Do I Qualify for Bankruptcy in Oregon? | Portland, OR

Do I Qualify for Bankruptcy in Oregon?

Explore Your Options for Bankruptcy Eligibility

Bankruptcy is a legal way to get help when you owe more money than you can pay. It gives people a fresh start by erasing or repaying their debts under the court’s protection. But before you take that step, it’s crucial to understand one key question: Do I qualify for bankruptcy?

Not everyone can file for bankruptcy. There are rules about who can apply and which type of bankruptcy you can use. Knowing if you qualify helps you avoid wasting time and money on a process that might not work for you.

In this article, we’ll give you an overview of the two main types of bankruptcy for individuals: Chapter 7 and Chapter 13.

Quick Summary:

  • Bankruptcy is a legal process that helps individuals who can’t pay their debts, providing a fresh start by erasing or repaying debts under court protection. Not everyone qualifies, so it’s crucial to understand the rules before proceeding.
  • The two main types for individuals are Chapter 7 and Chapter 13. Chapter 7 erases most unsecured debts quickly, while Chapter 13 allows for a repayment plan over three to five years, helping you keep necessary assets.
  • To qualify for Chapter 7 in Oregon, you must pass a means test, complete credit counseling, meet residency requirements, and ensure you haven’t recently filed for bankruptcy.
  • Chapter 13 requires a regular income, adherence to debt limits, the ability to fund a repayment plan, and commitment to making regular payments.

What is Bankruptcy?

Bankruptcy is a legal process that helps people who can’t pay their debts. When you file for bankruptcy, the court looks at your finances and decides the best way to deal with your debts. That can mean erasing some debts or setting up a plan to pay them back over time.

The primary purposes of the law of bankruptcy are:

  • to give an honest debtor a “fresh start” in life by relieving the debtor of most debts, and
  • to repay creditors in an orderly manner to the extent that the debtor has property available for payment.

Remember that bankruptcy isn’t a magic solution. It’s a serious decision with pros and cons. But if you’re struggling with overwhelming debt, it can offer a way out and a chance to rebuild your financial future.

What are the Types of Bankruptcy?

Different types of bankruptcy can help in distinct ways. Knowing the types of bankruptcy can help you understand which one might be right for you. Here are the two most common types for individuals:

Chapter 7 Bankruptcy

Chapter 7, established by the U.S. Bankruptcy Code, is a legal process designed to give individuals a clean slate. Think of it like a financial reset button. 

Chapter 7 is often a bankruptcy filer’s first choice for several reasons. It’s quick, taking only a few months to complete. Here’s how it works:

Erases Most Debts

The court will discharge (wipe out) most of your eligible debts. That means you’ll no longer be legally obligated to pay them back. That applies to most unsecured debts, like credit card bills, medical bills, or personal loans. 

Selling Assets

Sometimes, you might have to sell some of your things to help pay off your debts. That is called “liquidation.” However, “exemptions” let you keep specific and necessary things like your home, car, and personal items.

Exemptions are crucial because they help you keep essential property and maintain a basic standard of living during and after bankruptcy. They prevent the process from leaving you without a home, transportation, or necessary personal items.

How Do I Qualify for Chapter 7 Bankruptcy in Oregon?

If you’re in Oregon and overwhelmed by debt, Chapter 7 bankruptcy might offer relief. But before filing, it’s crucial to know if you qualify. Here’s a guide to help you understand the qualification process:

Means Test

To qualify for Chapter 7, you must pass a “means test.” The means test compares your income to the median income in Oregon. Below is how the means test works:

  • Comparing Income: The means test compares your average monthly income over the past six months to the median income for a household of your size in Oregon.
  • Deducting Expenses: Certain expenses, like rent, food, and transportation, are deducted from your income to calculate your disposable income.
  • Passing or Failing: If your disposable income is below a certain threshold, you pass the means test and qualify for Chapter 7 bankruptcy. You may still qualify based on your expenses and other factors if it’s above the threshold.

Credit Counseling

Before filing for Chapter 7 bankruptcy in Oregon, you must complete credit counseling from a certified agency. During this session, you’ll review your finances with a counselor. They’ll help you understand your financial situation and identify potential solutions. 

The counselor will help you explore different options for managing your debt, such as budgeting, debt consolidation, or bankruptcy. That is mandatory within 180 days before filing. Your bankruptcy case could be dismissed if you don’t.

Residency Requirement

You must have lived in the state of Oregon for at least 180 days before filing for Chapter. That means you can’t just move to Oregon to file for bankruptcy. The residency requirement ensures that your bankruptcy case is handled according to Oregon’s laws and procedures.

Previous Bankruptcies

After you’ve filed for bankruptcy before, there are waiting periods you must follow before you can file again. You must wait eight years after a previous Chapter 7 discharge or six years after a Chapter 13 discharge.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a way to help you manage your debts and pay them off over time. It’s also known as “reorganization” bankruptcy”. Instead of wiping out your debts like in Chapter 7 bankruptcy, Chapter 13 lets you create a plan to pay back your debts over three to five years. That plan is based on your income and expenses.

One big advantage of Chapter 13 bankruptcy is that you can usually keep your property, like your house and car, as long as you make payments according to your plan. After you’ve completed your repayment plan, any remaining eligible debts are typically discharged.

How Do I Qualify for Chapter 13 Bankruptcy in Oregon?

If you’re considering Chapter 13 bankruptcy, you might wonder if you qualify for this type of relief. Here’s a breakdown of what it takes to qualify for Chapter 13:

Regular Income

To qualify for Chapter 13 bankruptcy, you must have a regular income. That could be from a job, self-employment, or other consistent sources. Your income helps determine how much you can afford to pay back to your creditors.

Debt Limits

There aren’t strict debt limits like in Chapter 7. However, there are limits on the amount of debt you can have to file for Chapter 13 bankruptcy. These limits are adjusted periodically.

Steady Income to Fund the Repayment Plan

Since Chapter 13 involves creating a repayment plan to pay back your debts over time, you must show that you have enough income to fund this plan. The plan typically lasts three to five years.

Willingness to Stick to the Plan

You must be committed to following through with your repayment plan. That means making regular payments to the bankruptcy trustee, who then distributes the money to your creditors.

Let Our Oregon Bankruptcy Attorney Help You Determine Your Eligibility

Do I qualify for bankruptcy? Determining that can be a complex process. Factors like your income, expenses, assets, and type of debt all play a role in eligibility. It’s crucial to seek legal guidance from our Portland bankruptcy attorneys at Michael D. O’Brien & Associates, P.C., who can check your financial situation and help you understand your options.

Our bankruptcy law firm is here to help you through every part of the process. We’ll help you get a clear picture of where you stand financially. Our legal team will explain the different types of bankruptcy and help you understand which one might be best for you. 

We’ll represent you in court, talk to your creditors, and handle any legal issues. We’ll make sure your rights are protected throughout the bankruptcy process. Contact us now to schedule a free consultation and learn if bankruptcy is the right solution for you. We’re here to help you every step of the way.

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