Below are a number of Frequently Asked Questions that we get from many of our clients. The responses are general and may be different depending on your own unique circumstances, especially if you live elsewhere than Oregon. Our consultations are free and we would be glad to discuss your particular financial situation and provide you with specific answers to your questions.
Will I lose my home?
It depends on the current value of your home and the amount you owe against it. In Oregon, if the value of your home after subtracting the mortgage balance is $40,000 or less (or $50,000 for married filers) then you should be able to keep your home as long as the payments are current and remain current. If the total is considerably more than $40,000 or $50,000, then filing a Chapter 13 may be your best solution for keeping your home.
Will I lose my car?
As with your house, your ability to keep your car depends on the value of the car and the amount owed against it. In Oregon, if the value of your car after subtracting the loan balance is $3,000 or less (or $6,000 for married filers) you will be able to keep your car. If this amount is greater than $3,000 then there may be alternatives that will allow you to keep your car either in a Chapter 7 or in a Chapter 13.
Will bankruptcy stop the foreclosure of my home?
Yes, when you file bankruptcy an “automatic stay” goes into effect that prevents creditors from taking any action to collect on a debt incurred prior to filing for bankruptcy. This automatic stay will stop a foreclosure sale, but it only stops it temporarily. If you are facing foreclosure make sure you contact a bankruptcy attorney well before your house is scheduled to be sold at auction.
Can I sell my stuff before I file?
Yes, you can sell your stuff. But you have to sell it for a fair price. In other words you can’t sell your car to your friend for $10 – unless your car is really worth $10. If you do sell something worth more than $500, be sure to keep records of who purchased it and how you spent the money you received. Receipts and bills of sale are very important.
Can I give away my stuff before I file?
No. If you give away anything worth more than $200 it could be considered a fraudulent conveyance and the trustee may be able to recover the property.
Will I have to go to court?
If you are represented by an attorney, in most cases the only legal proceeding you are required to attend is the Section 341(a) meeting of creditors that takes place at the US Trustee’s office or the Chapter 13 Trustee’s office. In a Chapter 7 case if you are reaffirming a debt on a car loan, you may be required to attend a short court hearing where a bankruptcy judge will determine whether reaffirming the loan on your vehicle is in your financial best interest. There are cases that end up in court for various reasons, but in most cases with proper planning, court appearances can be kept to a minimum or avoided altogether.
For more on Reaffirmation Agreements, click here.
Will everyone know that I have filed bankruptcy?
Your bankruptcy petition is a public document and, as such, anyone that searches for your petition could find it. On the other hand, hundreds of bankruptcy cases are filed each day, so unless someone is specifically looking for your bankruptcy case, there is not much chance they will know about it. All of your creditors will receive notice of your bankruptcy filing.
Will I be able to re-establish credit after I file?
Yes, many of our clients report receiving offers for credit cards within weeks of filing bankruptcy. Most often the offers are for higher interest rate cards with low credit limits. However, once you have filed bankruptcy you can begin to rebuild your credit by using credit wisely and not carrying a balance on your credit cards. You may be able to obtain a “secured” credit card which will allow you to rebuild your credit.
Will I have to give up all of my assets?
When you file bankruptcy, everything you own becomes part of the “bankruptcy estate.” However, you are allowed to keep assets that fall within certain guidelines. For instance the Oregon exemption for Household Goods and Furniture is $3,000. Now ,$3,000 may not sound like a lot of money for all your household goods and furniture. However, in bankruptcy we use the current value for your property, not what you paid for a particular item or what it would cost if you bought it new. One Chapter 7 trustee explained this idea as follows “what would you get if you put all of your stuff (household goods and furniture) out in your driveway, on a cloudy day?” The answer in most cases is not very much and quite often well below the $3,000 exemption.
To be contacted by an attorney at Owens / Pinzelik, P.C., click here.
For informational purposes only and not to be relied upon as legal advice.
by John A. Pinzelik