to remain personally liable on a secured loan and the creditor agrees to not repossess the property so long as the debtor remains current on the payments. Entering into a reaffirmation agreement is usually only done in a Chapter 7 bankruptcy. The reaffirmation agreement must be executed before the bankruptcy discharge is entered. The debtor can rescind the agreement within 60 days after the agreement is entered or the discharge order is entered, whichever occurs later.
Reaffirmation agreements should not be entered into without serious consideration. If you sign a reaffirmation agreement and later default on the loan, the lender has the right to repossess the vehicle and sue you for any deficiency balance. Imagine a scenario in which you reaffirm a loan on an older, high mileage vehicle, and the vehicle later breaks down and cannot be easily repaired. If you stop making payments on the loan, you will remain liable for the loan, even though the vehicle is not driveable and has little value. This is one example of a scenario in which signing a reaffirmation agreement is probably not the best option.
If you decide to sign a reaffirmation agreement, there are some things you should know. First, the Bankruptcy Code requires that the agreement contain many disclosures concerning the contract terms. It is important that you review the terms carefully and understand what you are agreeing to. Second, you will be required to file a statement of current income and expenses. If your income after expenses is not enough to pay the monthly loan, the court may require that you appear at a hearing and may ultimately decide not to approve the reaffirmation agreement.
If your attorney agrees to sign the reaffirmation, the attorney must certify to the bankruptcy court that you were advised of the legal effect and consequences of the reaffirmation agreement, and that the reaffirmed debt will not create an undue hardship for you or your family. In many cases, bankruptcy lawyers are unwilling to sign reaffirmation agreements because of the potential that signing a reaffirmation agreement may cause an undue hardship. Third, because reaffirmation agreements are new contracts, the lender may be willing to alter the terms of the original agreement. This could mean a reduction of principal, interest, or a change in payment length in order to make the monthly payments more affordable. Remember, because signing a reaffirmation agreement is voluntary and because many creditors are not anxious to repossess the property, you may have more leverage in bankruptcy to negotiate a better deal with the creditor.
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What Chapter of Bankruptcy should I file?
By Brian Turner, Attorney at Cascade Bankruptcy
There are many issues involved in deciding whether to file under chapter 7 or chapter 13. Most people file chapter 7 if they are eligible because a typical chapter 7 case lasts only a few months and eliminates most types of debt without requiring that those debts be repaid. To be eligible for chapter 7, you must show that your regular living expenses consume all or most of your monthly income, leaving little or nothing to pay creditors, and that you have not filed a chapter 7 within the past 8 years. The benefit of filing chapter 7 is obtaining the discharge of most consumer, business and medical debts, while the consequences include possible liquidation of assets and the inability to eliminate certain debts like student loans, child and spousal support, some taxes and fines.
Where chapter 7 is not an option because of eligibility or risk of liquidation of assets, chapter 13 can be a good alternative. Chapter 13 is a three to five year reorganization plan that allows you to propose a plan to repay some of your debts according to your ability to pay. The plan allows you to prioritize certain debts like mortgage arrears, vehicle loans, back taxes and support obligations while reducing or even completely eliminating other debts like credit accounts and medical debt.
Determining eligibility for chapter 7 and predicting the consequences of filing is complex due to recent amendments to the bankruptcy code, and you should always consult with an attorney to ensure the best results. Chapter 13 is even more complicated and requires an experienced attorney who is familiar with local rules and procedures of chapter 13 in your area.
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What is Chapter 7?
By Brian Turner, Attorney at Cascade Bankruptcy
Chapter 7 is often referred to as a “fresh start” bankruptcy because it stops creditors upon filing the case with the bankruptcy court and discharges or eliminates all but certain classes of debt. To be eligible for chapter 7, you must show that your living expenses reasonably consume all or most of your income, and that you have not filed chapter 7 within the past 8 years. Those with incomes above the median level for their household size will typically find it more difficult to prove eligibility for chapter 7.
