September 25, 2017

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

 

 

What Does Your Bank Account have to do with Bankruptcy?

When you file for bankruptcy, you must list all the assets you own as part of the bankruptcy petition.  Your bank account is an asset, and an asset that must be listed.  This post details bank accounts, and how to protect bank accounts when you file for bankruptcy relief.

Bankruptcy Schedule B, or the schedule that lists all your personal assets, has a line-item for bank accounts and other financial accounts.  Most people have but a few accounts; some have quite a few accounts.  In any event, all accounts must be listed, and a value must be indicated as to funds held in the account.  In most cases, people have funds in their account running the range of less than $100 to more than a few thousand dollars.  But these bank accounts, and the funds contained therein, are mostly protected when you file bankruptcy by applying exemptions (or laws that protect property).

Particularly, the Federal Wildcard exemptions allow a person to protect up to $12,725 (or $25,450 for a married couple filing a joint bankruptcy) of any type of asset.  Therefore, in most cases, any funds held in a bank account ought to be protected entirely when you file for bankruptcy.

If you have any questions about bankruptcy and protecting assets, please feel free to call me today to set up a free in-office bankruptcy consultation.

 

Credit Union Considerations for Bankruptcy

I always keep a vigilant watch to see if credit unions are creditors in a client’s case. This article details why credit unions are a concern.

The contract you sign at a credit union for a loan, credit card, or line of credit contains in the fine print a “cross-collateral” clause, or a clause whereby you pledge as security any assets you have with (or at) the credit union.  This means the credit union has a right to offset a liability owed to the credit union with any asset you have at the credit union, should they choose.  For example, if you owe the credit union $5,000 in a line of credit, and you have $4,000 in a savings account at the credit union, the credit union has a security interest in the $4,000, and given the right circumstances, the credit union can take the $4,000 to offset the debt owed to them.  This becomes very apparent in the context of bankruptcy.  If you file bankruptcy and you owe a credit union $5,000 and you have $4,000 in a checking or savings account at that same credit union, the credit union can take the $4,000 to offset the debt, per their right, and there is nothing we can do.

Therefore, if a client comes into my office and I learn they bank at the same credit union they owe money to, I will have my client open a new account at a new bank to do his or her banking at.  When the time comes to file bankruptcy, then, there will be no money in the credit union, and the credit union cannot seize any funds in savings or checking due to the bankruptcy filing.

Some banks are starting to do the same thing.  Therefore, I always advise clients to bank somewhere they do not owe money to if they are contemplating bankruptcy.

 

 

 

 

Will People Find Out that I Filed Bankruptcy?

A common question I receive is: “Will people find out if I file bankruptcy?”  This post details who will find out about your bankruptcy, and who will probably never find out about your bankruptcy (unless you first disclose this fact to them).

A bankruptcy filing is a public filing; it becomes part of the public record.  However, it is difficult for the average person to access this record, and even difficult for many attorneys to access this record, unless they practice in bankruptcy and/or the federal court system.  So, who will find out that you filed bankruptcy?

First, your creditors will find out you filed bankruptcy; this is a given.  We file bankruptcy for relief from our creditors. Second, any co-borrowers or co-signers will receive notice of our bankruptcy.  Co-borrowers’ or co-signer’s will be affected by our bankruptcy; we will usually no longer be financially liable for the debt these individuals co-signed — therefore, notice must be provided. Third, if we have a domestic support obligation (child  support, spousal support, etc.) that claimant, or person who receives these payments, must receive notice of the bankruptcy and special notice must be made to the trustee in such cases (see DSO Form post).  Third, the credit bureaus will receive notice that we filed bankruptcy via the creditors we list in our bankruptcy. Our credit reports will, then, report that we filed bankruptcy. Fourth, prospective lenders of credit and car loans will discover we filed bankruptcy  – as soon as you file bankruptcy you will receive applications for credit cards and car loans.  Lenders will use the bankruptcy court’s database to establish new business.

Your friends and family will most likely never know you filed bankruptcy unless you inform them first that you have.  The newspaper does not print the names of people who filed bankruptcy.  To access information regarding who filed bankruptcy, a person would need to go down to the bankruptcy court to search names (this is no easy task);  or, have access to the bankruptcy court’s database, which is not granted easily (generally you must be an attorney or creditor).

Therefore, when I am asked “will anyone know I filed bankruptcy,” my answer is: creditors, the court, co-borrowers, claimants of domestic support obligations, but hardly ever any friends or family.  Rest assured, although bankruptcy is a public activity, few people will know if you file bankruptcy or not. And in fact, I am certain that you know at least three people (if not more) who have filed bankruptcy, yet you are unaware that they have filed bankruptcy.

