Filing a Chapter 13 Bankruptcy in Clackamas, Oregon: The Basic Steps
Chapter 13 Bankruptcy Background
Chapter 13 bankruptcy is sometimes referred to as a wage earner’s plan. It allows people with a steady income to devise a plan to repay all or a portion of their debts.
Under this bankruptcy chapter, people who owe money must come up with a repayment plan to pay back their creditors between 3 to 5 years. Unless the court orders a longer duration “for cause,” the repayment plan will be for 3 years if the current monthly income of the debtor is less than the applicable state median. The duration of the repayment plan must be for 5 years if the current monthly income of the debtor is more than Oregon state’s median. Payments under a plan can’t be spread out over more than 5 years. 11 U.S.C. § 1322 (d). During this time, creditors can’t start or continue their collection efforts.
Filing a Chapter 13 bankruptcy in Clackamas, Oregon, is a good option to help alleviate the stress of being deeply in debt. Filing bankruptcy may seem overwhelming in the beginning, but with the help of experienced Oregon bankruptcy attorneys, the process may be simplified significantly.
Bankruptcy may be a difficult decision, but our bankruptcy attorney in Oregon (Portland, Bend, and Clackamas) can help you weigh your bankruptcy options and make the right choice. Call the office of Michael D. O’Brien & Associates today to schedule a free consultation!
Why do I need a Bankruptcy Attorney in Oregon?
When you consider filing for bankruptcy, every following move you take becomes critical. You cannot make decisions on what sort of bankruptcy to file until you understand the complete legal process. You must choose a bankruptcy lawyer who can help you and answer all of your inquiries. Thus, keep the following attributes of a bankruptcy lawyer in mind:
- Board Certified. Only a few bankruptcy lawyers in Portland have achieved Board Certification. Aside from doctors, lawyers can also be certified. This indicates that a certified bankruptcy attorney has met the appropriate objectives and required level of expertise in the bankruptcy process. Furthermore, this ensures that they are well-versed in creditors’ and debtors’ rights law.
- Community Involvement. The bankruptcy law firm’s community involvement demonstrates the firm’s genuine principles of giving back to the community. It will demonstrate their commitment to serving and safeguarding the greatest interests of the people. Aside from that, it provides you with additional assurance that your lawyer is reputable in your state. If your bankruptcy lawyer has strong dedication, and at the same time, reputable, you will achieve the best results.
- Affordable Legal Service. Consider a law firm that can offer reasonably priced legal services. It will not suffice if the law firm charges you a hefty fee. In the midst of your financial difficulties, look for a bankruptcy firm that can provide excellent service while remaining affordable.
Michael D. O’Brien is one of the few attorneys in Oregon who received Consumer Bankruptcy Specialist by the American Board of Certification in 2007. Michael D. O’Brien & Associates, P.C. is available to help you get a fresh start in Portland, Clackamas, or Bend.
With over 26 years of experience in the field, our expert bankruptcy attorneys can guarantee you satisfactory results. Michael D. O’Brien and Theodore J. Piteo are both Super Lawyers Top Rated Bankruptcy Attorneys. With our genuine desire to assist struggling debtors, you will never regret hiring us. We offer affordable legal services to help you attain financial freedom. Schedule a free case evaluation today!
How Chapter 13 Works
If you’re considering filing a Chapter 13 bankruptcy in Clackamas, Oregon, here’s a quick rundown of the Chapter 13 bankruptcy basic steps you will need to do. The more complicated portions in Chapter 13, such as determining eligibility as well as the particulars of your Chapter 13 plan, will seem less daunting once you’ve gone over the these phases.
1. You Must Enroll in Credit Counseling Course
Counseling from a credit counseling agency recognized by the Department of Justice’ US Trustee Program must be completed within 180 days before filing a Chapter 13 bankruptcy in Clackamas, Oregon. This credit counseling course is meant to determine if you have enough income to pay off your creditors.
The cost of this course by most providers ranges from $25 to $35, with some offering free or discounted credit counseling for those who can’t otherwise afford it. However, the discount is rarely granted to filers of Chapter 13 filer.
