Chapter 7

What is Chapter 7 Bankruptcy?

The Law Offices of W. George Senft specializes in Chapter 7 Bankruptcy Law in Portland, OR. A Chapter 7 Bankruptcy will wipe out your unsecured debts.

  • Credit card debts.
  • Medical bills.
  • Deficiency balances related to repossessions.
  • Debts related to foreclosure proceedings.
  • Income taxes (under certain circumstances).
  • Liabilities like payday loans or utility bills.

Some Debts Survive Chapter 7 Bankruptcies

Some debts cannot be eliminated by the filing of a Chapter 7 Bankruptcy. These may include spousal and child support obligations, debts arising from fraud, false pretenses, or from driving under the influence of intoxicants. You should contact a bankruptcy lawyer to determine whether your debts can be discharged in a bankruptcy.

Wage Garnishments and Foreclosures – Chapter 7

Upon the filing of a Chapter 7 Bankruptcy, creditors must cease garnishing your wages and temporarily halt foreclosure proceedings. To permanently stop a foreclosure proceeding and save your home, you have to file a Chapter 13 Bankruptcy. Contact a bankruptcy attorney to review your situation and to determine whether a Chapter 7 or a Chapter 13 bankruptcy fits your needs.

Chapter 7 Bankruptcy and the Means Test

Chapter 7 Bankruptcy is filed by both individuals and corporations. The 2005 Bankruptcy Act Means Test determines your Chapter 7 filing eligibility. This is done by comparing your average income over a six-month period to the median income of the state. If your average income exceeds the median income then you file a Chapter 13 Bankruptcy.

May I Keep My Assets in a Chapter 7 Bankruptcy?

Chapter 7 Bankruptcies are also referred to as “Liquidation”. The Chapter 7 trustee may take non-exempt assets, sell them and disperse the sales proceeds to your creditors. However, most cases are no-asset cases. That means that your assets are exempt and the bankruptcy trustee will not take them. In the unlikely event that you own non-exempt assets, skilled pre-bankruptcy counseling can turn your asset case into a no-asset case. Do not sell, give away of transfer your assets before the filing of a bankruptcy. The bankruptcy trustee has the power to reverse the transfer. In the worst case scenario, you will not receive a discharge.

Federal Exemption Laws – SB 396

On June 25th, 2013, the Oregon Senate passed SB 396 allowing debtors to use the Oregon exemption law or the federal exemption laws. The use of the federal exemptions allows a debtor in Chapter 7 to greater protect assets. The federal wildcard exemption is $1,225 per debtor. This amount is increased by up to $11,500 (per debtor) of any unused portion of your homestead exemption.

I Am Making Car Loan Payments – Can I Keep My Car?

As a general rule: if the equity in your car is below a certain threshold, you make your car loan payments, you can keep your vehicle after filing a bankruptcy. Reaffirming the car loan is required.

Mortgage Payments – Can I Keep My Home?

If the equity in your residence is below a certain threshold and if you are current on your mortgage payments, you may keep your home in a bankruptcy.

Credit Counseling and Debtor Education

Section 109 of the Bankruptcy Code states mandatory participation in credit counseling and debtor education course.

I Previously Filed a Bankruptcy, Can I File Again?

If you have received a discharge in a Chapter 7 Bankruptcy then you have to wait eight years before you qualify for a discharge in a subsequent Chapter 7 bankruptcy. The eight-year period starts running with the filing date of the previous bankruptcy. To receive a discharge in a subsequent Chapter 13 bankruptcy, four years have to be between the filing dates.

However, you can file a Chapter 13 bankruptcy sooner if you do not need a discharge. For example, if you want to stop a foreclosure to have more time to catch up with mortgage arrears.