Bankruptcies are legal proceedings where the insolvent debtor is given financial freedom through a bankruptcy discharge, thereby granting the debtor a fresh start. In Oregon, declaring bankruptcy gives an automatic stay or bankruptcy protection so that the debtor is prevented from experiencing:
Bankruptcy petitions also enable you to have your debts wiped out. You can obtain discharge depending on the types of debt you incurred but most debts are dischargeable. The common debts that can be eliminated are:
However, secured debts such as those with mortgages and other collateral are within the creditors’ rights hence, the debts can be discharged but the property will belong to the lenders.
Types of Bankruptcy
Under the Bankruptcy Code, there are multiple chapters that a debtor experiencing insolvency can avail. The most common chapter used in bankruptcy proceedings in Chapter 7 and Chapter 13 Bankruptcy. The bankruptcy chapters can be quite similar but ultimately, they are different.
Oregon Chapter 7 Bankruptcy vs Chapter 13 Bankruptcy
| Bankruptcy Chapter 7 | Bankruptcy Chapter 13 | |
| Bankruptcy Type | Liquidation | Reorganization |
| Eligibility | Any person including businesses and corporations | Any person including sole proprietors of businesses |
| Restrictions | Must pass the Means Test and Credit Counseling. The debtor’s disposable income must be below the median income required by the State of Oregon | Does not require you to pass the Means Test but the amount of secured and unsecured debts that the debtor has must not exceed the amount limited by the State of Oregon |
| Time to Wipe Out Debts | Takes about 3 to 4 months upon the bankruptcy petition | Takes about 3 to 5 years, until the payment in the payment plan is completed |
| State of the Properties | The bankruptcy trustee in the bankruptcy will liquidate or sell the nonexempt assets of the debtor and then the proceeds will be used to pay off the creditors | The chapter 13 trustee will not sell the properties of the debtor but the debtor needs to pay the equivalent value of nonexempt property |
| Unsecured Debts | Unsecured debts are often discharged but the removal of unsecured liens of real properties through stripping of liens are not allowed | Once the requirements are met, removal of the unsecured lien of real properties through stripping of liens are not allowed |
| Secured Debts | Reduction of the principal loan is allowed but only on personal property | Once the requirements are met, the principal loan balance will be reduced on secured debts |
| Pros and Cons | The debtors quickly discharge their debts, being debt-free | The debtors will keep most of their properties to catch up on their missed monthly payments such as mortgages and car loans |
| The trustee in bankruptcy will sell all the nonexempt property and there is no way to avoid repossession or foreclosure of secured debts because chapter 7 does not makeup on missed payments | Portions of unsecured debts may have to be paid off and monthly payments to the United States trustee is to be made for up to 5 years |
Talking with a Bankruptcy Attorney
While filing for bankruptcy does not require one to have a bankruptcy attorney, working with a bankruptcy lawyer will greatly help you because bankruptcy law can be very complex. Small mistakes can lead to your petition for bankruptcy being denied, wasting all the time, money, and effort you put in. Here at Northwest Debt Relief Law Firm, our competent bankruptcy attorneys will walk alongside you in your journey to debt relief and a fresh start. Our Portland, Oregon bankruptcy lawyers will help you not just before a bankruptcy filing, but also after the discharge. Our lawyers can provide reliable legal advice on matters such as how to rebuild credit, buying a house after bankruptcy, and more. Call us now for a free legal consultation.
