A Chapter 7 Bankruptcy allows a debtor (or debtors, if married and a joint filing) to discharge most unsecured debts (credit cards, medical debt, unsecured lines of credit).
The moment that a Chapter 7 Bankruptcy is filed a legal stay goes into effect. This legal stay immediately prevents creditors from taking any collection at all against the debtor.
Thus, the creditor can no longer call, write, sue, and/or collect on a judgment, if they have one.
If the creditor was already garnishing a debtor’s paycheck at the time of filing, then the garnishment must stop immediately.
Some tax debt may be discharged. The general rule is that if tax debt is three years old or older (as determined by the due date that the taxes were due) and the relevant tax returns were filed at least two years before the bankruptcy filing, then that tax debt will be dischargeable.
Some obligations like child and/or spousal support are never dischargeable. And, unfortunately, student loans are almost never dischargeable in any type of bankruptcy.
In general, a debtor can keep their secured property (e.g., house and/or car) as long as they are current on their payments (or make arrangements to get current with the lender) and continue making their payments post-filing.
Regarding a debtor’s assets, there are different statutory exemption amounts for different property categories. For example, the exemption amount for a house is $40,000 for a single filer or $50,000 for a married/joint filing.
This exemption amount has to do with the equity that is in the house. So if there wasn’t more than $40,000 or $50,000 of equity in the debtor’s house and the debtor is current and stays current on payments, the debtor will not lose their house.
The exemption amount for cars is $3,000. Again, that has to do with the equity in the car, if any, and generally the Kelly Blue Book trade-in value is what is used for the value of a car. There are, of course, subtleties to all of the above statements and, thus, a consultation with me or another experienced bankruptcy attorney in the Portland, Oregon, area is essential.
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.