If you are interested in bankruptcy and would like to learn more about the process, please call today for your free in-office bankruptcy consultation.

 

The Chapter 13 Bankruptcy Debt Limit

I meet with clients almost daily.  During my free in-office bankruptcy consultation, I conduct an in-depth analysis of a client’s legal issues as it pertains to bankruptcy. Most often, a client will choose to file a chapter 7 bankruptcy, provided he or she meets the eligibility requirements for a chapter 7.  If the circumstances warrant a chapter 13 bankruptcy filing, I will discuss with a client how a chapter 13 operates and, given the facts, how this chapter of bankruptcy may be the best option.  But sometimes a client may not be eligible to file a chapter 13 bankruptcy, although this chapter may be the most preferable given a client’s particular set of facts.   One reason a chapter 13 bankruptcy filing may not work is that a client may have too much debt.  This post discusses the chapter 13 restriction of debt load in-depth.

A chapter 13 bankruptcy, or a “restructuring bankruptcy,” is a bankruptcy that lasts between 3 to 5 years, with monthly payments being made by the consumer for the benefit of creditors.  A chapter 13 bankruptcy does have certain restrictions, however, particularly when it comes to how much debt a consumer can have to be eligible to file a chapter 13 bankruptcy.  Currently, a consumer must have less than $360,475 in unsecured debts (not attached to collateral, such as medical bills, credit card bills, etc.) and less than $1,081,400 in secured debt (such as mortgages on a house, car loans, etc.).  These numbers adjust periodically.

Most people who consider filing a chapter 13 bankruptcy fall below these total debt thresholds. But what if a consumer exceeds these thresholds?  What options does he or she have?

I recently wrote a post on “Chapter 20” bankruptcy (chapter 7 + chapter 13) detailing one strategy to combat the debt ceiling.  If a consumer’s debt is higher than the allowable thresholds for a chapter 13 bankruptcy, one option is to file a chapter 7 bankruptcy, eliminate the unsecured debt, and then file a chapter 13 bankruptcy on the heels of a chapter 7 bankruptcy.  Often times, by eliminating the dischargeable unsecured debt first in a chapter 7 bankruptcy filing, this may qualify a consumer for a chapter 13 bankruptcy filing since the debt load may substantially decrease.  Using a “Chapter 20” approach applies in a very narrow set of circumstances, though.

The other option we always consider before looking at a chapter 13 bankruptcy, is a chapter 7 bankruptcy filing.  A chapter 7 bankruptcy will eliminate most debts and contains absolutely no debt ceiling.  But to file a chapter 7 bankruptcy, certain eligibility requirements must be met first.  For example, a consumer must not have filed a chapter 7 bankruptcy in the previous 8 years.  The second eligibility criteria for a consumer is to be able to pass the chapter 7 bankruptcy “means test” which is based on income and household size.  If a consumer’s income is too high based on household size he or she may be ineligible to file for a chapter 7 bankruptcy.  Therefore, in some instances a consumer may not even qualify for a chapter 7 bankruptcy.

Now, what if a consumer is above the debt threshold of $360,475 in unsecured debt and/or $1,081,400 in secured debt, and he or she does not qualify for a chapter 13 bankruptcy? And what if that same consumer’s income is too high to be eligible for a chapter 7 bankruptcy? Where do you turn?  Chapter 11 bankruptcy.

Chapter 11 bankruptcy is mainly for business reorganization, but can be a useful bankruptcy tool for some consumers who do not qualify for a chapter 7 bankruptcy because of too high of income and does not qualify for a chapter 13 because of too high of debt load.  Chapter 11 is a very complicated form of bankruptcy.  The situation that necessitates the need to file a chapter 11 bankruptcy for an individual consumer is rare.

If you are interested finding out more about bankruptcy, please call today to schedule your free in-office bankruptcy consultation in Eugene.

 

 

“Chapter 20” Bankruptcy

You may have heard of a Chapter 7 Bankruptcy.  And you may have heard of a Chapter 13 Bankruptcy.  But you probably have not heard of a “Chapter 20” Bankruptcy. While not technically a chapter of bankruptcy, “Chapter 20” bankruptcy nonetheless is an important strategy when dealing with very specific financial fact patterns.

As I have detailed in many earlier posts, a Chapter 7 Bankruptcy is a liquidation bankruptcy, where you can eliminate most, if not all, of your debt.  The time frame usually is about 90 days from start to finish.  The second most common type of bankruptcy is a Chapter 13 Bankruptcy, or a “wage earner’s” bankruptcy.  A chapter 13 bankruptcy generally lasts between 3 to 5 years, and the consumer makes monthly payments during that period for the benefit of his or her creditors.  But what, then, is a “Chapter 20” bankruptcy.

