A 5-Step Guide To Dealing With Bankruptcy

Eugene, OR – Filing for bankruptcy is one of the hardest decisions you’ll have to make in your life. The stigma of going bankrupt is already difficult to handle, but what you should be focusing on are the financial implications of such a decision. If you’re considering bankruptcy, you should consult with an experienced professional before taking any action.

All bankruptcies are filed in the United States Bankruptcy Court, but each state has its own provisions. Here’s a quick guide to dealing with bankruptcy in the state of Oregon. 

Determine if you’re a good candidate for bankruptcy

When you’re drowning in debt, bankruptcy may seem like the only solution. Yet, if you’re not an expert in this final, you don’t know for sure. At the very least, you should schedule a consultation with a seasoned Oregon bankruptcy lawyer, like Stephen Behrends of Behrends, Carusone & Covington, Bankruptcy Attorneys, to examine your options. For free. Any decent attorney will offer you a free initial consultation, so you’ve got nothing to lose. Maybe there are other options, like debt relief.

Decide which type of bankruptcy you should go for

There are two types of bankruptcy, one under Chapter 7 and the other under Chapter 13. If these words don’t mean anything to you, it’s best to seek legal counsel before you do anything.

Chapter 7 bankruptcy

This is the most common type of bankruptcy in the US. If you file for bankruptcy under Chapter 7, you basically turn your assets over to the bankruptcy court. The court will sell your assets and pay your creditors.

Under Oregon law, some of your assets are exempt and you should take full advantage of this provision. Here are a few examples:

  • your interest in a car up to a value of $3,000
  • household furnishings up to $3,000
  • clothes and musical instruments up to $,1,800
  • the federal earned income tax credit
  • a certain portion of wages
  • almost all government benefits
  • some bank account balances 
  • the equity in your home, depending on the amount

Also, talk to your lawyer about federal exemptions.

Your debts will be discharged once creditors receive the proceeds from the assets sale. Keep in mind that certain debts, such as child support, alimony, or student loans cannot be discharged. 

Chapter 13 bankruptcy

If your income for the last six months is more than the median income in Oregon, you’ll probably have to file for bankruptcy under Chapter 13. This involves setting up a repayment plan to repay your creditors. 

The main drawback is that a Chapter 13 bankruptcy can take 3-5 years, while under Chapter 7 you’re done with the whole thing in a few months.

Collect your financial documents

This part will be quite a hassle, especially if you decide against getting a lawyer. You’ll need your credit report and a list of debts not included in it. On top of that, you’ll have to prepare your tax returns for the past 2 years, pay slips for the last 6 months, bank account statements, valuations of any real estate you own, vehicle registration documents, etc. 

Fill in bankruptcy forms

If you go alone, you’re looking at a massive task. You’ll have to fill in at least 23 different forms, totaling around 70 pages. You can fill in the forms online, but you will have to print them afterwards. If you file under Chapter 7, you have to pay a $338 fee, but waivers are available for those who cannot afford it. 

File for bankruptcy

This is it. You’ll need to go to the local courthouse and tell the clerk you want to file for bankruptcy. Hopefully, all your forms are in order. After you submit the documents you will receive your case number and the name of your bankruptcy trustee. You will submit all your financial documents to the trustee at the first meeting. 

There are a few more steps, but the hardest part is over. You have officially filed for bankruptcy and you’re almost debt free. 

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