June 26, 2017

Debt Settlement – Why This May Not be A Good Option for You

Debt settlement is one option to consider when trying to resolve debt issues. However, sometimes this option may not the wisest option to choose. It will be a good idea to meet with a bankruptcy lawyer to weigh all your options first, including debt settlement or bankruptcy.

There is an entire industry focused on debt buying and debt collecting. Often, a credit card account or other account, may be sold off to a third party, known as a “junk debt buyer.” The junk debt buyer may offer the debtor a discount to paying off the debt; and sometimes these discounts are rather steep. In some cases, settling a debt in such cases may prove beneficial. However, many of these cases are rife with problems, which may include: [Read more…]

Should I Wait to File Bankruptcy Until After I Receive My Tax Refund?

This article is posted in a strange part of the year (August), but this question comes up usually starting around October:  “Should I wait to file bankruptcy until after I receive my tax refund?” Or a variation of this question: “If I file bankruptcy right now, will I lose a portion of my 2014 tax refund?”   [Read more…]

The Pitfalls of Receiving an Inheritance Shortly After You File Bankruptcy

Inheritance, including life insurance proceeds, and bankruptcy can prove to be a very serious issue if not planned for correctly. An individual, depending on timing, may have to surrender a portion or all of an inheritance or life insurance proceeds as a result of filing bankruptcy. This article discusses inheritance in the context of bankruptcy, and the potential issues that may arise.
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Where Do I File Bankruptcy If I Just Moved To Oregon?

From time to time, I come across the issue of someone who recently moved to Oregon, and is considering bankruptcy. They come to my office, and I conduct my usual free bankruptcy consultation. I soon learn that the person has only been in Oregon but a few months, or for even less time. This raises a few issues regarding “venue,” or the proper place where a bankruptcy ought to be filed. This post discusses venue in the context of bankruptcy. [Read more…]

5 Mistakes to Avoid Before You File Bankruptcy

There are many mistakes for consumers to avoid before filing bankruptcy. The following list is what I consider some of the top mistakes to avoid before filing bankruptcy.

1. Not Being Honest With Your Attorney: Disclose everything to your attorney; [Read more…]

Federal & State Bankruptcy Exemptions: Household Goods & Furnishings

As discussed in the last post, exemptions are laws that protect your property when you file for bankruptcy relief. Most people get to keep all of their property when they file a chapter 7 bankruptcy because of the protections afforded by exemptions.  This post will extend the discussion of bankruptcy exemptions, and highlight one particular exemption: the exemption that protects household goods and furnishings.

Broadly speaking, household goods and furnishings are just that: items found in the household, including appliances, plates and flatware, electronics, furniture, clothes, books, pets, musical instruments, and so on.  And as mentioned in previous posts, Oregon has two bankruptcy exemption schemes, or sets of laws that protect your property when you file for bankruptcy relief.  These exemption schemes are: the Federal Exemption scheme and the Oregon Exemption scheme.  A person who files either a chapter 7 or a chapter 13 bankruptcy must elect to use either Federal exemptions or Oregon Exemptions in his or her bankruptcy, but cannot mix-and-match exemption schemes.  The two exemptions that protect household goods are discussed below:

1.  Federal Exemption:

The Federal Exemption that protects household goods, furnishings, and the like, allows a person to protect $12,250 in the aggregate on such goods, with the limit of $575 per any one item.  Now, if you jointly file with your spouse, this $12,250 in the aggregate amount increases to $24,250 in the aggregate amount.  In addition, a person may use the Federal wild card exemptions to protect an additional $12,725 per individual bankruptcy filer on top of any exemptions used to protect household goods. In theory, this could allow a married couple who file bankruptcy together to protect up to $49,950 in household goods and furnishings, given the right set of circumstances!

2.  Oregon Exemption:

The Oregon exemption that protects household furniture, household items, utensils, radios,  TVs and other like items, only amounts to $3,000, and provides far less protection that using Federal Exemptions.

Federal exemptions, as with many cases, wins out in terms of protecting a person’s household goods and furnishings.  The amount that can be protected using Federal exemptions easily dwarfs the amount that can be protected using Oregon exemptions.

If you are interested in learning more about chapter 7  bankruptcy and chapter 13 bankruptcy and how exemptions may be used to protect your property when you file for bankruptcy relief, please contact me today to schedule your free in-office bankruptcy consultation in Eugene.

I look forward to hearing from you.

 

Sincerely,

 

Tom Butcher
Attorney at Law
116 Highway 99 N #101
Eugene, Oregon 97402
541 762-1967 tele
tomkbutcher@gmail.com

 

Don’t Pay Mom or Dad Back! File Bankruptcy First!

Outside the context of bankruptcy, this is a very strange notion: don’t pay Mom or Dad back – file bankruptcy first. But this has some very real world consequences. I usually see an uptick in people paying back their relatives around tax season, when people get their tax refunds. But this could prove potentially disastrous if you are planning on filing a bankruptcy.

