A Chapter 7 Bankruptcy usually lasts about 90 days before the discharge is issued. But remember, the benefits of the Chapter 7 bankruptcy (the legal stay discussed above) occur immediately.
Normally there are no payments that need to be made to the trustee in a Chapter 7 Bankruptcy case because over 90% of chapter 7 bankruptcy cases are “no asset” cases, which means that there are no non-exempt assets.
In the fall of 2005, Congress changed the bankruptcy laws somewhat. There is now a “Means Test” requirement to determine threshold eligibility for a Chapter 7 Bankruptcy case. To summarize; the debtor’s last six months of income are put into a formula and compared with the median income level for their family size.
If the debtor’s annualized income is above the current median income level for their family size in their respective state, then the debtor may need to file a Chapter 13 Bankruptcy instead of a Chapter 7 Bankruptcy. The Means Test analysis can get very complicated.
I recommend that you consult with me first or an experienced bankruptcy lawyer in the Portland, Oregon, area to discuss your situation.
In both a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy filing, there is a meeting with the relevant trustee about 30 days after filing.
At my consultation I will explain the significance and what to expect at this trustee hearing. It is extremely rare for the debtor to ever have to appear in front of a judge in either a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy.
Like the filing of a Chapter 7 Bankruptcy, a legal stay goes into effect immediately with the filing of a Chapter 13 Bankruptcy. But, unlike a Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy will have monthly payments that need to be made to the trustee.
The minimum monthly payment is $100, but the monthly payment can be higher if the debtor’s net monthly income (i.e., disposable income as determined by a combination of IRS allowable and actual expenses) is higher than $100. (You definitely need to consult with me or an experienced bankruptcy attorney in the Portland, Oregon, area to determine what your payments will probably be in a Chapter 13 Bankruptcy case.
When the Chapter 13 Bankruptcy is filed, your lawyer will put forth a proposed monthly plan payment based on numerous factors. The trustee’s office could disagree with this number and then a new number will be required.) A Chapter 13 Bankruptcy plan lasts anywhere between 36 and 60 months, but it is rare that the debtor’s unsecured creditors receive a large percentage of their debt during the life of the Chapter 13 Bankruptcy plan.
During the life of the Chapter 13 Bankruptcy plan, any tax refunds that the debtor would be entitled to would go to the Chapter 13 Trustee.
There are many benefits to filing a Chapter 13 Bankruptcy that are the same as filing a Chapter 7 Bankruptcy (e.g., relief from creditor harassment and collection action; and eventually discharge of most unsecured debts).
Additionally, there are some unique benefits to filing a Chapter 13 Bankruptcy. One unique benefit of filing a Chapter 13 Bankruptcy is the ability to strip away a wholly unsecured second mortgage and/or lien from a house (i.e., the current market value of the house is less than what is owed on the first mortgage).
The reality is that many people are in a financial position where a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy will greatly help them as a result of the housing market collapse and the resultant substantial drop in real estate values (in middle class America it has traditionally been an individual’s home that was the largest portion of their net worth).
The good news is that a wholly unsecured second mortgage and/or home equity line can be stripped away in a Chapter 13 Bankruptcy filing. Another unique benefit of a Chapter 13 Bankruptcy is that it can allow a debtor to pay off any mortgage arrearage (past due amounts on their mortgage) over the life of the plan as long as the debtor can start paying their current mortgage payments the month after filing.
Many people have been able to save their homes with a Chapter 13 Bankruptcy filing for this reason. Also, if a debtor does have a lot of non-exempt assets, they can file a Chapter 13 Bankruptcy and keep everything. It takes an experienced and trustworthy bankruptcy lawyer in the Portland area to properly advise an individual on the best course of action (a Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy, or neither and suggest other strategies).
There are numerous considerations (far too many to list in general) that really require a consultation with an experienced bankruptcy lawyer in the Portland area.
The bottom line is that if you are not comfortable with your current debt load, then you should schedule a consultation. There are numerous benefits to a consultation with me.
- You will never wait in a waiting room with other potential or actual bankruptcy clients. (My southeast office in the Sellwood neighborhood in Portland, Oregon, is actually a home office; it is separate from the main house.)For obvious reasons, a bankruptcy filing and/or a potential bankruptcy filing is a private matter.
- You will never meet with a legal assistant. Some bankruptcy lawyers have their legal assistants do a lot of the work on your case, including an initial intake. That will never happen with me for numerous reasons that I can explain to you when we meet.
- I am compassionate about your financial situation and I have the utmost empathy for what you’re going through. My reward is that I get to help you. This is why I decided to practice Bankruptcy Law during these trying economic times.
I take great pride in seeing the positive in everybody and trying to help individuals better their lives; it is very important to me that the service that I provide to my clients is exceptional.
Among other things, this includes promptly returning phone calls and emails and completing work in a timely and accurate fashion.