Chapter 7 eliminates most debts, with the exception of student loans, some taxes, spousal and child support obligations and court fines. If a creditor can show that a debt was incurred through fraud, that debt will not be discharged in bankruptcy. For this reason, it is important that you do not continue to use credit accounts once you realize you will be unable to repay them.
Chapter 7 can result in the liquidation of some assets. A complicated set of state and federal laws called “exemptions” protect certain categories of assets up to a certain value. The purpose of exemptions is to allow you to keep items necessary for obtaining a fresh start. For example, Oregon law protects to some extent household goods and furnishings, clothing, jewelry, retirement accounts, some home equity and equity in vehicles, tools and firearms. Because exemption laws are complex, it is vital that you consult with a bankruptcy attorney before choosing to file a chapter 7 bankruptcy.
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What is Chapter 13?
By Brian Turner, Attorney at Cascade Bankruptcy
Chapter 13 is a debt reorganization plan that lasts a minimum of three years but no longer than five years. Some people file chapter 13 because they are ineligible for chapter 7 because of income or because they have filed a chapter 7 within the past 8 years. Others file chapter 13 to stop a foreclosure, repay back taxes or support, protect assets that would be liquidated in chapter 13, modify car loans, or even to eliminate second mortgages from their homes. While chapter 13 does require a monthly payment plan, it rarely results in repayment of all debts.
There are two basic rules that determine how much creditors receive in a chapter 13 bankruptcy. In chapter 13, you must pay the greater of what you can afford to pay on a monthly basis for the length of your plan, or the amount your creditors would have received had you filed chapter 7 bankruptcy and your unprotected assets were liquidated. Often, determining the amount you can afford is more difficult than it sounds because of expense standards used in bankruptcy cases. It is also important to carefully plan steps that can be taken before a case is filed to ensure the greatest chance of success. A bankruptcy lawyer experienced in chapter 13 will help analyze your case to determine whether chapter 13 is appropriate and how to optimize your case.
I NEED TO FILE BANKRUPCY BUT I DON’T WANT TO LOSE MY CAR. IS THIS POSSIBLE?
By Erin Uhlemann, Attorney at Cascade Bankruptcy
Most Oregonians who file bankruptcy rely on their cars and trucks to go to work, get to the doctor, to drive children to school, and for many other purposes. When you need to file bankruptcy, protecting a vehicle is an important issue to consider. If you file a Chapter 7 bankruptcy case and the equity you have in your vehicle is at or below the exemption provided for by Oregon law, you will be able to keep the vehicle. Talking to an attorney can be helpful in determining the value of your vehicle and understanding the exemption limit. If you have a loan against the vehicle, things become a bit more complicated. Some lenders will require that you sign a reaffirmation agreement in order to keep the vehicle and the vehicle loan. This means that you will remain responsible for the debt against the vehicle, even after the chapter 7 bankruptcy case. Not all lenders require that you sign a reaffirmation agreement. It is important that you consider your alternatives and consult a bankruptcy attorney before you decide to sign a reaffirmation agreement.
If your vehicle is worth more than the Oregon bankruptcy exemptions allow, there are some bankruptcy options you may want to consider. In some cases, you can enter into an agreement with a bankruptcy trustee to allow you to make payments in order to keep your vehicle. In other cases, you may consider filing a Chapter 13 bankruptcy case. In a Chapter 13 bankruptcy case, you are allowed between 3 and 5 years to pay a portion of your unsecured debts in exchange for being permitted to keep your vehicle and your other valuable belongings.
It is never a good idea to give away a vehicle or to sell it for less than it is worth before filing a bankruptcy case. If you do so, you risk losing the vehicle and possibly the opportunity to discharge your debts in bankruptcy.
The bottom line is that when you have something valuable like a vehicle that you need to keep and you need bankruptcy to relieve you of your debt obligations, it is important to consult a bankruptcy attorney to discuss your options.
