When Should You Declare Bankruptcy?


Knowing Your Options in Solving Debt Problems

Almost everyone has debts. Even a whole country borrows from an international fund or from other countries to sustain their needs. But not everyone can or has managed to keep up with paying their debts, especially with the current happenings worldwide. The pandemic has affected a lot of businesses and people. When things like this happen, it is inevitable to miss a loan payment for a month or two. Then it piles up, and it becomes non-manageable and stressful due to creditor harassment, an impending foreclosure, or repossession of property. 

Before this happens to you, it is best to know your options. So, what are your options to pay off your debts? 

  • Consumer Credit Counseling – a credit counseling agency will work with you to develop a payment plan that’s within your budget. The agency will place on a debt management plan which usually takes three to five years.
  • Negotiate with Creditors – it is always best to be direct with your creditors about your financial issues and maybe develop a repayment plan with them.
  • Debt consolidation Loan – this method combines all your unsecured debts into a single monthly payment. But this one requires you to have a good credit score.
  • Filing for bankruptcy – should be the last resort among this list of options. But even so, most people would choose this over any other options as this legal proceeding gives you bankruptcy protection from creditors. 

Whichever option you take, make sure always to do your research and ask for legal assistance from a reliable bankruptcy attorney in Portland.

 

What Happens When You File for Bankruptcy?

If you have missed some payments for your debts and getting back on track on payments seemed impossible somehow, then maybe you should file for bankruptcy. Yes, it will stay in your credit and significantly affect it, but declaring bankruptcy would be better than stressing out too much on avoiding constant calls from debt collectors and losing your property over an unpaid debt. 

Under the United States bankruptcy code, when you file for personal bankruptcy in Portland, the bankruptcy court should:

 

Put the automatic stay in place.

The automatic stay is a provision in the United States bankruptcy law that temporarily halts debt collection by creditors, car repossession, a home foreclosure, and wage garnishment during the bankruptcy case.

 

Assign a bankruptcy trustee to your case.

The United States Trustee appoints a bankruptcy trustee to represent and handle your assets during a bankruptcy case. 

 

Allow bankruptcy exemptions.

If you have properties you wish to keep after bankruptcy, you are legally allowed to file for exemptions to protect those assets.

 

Pay off all your qualified unsecured debts.

You will then be cleared from paying off your unsecured debts if you have passed the qualifications for a bankruptcy petition and the bankruptcy proceeding has successfully ended.

 

Debts Qualified for Dismissal

In filing a bankruptcy petition, you are legally obliged to list all of your properties and debts on the bankruptcy form. Not doing so will affect the outcome of your bankruptcy hearing. But you should remember that not all kinds of debts are qualified for discharge after a bankruptcy case. 

 

Secured Debts

There are different types of debts. A secured debt or debt with collateral which the creditors can repossess should you stop paying for it. Examples of secured debt are mortgage loans and car loans.

 

Unsecured Debts

Another type of debt is unsecured debt or loans without collateral.  This type of debt is also subdivided into two categories: priority and nonpriority. 

  • A nonpriority unsecured debt is a general unsecured debt like unpaid credit card bills, utility bills, payday loans, medical bills, and in some cases – student loans.
  • Priority debts are debts without collateral but have higher priority over your other debts under federal law and would be non-dischargeable even after a bankruptcy case. Most common examples of which are: tax obligations, child support, alimony, personal injury award due to intoxication, and criminal fines.

There’s an ongoing discussion about whether the court should consider a student loan a priority or non-priority debt, and the bankruptcy court decides that. The court determines which debts are a priority and non-priority, and all debts that don’t fall under a priority debt are qualified to be discharged. 

 

Talk to a bankruptcy attorney in Portland!

Yes, the whole process of filing for bankruptcy can be expensive. Still, it can also become time-consuming, and if you don’t know a lot of legalities or don’t understand the law that much, it might become a disaster and cause more significant problems in the future. Suppose you are still unsure what to do about your financial issues, and you need more help understanding your bankruptcy options. In that case, you may visit our Portland bankruptcy law firm and get legal assistance from our team of experienced bankruptcy lawyers. 

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Please be aware that submission of this no-obligation form does not establish an attorney-client relationship. By filling out the form, you agree to receiving emails from our firm regarding your case evaluation and other helpful resources. 

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FACING COMPLEX DEBT PROBLEMS?

Whether you're dealing with overwhelming debt, stopping foreclosure or repossession proceedings, or looking for a way to protect your assets, our Portland bankruptcy attorneys are here to help you overcome your financial hurdles!

Please be aware that submission of this no-obligation form does not establish an attorney-client relationship. By filling out the form, you agree to receiving emails from our firm regarding your case evaluation and other helpful resources.