2. Submit the Required Paperwork for Chapter 13 Bankruptcy
Insolvency proceedings begin at the time of filing a Chapter 13 bankruptcy in Clackamas, Oregon. Shortly after, the bankruptcy court clerk will mail a letter to you, the trustee selected to handle your bankruptcy case, and your creditors, informing about the automatic stay banning collection efforts. The notification will inform creditors of the deadlines for filing claims and the time and place for the creditors’ 341 meeting, which is a mandatory hearing for all filers.
When submitting bankruptcy paperwork as well as credit counseling certificate, a filing fee will be required from you.
3. Join the 341 Creditors’ Meeting
You must turn over “521 documents” to the bankruptcy trustee at least 5 days before the hearing, such as bank statements, paycheck stubs, tax returns, and maybe more. At the bankruptcy hearing, the bankruptcy trustee will examine your identity and also ask you questions concerning your bankruptcy petition. Creditors are welcome to attend as well, although they seldom do.
4. Start Making Payments on Your Chapter 13 Payment Plan
Even if the court hasn’t accepted or “verified” your planned Chapter 13 plan, your Chapter 13 monthly payments will start the month after you file bankruptcy. The timing ensures that your Chapter 13 case is completed on time, often around 5 years.
If your plan is not confirmed by the court, the bankruptcy trustee will return your payments. But, don’t anticipate your car payments to be refunded. The lender of your car will instead add credit to your account.
5. Finish the Confirmation Process for Chapter 13
Your lenders and the trustee in your bankruptcy case will be able to oppose the Chapter 13 payment plan you propose. If such happens, your bankruptcy attorney will possibly try to do modifications that will make everyone happy.
Before approving your repayment plan, the judge has to be able to reply “yes” to the questions below, after taking into account any arguments made at the plan confirmation hearing:
- Is the repayment plan workable? For example, does the person who is filing a Chapter 13 bankruptcy in Clackamas earn enough income to meet the monthly payment?
- Did the debtor come up with the proposal in sincerity? Or is the filer of the Chapter 13 bankruptcy trying to rig the bankruptcy process?
- Does the plan meet the requirements of bankruptcy law? Does the filer pay creditors the amounts that the law requires?
Before they dismiss a Chapter 13 bankruptcy case, most judges give the filers more than one chance to fix a deficient plan.
6. Accomplish The Chapter 13 Plan That Has Been Approved
Before the court orders a debt discharge that wipes out the rest of your qualifying debts, you need to make all of your payments, be up-to-date on child support as well as alimony, and finish a second course called “debtor’s education course.”
The majority of Chapter 31 filers are free of debt after getting a bankruptcy discharge, with the exception of mortgages and student loan debt. Ask a bankruptcy attorney in Oregon (Portland, Bend, and Clackamas) for more information on debts that survive Chapter 13.
Do You Qualify For Chapter 13 Bankruptcy?
In the next steps, you will find out if you qualify for Chapter 13, how much you will have to pay, and what problems you might encounter during your plan.
How much debt do you have?
In a Chapter 13 case, you are only allowed a certain amount of debt. You will not be eligible for this type of bankruptcy if you have too much debt, however you can still file a Chapter 11 bankruptcy individually.
How much is your monthly income?
When filing for Chapter 13 bankruptcy, proof that your monthly income can afford your monthly bills as well as the monthly payment plan has to be shown. If you have no income or if your income is too low, the bankruptcy court will not approve or “confirm” the Chapter 13 payment plan you proposed.
What is your individual status?
Debt discharge in Chapter 13 is only available to individuals and sole proprietors. Companies and small businesses cannot use it. But a small business owner who files as an individual will have to include business debts that they personally guaranteed in their repayment plan. Additionally, a business owner’s improved financial situation might indirectly benefit a small business from a practical perspective, therefore Chapter 13 would be worthwhile to pursue.
Chapter 13 Repayment Plan: Can You Afford It?
Will you be able to afford a Chapter 13 payment? Not a lot of people can. In case you can afford it, even if you pay far less than what you owe, your Chapter 13 plan will push you to the edge of your financial capacity.