Why is this? Well, it all comes down to preference payments to an “insider.” An insider can be a friend, relative, or even business associates in some situations. And the bankruptcy code does not necessarily look kindly on repayment to these folks within a year of a person filing bankruptcy. The bankruptcy code, in all fairness, tries to even the playing field for all creditors.

For example, if you pay Mom and Dad back during the past year, especially at the expense of other creditors, these payments can be “clawed back” by the bankruptcy trustee, or the person who administers your bankruptcy. These payments usually need to be substantial enough for the trustee to pursue; usually repayment of debt to family members that are minimal do not raise the trustee’s eyebrow. However, the more money you repay a family member or friend, within a year of your bankruptcy, the more exposure you create: the trustee can go after that family member or friend to recover the monies you paid, as a preference payment – and the trustee has every right to pursue these payments under the law.

So, if you have been paying Mom or Dad on a debt and you are considering bankruptcy, what do you do? Immediately make an appointment to see a bankruptcy attorney – such as myself. Second, stop paying the family member immediately to mitigate any exposure. After your bankruptcy, you can repay anyone you want to, including friends or family. The issue is when you pay friends or family back before you file bankruptcy.*

In certain circumstances, when a client comes to see me and I learn that a substantial amount was paid back to a parent or relative within the last several months, there are a few things we can do. First, we can undue the transaction – have the parent or relative return the funds (check form is usually best for record-keeping). Or, wait a full year for the preference period to run (the bankruptcy code only allows a 1 year look-back; therefore if you paid Mom $5,000 on a debt 13 months ago, this does not fall within the 1 year period in which the bankruptcy trustee can claw back the payment as a transfer to an “insider”).

In any event, you should meet with a bankruptcy attorney immediately and discuss what options are available.

I conveniently offer free in-office consultations in Eugene or by phone. Please feel free to contact me today to schedule your free bankruptcy appointment to learn how bankruptcy may benefit your financial situation. And if you have been paying back an “insider” during the past year, we can discuss ways to mitigate any consequences.

I look forward to hearing from you.

* If Mom or Dad hold a security interest in a vehicle, and you are making normal payments on this vehicle to Mom and Dad – this is not a preference payment. Most preference payments apply to unsecured debt, or debt not attached to collateral.

What to Bring to Your Free Bankruptcy Consultation in Eugene

I offer free bankruptcy consultations, both for Chapter 7 bankruptcy and Chapter 13 bankruptcy, in Eugene or by phone.  These bankruptcy consultations generally last about 30-60 minutes, and I review a consumer’s financial situation through a series of questions I ask and I discuss how bankruptcy may benefit the consumer, either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.  Often, I am asked by consumers what documents should I bring to the free bankruptcy consultation?

My general answer is: just bring yourself.  If you decide to file for bankruptcy, I have a list of documents to gather up.  However, with that said, some useful documents to at least review before the free bankruptcy consultation, or even bring, include a few items, listed below:

1. Having a clear idea of how much you or your spouse earn is useful  – Bringing a recent pay stub or last year’s tax return will work for this purpose.  Your income and household size ties into the means test for bankruptcy, and if you qualify for a Chapter 7 bankruptcy.

2. Knowing which debts you have is useful – You can pull free credit reports at Annualcreditreport.com, and you can bring in any bills you have, additionally.

3. If you have been recently divorced, a copy of your divorce decree can prove useful. I look at how property was divided and how debt was divided pursuant to the divorce decree.

4. Any lawsuits or summons for a lawsuit you have received will prove useful.

Again, these are useful documents to have or to have reviewed prior to our free bankruptcy consultation.  However, my general rule of thumb is just bring yourself, and if you decide to file bankruptcy, I have a list of documents for you to gather up.  My approach is that you shouldn’t have additional stress in meeting with an attorney to file bankruptcy, it can be stressful enough!  I try to keep the process as calm and stress-free as possible for my clients, as this can be a very anxiety-ridden time in my clients’ lives.  I try to make the process as streamlined and easy for my clients as possible.

If you would like to schedule your free bankruptcy consultation in Eugene, please call me today.  And if you ask what should I bring to our meeting, my general answer will be: just bring yourself, with the one caveat: if you are getting sued currently, I will need you to bring the lawsuit and/or summons.

I look forward to meeting with you!

 

Sincerely,

Tom Butcher

Attorney at Law

 

 

Bankruptcy Myths Debunked: Part 2

There are many persistent myths and misconceptions surrounding bankruptcy.  In an earlier post, I addressed 5 such myths and misconceptions.  This post will discuss an additional five myths and misconceptions that may surround bankruptcy.

MYTH 1:  If You Are Married, You Must File Bankruptcy With Your Spouse:  This myth is untrue.  An individual spouse may choose to file by himself or herself, without bringing the other spouse into the bankruptcy filing.  Often, if there is joint debt in the marriage, it will make sense to file for both husband and wife (a joint bankruptcy).  But there are reasons for only one spouse to want to file bankruptcy and not include the other spouse; for example, the spouse filing bankruptcy may have incurred the debt prior to the marriage, the other spouse may have pending legal claims that he or she does not want to get wrapped up in a bankruptcy, the other spouse has no debt to speak of, and so on.

