February 18, 2020

Retaining Credit Cards through Bankruptcy

I have many clients who want to hold onto a credit card through bankruptcy. But this is not always the best idea and is a lot more difficult than it may seem at first blush.

In the first place, you must list all creditors you owe money to in your bankruptcy, including any medical bills and credit card debt. Omitting any creditor from your bankruptcy is perjury. But what happens when you want to keep a credit card open when you file bankruptcy? If you have a credit card open, in which you owe a zero balance ($0.00) on, this credit card is not actually a creditor and does not need to be listed in your bankruptcy.

However, just because a credit card has a zero balance ($0.00) and need not be listed in your bankruptcy as a creditor, the credit card may still be closed as a result of the bankruptcy filing. Most, if not all, credit card companies pay for a service to screen bankruptcies by social security number. Most credit card companies’ policies are to close the account once the bankruptcy is discovered, whether you owe $10,000 or $0.00.

While some people may think that if they pay the credit card down to zero ($0.00) prior to bankruptcy, they will not need to list the credit card as a debt for bankruptcy, and the card will remain open. The card in most cases will be closed. Additionally, this may create a recoverable “preference payment.” A recoverable preference payment essentially means you paid a creditor $600 or more in the 90 days before you filed the bankruptcy. In such cases, a bankruptcy trustee, or the individual who administers the bankruptcy, can recover this payment for the potential benefit of all your creditors. In this example, not only could your card with a zero balance on the day of bankruptcy filing be canceled, but a bankruptcy trustee could go after the credit card company for a recovery of funds.

But what about reaffirming the debt in bankruptcy? Certain debt can be reaffirmed through the bankrutpcy process, which essentially means you re-obligate yourself to the debt. Reaffirmation of debt makes better sense in the case where you get to hold onto the collateral, such as reaffirming a car loan and holding onto the car. I always advise clients never to reaffirm an unsecured debt, as there really is no benefit here.

After you file bankruptcy, opportunities for credit abound. An emergency credit card can be easily replaced after the bankruptcy is completed in most cases.

If you are interested in learning more about bankruptcy and its effect on credit, please feel free to contact me today for a free bankruptcy consultation.

Thank you.

Tom Butcher
Bankruptcy Lawyer
116 Highway 99 N #101
Eugene, OR 97402
541 762 1967

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.
[Read more…]

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.




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


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!



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.


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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