Find out how long the length of your plan is going to be, and then figure out how much debt you need to pay off. But be careful: the rules are complicated, and at best you’ll get a rough estimate. Before you file Chapter 13 in Portland, Bend, or Clackamas, Oregon, you and your bankruptcy lawyer will be using a software program to obtain an accurate number..
How Much Will You Have to Pay Under a Chapter 13 Plan?
To figure out how much you have to pay each month, add up everything you have to pay and divide it by 36 or 60, which are the number of months you have in your repayment plan.
- Priority debts. The Chapter 13 repayment plan must pay in full all of your “priority claims,” such as child support, alimony arrears, and recent tax debt.
- Secured debt. “Secured” debt is debt that is backed up by collateral like your car or house. To keep the property, you must make payments on the secured debt and any past due amounts.
- Unsecured debt. The rest of your debts fall under this category. The payment plan must use your disposable-income, the money you have left over after paying your priority debt, secured debt, and allowed living expenses, to pay off unsecured debt like medical balances and credit card balances.
- Fee for the trustee. You will have to pay an extra 10% as compensation for your Chapter 13 trustee.
What is your last step?
Think about the “best interests” or “best efforts of creditors” test. If you want to keep property that you cannot protect with a bankruptcy exemption, this rule says you have to pay.
To establish this amount, you will need to inventory your property, check Oregon’s bankruptcy exemptions, and figure out how much “nonexempt property” you have (properties that are not covered by a bankruptcy exemption). Compare the value of all of your non-exempt property to the amount of disposable income you have. You will pay the bigger amount in your plan.
The rule makes sure that creditors in Chapter 13 get at least as much as they would have gotten if the debtor filed Chapter 7. Find out more about the Chapter 13 repayment plan and the debts you’ll have to pay back from an experienced bankruptcy attorney in Oregon (Portland, Bend, and Clackamas).
What Happens If You Can’t Pay Your Chapter 13 Payment Plan?
If your income goes down during your payment period (this happens more often than you might think), your Chapter 13 case might not be over. Here are what you can do if you cannot complete your Chapter 13 plan.
- Modify your payment. The bankruptcy court can reduce the amount of disposable income you pay toward nonpriority unsecured debts, such as medical bills, credit card balances, and personal loans. Under the “best efforts” rule, that’s all you can do unless you are willing to sell the property and give the proceeds to your creditors.
- Request a hardship discharge under Chapter 13. You might be able to get a hardship discharge if you lose work because a factory closes in a town that has only one factory or because you get gravely sick and cannot work. Where’s the catch here? Because you have to pay the money required by the rule of best efforts, you usually can’t get a hardship discharge until you’re far into your plan.
- Consider shifting to Chapter 7. What’s the downside here? If you have nonexempt property that you still haven’t paid to keep, you will probably lose it. Once more, the rule of best efforts is in play. Unsecured creditors will need to at least get what your nonexempt value is. If not, the Chapter 7 bankruptcy trustee will sell the nonexempt property and then pay off the unsecured creditors.
- Drop your Chapter 13 bankruptcy case. You will still have to pay back any debts that aren’t paid off, plus any interest that creditors did not charge while your bankruptcy case was going on.
Consult a Chapter 13 Bankruptcy Attorney in Oregon (Portland, Bend, and Clackamas)
It’s not easy to go through a Chapter 13 case. Even though you can file Chapter 13 bankruptcy case on your own, it rarely succeeds, and most courts advise filers to hire a bankruptcy lawyer to handle Chapter 13.
Are you considering bankruptcy in Oregon? Our bankruptcy lawyers in Clackamas, Oregon can help you! Michael O’Brien and Theodore Piteo are two of only three lawyers in the state of Oregon who are nationally certified as Consumer Bankruptcy specialists by the American Board of Certification. Mr. Piteo and Mr. O’Brien have been bankruptcy lawyers in Clackamas for more than 20 years and have helped thousands of Oregon residents get real relief from debt through bankruptcy. Many clients from Canby, Clackamas, Estacada, Gresham, Happy Valley, Milwaukie, Sandy, and West Linn have come to Michael D. O’Brien over the years. Atty. O’Brien and Associates have now opened a law office in Clackamas in an effort to offer these clients and others in a similar situation a greater level of service.
Call our law office right away to set up a meeting!