MYTH 2: I Will Lose All My Property If I File For Bankruptcy: This is completely untrue.  In fact, in the vast majority of bankruptcies, consumers will loose no property.  This is largely due to bankruptcy exemptions, or laws that protect your property when you file for bankruptcy.  In Oregon, for example, we have many exemptions that will protect most, if not all, property owned by a consumer.  There are exemptions that help protect household goods, vehicles, real estate, tools, and so on.

MYTH 3: You Can Pick And Choose Who You File Bankruptcy On:  This is also untrue.  When you file bankruptcy, you must list all of your creditors, including any family members, friends, doctors, and so on.   In fact, you are signing under penalty of perjury in your bankruptcy petition that you have listed all known creditors.  Now, after the bankruptcy you may voluntarily pay any creditor that was discharged in the bankruptcy.

MYTH 4: Your Immigration Status Will Be Jeopardized:  This is not true.  Bankruptcy is a federal procedure to discharge debt, not a crime.  Merely filing bankruptcy will not affect an immigrant’s ability to obtain citizenship or maintain permanent residency.

MYTH 5: It Is OK To Max Out Credit Cards On The Eve Of  Bankruptcy:  This is absolutely false!  If there is a clear way to get in trouble, this is it!  Creditors can file an objection in a consumer’s bankruptcy case to make this debt non-dischargeable, or, in other words, the debt may survive the bankruptcy.  In egregious cases, creditors (including the United States Trustee) can move the court to deny a bankruptcy discharge altogether based on such activity, meaning all the debt will come back on the consumer.

This wraps up Part 2 of “Bankruptcy Myths Debunked.”  If you have any questions relating to this material or how bankruptcy may improve your financial situation, please call today to schedule your free in-office bankruptcy consultation in Eugene.

 

Bankruptcy Myths Debunked: Part 1

There are many myths about bankruptcy floating around.  Some are based on a kernel of truth, while others are flat-out incorrect.  I will dedicate several posts to debunking some of the most common misconceptions and myths about bankruptcy.

MYTH 1:  The “Medical Bankruptcy”:  There is no specific bankruptcy for medical debt per se. Medical debt is general unsecured debt similar to credit card debt. This debt is eliminated through bankruptcy.  Now, one of the main reasons some people file for bankruptcy relief is medical debt.  Some studies have found that medical debt is the biggest reason for filing bankruptcy, but there is no special bankruptcy carved out specifically for medical bills.

MYTH 2:  Medical Bills Are Not Covered By Bankruptcy:  This myth is basically the opposite of Myth #1.  Medical bills are covered by bankruptcy, and by some accounts, medical bills form the basis of most bankruptcy filings.  This myth is a persistent myth, but it is completely untrue.  A variation of this myth is that credit card debt or even pay-day loans are not covered by bankruptcy, which is also false.  I have a sneaking suspicion that this type of myth may be spread by certain debt collectors trying to collect on medical debt or other types of debts.

MYTH 3:YouWill Never Get Credit Again:  This is completely untrue.  Filing bankruptcy, in some ways, may improve your credit-worthiness.  For example, after filing for bankruptcy your debt-to-income ratio dramatically improves.  In fact, credit card companies and car lenders will mine the bankruptcy database, and a few days after a consumer files bankruptcy he or she will receive a deluge of applications for credit cards and car loans (which probably is a good idea to avoid due to some of the high interest rates).  As I have discussed in prior posts, a consumer who files bankruptcy may be eligible for an FHA Mortgage Loan two years from filing, and in some circumstances, only one year from filing.  Now, bankruptcy will be reported on your credit report for up to 10 years, but a consumer’s access to credit is fairly immediate after he or she files for bankruptcy.

MYTH 4:  Everyone Will Find Out That I Filed For Bankruptcy:  This is also false. If you file bankruptcy, the people who will know you filed will be your attorney, the court, any co-debtors (co-signors on loans), any claimants of child/spousal support, and any one you choose to tell. Who files bankruptcy is public information, but only a very small group of people know how to access this information.  Your name will not be printed in the newspaper.  In fact, you probably know several people who have filed for bankruptcy, yet you may be unaware that they filed for bankruptcy.

MYTH 5: There Is A Minimum Amount Of Debt Required To File Bankruptcy:  This is false.  There is no minimum amount of debt a consumer must have to file for bankruptcy relief.  If you cannot pay your current debt with you current income, then bankruptcy may be a very good option to consider, despite your debt-load.

This wraps up Part 1 of “Bankruptcy Myths Debunked.”  If you would like to learn more about bankruptcy and how bankruptcy may improve your financial situation, please call today to schedule your free in-office bankruptcy consultation in Eugene.

Pursuant to 11 U.S. Code § 528: "I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code."

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