A “Chapter 20” Bankruptcy is more of a procedural matter.  Simply stated, it is filing a chapter 7 bankruptcy first, followed by filing a chapter 13 bankruptcy immediately after.  Therefore, chapter 7 plus chapter 13 renders a chapter 20, despite the fact that two bankruptcies are being filed separate of one another.

Why would a consumer file a “Chapter 20” bankruptcy?  This seems like a lot of work!

There a couple of important situations when filing a “Chapter 20” Bankruptcy is useful.  First, there are debt limits to filing a chapter 13 bankruptcy; if you have too much debt, you do not qualify for a chapter 13 bankruptcy.  However, if you qualify for and file a chapter 7 bankruptcy, this will eliminate most debts.  By eliminating a large portion of your debts first through a chapter 7 bankruptcy filing, you can then move onto filing a chapter 13 bankruptcy.  This may be especially useful if you need to avoid a second lien on your property and catch up on mortgage arrears on your primary mortgage, but you can only accomplish this in a chapter 13.  Additionally, by filing a “Chapter 20” bankruptcy, this may reduce the time that you are actually in a chapter 13 bankruptcy (as you are no longer focusing on debts eliminated in your chapter 7 filing).

While you will obtain a bankruptcy discharge in a chapter 7 bankruptcy, you will not receive a bankruptcy discharge in an immediately following chapter 13 bankruptcy.  But this is okay; we are using the chapter 13 to pay down debt that will not be taken care on in a chapter 7 bankruptcy — hence, a “Chapter 20” bankruptcy.

By filing a “Chapter 20” bankruptcy, you can also focus more of your energy and resources on non-dischargeable debts, such as taxes.  For example, if you have $50,000 in medical debt, $20,000 in credit card debt, and $30,000 in non-dischargeable unsecured tax debt (a special type of tax debt), the benefits of a “Chapter 20” bankruptcy become immediately apparent.  By filing a chapter 7 bankruptcy first, you will get rid of the medical debt and the credit card debt, but you will be stuck with the tax debt. If you file a chapter 13 on the heels of a chapter 7 (“Chapter 20”), the chapter 7 will take care of the dischargeable debt so that the chapter 13 bankruptcy can focus exclusively on the tax debt (non-dischargeable debt), for which you will have up to 5 years to pay down.

While a “Chapter 20” bankruptcy is not a true chapter of bankruptcy, it is nonetheless a viable strategy when dealing with particular debts and very specific fact patterns.  If you are interested in learning more about chapter 7, chapter 13, or even “Chapter 20” bankruptcy, please call today to schedule a free in-office bankruptcy consultation in Eugene.

The Many Chapters of Bankruptcy

As a consumer bankruptcy attorney, I limit my practice to chapter 7 bankruptcy and chapter 13 bankruptcy filings.  Most individuals and small businesses fall into either one of these two types of bankruptcies.  But there are many other chapters of bankruptcy beyond just a chapter 7 bankruptcy and a chapter 13 bankruptcy.  This article discusses chapter 7 and chapter 13 bankruptcy along with the lesser known chapters of bankruptcy, and when and why these chapters may be appropriate.

Chapter 7 Bankruptcy: A chapter 7 bankruptcy is the most common bankruptcy for consumers.  Also known as a liquidation bankruptcy, chapter 7 eliminates most, if not all, consumer debts.  The time frame, from start to end, is usually about 90 days.  When people think about bankruptcy, they usually think of chapter 7.

Chapter 9 Bankruptcy: A chapter 9 bankruptcy is a bankruptcy specifically tailored for government municipalities to reorganize debt.  For example, both Stockton, California, and Detroit, Michigan are currently in chapter 9 bankruptcy proceedings.

Chapter 11 Bankruptcy:  A chapter 11 bankruptcy usually applies to businesses and is used as a restructuring tool.  A few of the major car manufactures have entered into a chapter 11 bankruptcy, and have come-out of the process as a restructured company (such as Chrysler); however, other companies have attempted a chapter 11 restructuring, but failed, and ultimately converted to a chapter 7 bankruptcy (Hostess, for example).

Chapter 12 Bankruptcy: A chapter 12 bankruptcy is exclusively available to family farmers and fishermen.  This form of bankruptcy is similar in substance and procedure to a chapter 13 bankruptcy.

Chapter 13 Bankruptcy:  A chapter 13 bankruptcy is the second most common type of bankruptcy, following chapter 7.  A chapter 13 bankruptcy allows for the restructuring of a consumers debt over 3-5 years, where the consumer makes monthly payments to the plan for the benefit of creditors.  Often, a chapter 13 bankruptcy is used to stop a foreclosure and catch up on mortgage arrears, pay down tax debt and domestic support obligations, cram down vehicle loans in terms of a principal reduction of loan amount and interest rate,avoid second liens on properties (in some instances) such as home equity lines of credit, and so on.  In some instances, a consumer may not be eligible to file for a chapter 7 bankruptcy due to high income or a prior chapter 7 bankruptcy filing, and therefore must file a chapter 13 bankruptcy instead.

Chapter 15 Bankruptcy: A chapter 15 bankruptcy is designed for ancillary or cross-border claims; this includes debtors, assets, and claimants involving multiple countries.

Chapter 7 bankruptcy and chapter 13 bankruptcy are the most well-known of the bankruptcy chapters in the United States.  However, there are other chapters available for a debtor (individual, business, municipality), provided the right circumstances exist.

If you are interested in learning more about bankruptcy and how it may benefit your financial situation, please call today for a free in-office bankruptcy consultation in Eugene.

Emergency Bankruptcy

There is a bankruptcy known as an emergency bankruptcy.  This is not a special type of bankruptcy, but takes the form of either a chapter 7 bankruptcy or a chapter 13 bankruptcy.  An emergency bankruptcy deals more with process than substance.  This article discusses what an emergency bankruptcy is and when it is appropriate.

An emergency bankruptcy simply is the filing of an incomplete bankruptcy.  The minimum documents that are required to be filed with the court, which form the basis of an emergency bankruptcy, are:  1.) the Voluntary Petition; 2.) Mailing Matrix; and, 3) Statement of Social Security Number.  By filing the minimum requirement for documents in your bankruptcy, you have just filed an emergency bankruptcy case.  This applies to both a chapter 7 bankruptcy case and a chapter 13 bankruptcy case.  Additionally, for a chapter 7 bankruptcy you can pay the filing fee on installments (the first installment is due within about 30 days) and for a chapter 13 bankruptcy an initial filing fee of $185 must be paid.

Now, why would a person file an emergency bankruptcy? Sometimes, as a bankruptcy attorney, I am not called until the 11th hour by a potential client who needs to file a bankruptcy to stop a garnishment, foreclosure, or other civil law matter.  As soon as we file the emergency bankruptcy, the bankruptcy’s automatic stay is triggered, which stops foreclosures and most collections activities.  I have helped clients before whose home was to be foreclosed within a few short days.  Although we did not have all the documents gathered for a complete bankruptcy, we had enough to file an emergency chapter 13 bankruptcy and stop the foreclosure.  This can also be a common case when someone needs to stop a garnishment, right before his or her wages will be garnished.

Once an emergency bankruptcy is filed, the debtor has 14 days to file all deficiencies, or documents that need to be filed to complete the chapter 7 bankruptcy or the chapter 13 bankruptcy.  Usually, we are able to gather and file all missing documents within the 14 day period.  Occasionally, however, we must file a motion with the court to seek an extension of the 14 days in order to have enough time to file all missing documents.

Ideally, it is better to plan and file a complete chapter 7 bankruptcy or chapter 13 bankruptcy from the beginning.  But sometimes circumstances necessitate the filing of an emergency bankruptcy.

If you are facing foreclosure or are about to be garnished at work, please contact me to set up a free in-office bankruptcy consultation in Eugene.  If we need to file an emergency bankruptcy, I can accommodate your schedule. My turn-around time can be extremely fast.

Chapter 7 Bankruptcy: Voluntary vs. Involuntary

When it comes to a chapter 7 bankruptcy, there are two options available: 1.) it can be filed voluntarily by the debtor; or, 2) it can be filed by a debtor’s creditors, thereby resulting in an involuntary bankruptcy.  This post discusses both voluntary and involuntary bankruptcies, and when involuntary bankruptcies may occur (which is rare).

The vast majority of chapter 7 bankruptcy cases are voluntarily filed; a person has decided that he or she wants to file bankruptcy, and does so.  However, there is a second, yet very uncommon type, of filing: an involuntary chapter 7 bankruptcy.  Involuntary bankruptcy filings usually involve a business as the debtor.  In the common situation, the business owes creditors money and has defaulted on contracts with the creditors.  The creditors are having difficulty getting paid or pursuing the business’s assets.  Faced with the difficulty of recovery, some creditors may file an involuntary bankruptcy for the business.  This is particularly true if the creditors know the business can repay or liquidate assets to pay its debts, but refuses to do so.    It is extremely rare that creditors would file an involuntary bankruptcy for an individual, though.

Once the creditor files a bankruptcy petition “for” the business, the business will receive notice of the bankruptcy filing.  The business will then have 20 days to respond.  If the business does not respond, the bankruptcy court will allow the bankruptcy to proceed.  But if the business does respond, there will be a hearing before a bankruptcy judge to determine whether the petition was filed in good faith and if the business has failed to pay its debts.  If the court determines that the bankruptcy petition was indeed filed in good faith and that the business is refusing to pay its creditors, the chapter 7 bankruptcy proceeding will continue. If the judge, however, rules for the business, the bankruptcy case will be dismissed and the business may be entitled to any damages as a result of the involuntary bankruptcy filing.

If the bankruptcy moves forward, however, a Chapter 7 Trustee will be appointed to administer the bankruptcy estate for the business.   The Chapter 7 Trustee will be in a position to liquidate the assets of the business in order to pay some (if not all) of the debt owed to the creditors.  Such assets would include, but are not limited to, accounts receivables, investments, inventory, goodwill (selling the business name), tools, intangible property such as copyrights, patents, and other various assets.   As a result of a chapter 7 bankruptcy, creditors may be in a better position to be paid on contract; however, such a maneuver should be saved only for the most extreme cases.  Therefore, involuntary chapter 7 bankruptcies are extremely uncommon for business debtors, and even more uncommon for individuals.

 

Chapter 7 “No Asset” Case

The majority of cases filed under chapter 7 bankruptcy are considered “no asset” cases.  This post details what a “no asset” case is, and why we prefer this over an “asset” case.

When you file chapter 7 bankruptcy, everything you own, with few exceptions, becomes part of a “bankruptcy estate.”  To protect these assets as we travel down the road of chapter 7 bankruptcy, we use exemptions, or laws that protect your personal and  real property.  In Oregon, we can use Oregon Exemptions or Federal Exemptions to protect you from losing your property as a result of filing bankruptcy.  I have written several posts about exemptions, particularly the Federal Wild Card exemption. Using exemptions, the vast majority of chapter 7 bankruptcies are “no asset” cases, meaning your assets are protected and you won’t lose anything through the bankruptcy process other than debt.

The opposite of a “no asset” case is an “asset” case.  An “asset” case means that, despite using exemptions, all your property is not protected.  In such a case, the Chapter 7 Trustee will liquidate the asset and pay your creditors a dividend from this asset.  Other than real or personal assets that determine if a chapter 7 bankruptcy is  an “asset” case or a “no asset” case, certain transfers and “fraudulent conveyances” may form the basis of whether a case is an “asset” case or a “no asset” case.

An important part of your bankruptcy consultation is to determine not only your debts but also your assets.  If you have too many assets, or the value of an asset is too high, we can consider filing a chapter 13 bankruptcy or consider some pre-bankruptcy planning to help alleviate any potential problems with an “asset” case.

When do you find out if your case is an “asset” case or not?  Usually when you first meet with me, we make this determination and what planning is necessary to alleviate the possibility of an “asset” case, including, but not limited to, considering a chapter 13 bankruptcy filing.  Also, the Chapter 7 Trustee, at the conclusion of the meeting of creditors, will usually make the determination if your bankruptcy is an “asset” case or a “no asset” case.

There are additional benefits for having a “no asset” case.  For example, if you accidentally missed listing a creditor in a “no asset” case and you have already received your bankruptcy discharge, this creditor will be discharged by operation of law in the bankruptcy despite not receiving actual notice of the bankruptcy.  On the other hand, if the case is an “asset” case, then if you miss listing a creditor and have received your bankruptcy discharge, you will be stuck with this debt.

Please call to learn more about bankruptcy and whether your potential bankruptcy case may be an “asset” case or a “no asset” case.  I offer free in-office bankruptcy consultations 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."

CAUTION: This website is to provide visitors with basic information about my law office, and information about how to contact me. Every situation is different, and no information on this website is legal advice on any specific question. You should not act on any of the information without first conferring with an attorney licensed in your jurisdiction. No attorney-client relationship or privilege is formed by visiting this site or by unsolicited email. Therefore, initial emails should not contain any confidential information. I may already represent parties adverse to you and cannot advise or represent you until we check for conflicts. I am licensed only in Oregon and offer my services only to those doing business in Oregon, unless I am associated with local counsel in accordance with other states' laws. The applicable laws may have changed after the information on this website was published. While effort is made to keep the information current, you should not presume that all information is up to date. You must confer with an attorney to be sure you have current information.

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