What Chapter 7 Does
Filing for Chapter 7 bankruptcy can help you:
- Eliminate your general unsecured debt, including medical bills, unsecured personal loans, and credit card debt
- Get relief from some financial obligations, excluding alimony and child support payments
- Rebuild your credit score gradually over time
- Activate an "automatic stay" on your existing debts, stopping all forms of creditor harassment, wage garnishment, and all other collection efforts
- Prevent debt collectors from foreclosing, repossessing, or evicting you from your home
What Chapter 7 Doesn't Do
Despite the numerous things Chapter 7 can do for you, it may not do the following:
- It won't leave you with nothing — You will still own your major assets, including your primary home, motor vehicle, clothing, and furniture
- It won't wipe out your student loan debt, except in rare instances
- It won't wipe out some debt, such as divorce settlement debts, criminal restitution, fraudulent debt, state, local, and federal taxes, fines, and penalties
- It won't alleviate your responsibility to pay alimony and child support
Qualifying for Chapter 7
To qualify for Chapter 7 bankruptcy in Oregon, you must pass the bankruptcy "means test" and attend credit counseling courses.
Bankruptcy Means Test
A bankruptcy "means test" is used to determine eligibility for Chapter 7 bankruptcy. If your income is lower than the median income for a household of your size in Oregon, you automatically pass. However, if your family income is more than Oregon's median income for your household size, you will be required to complete the bankruptcy means test.
The bankruptcy means test will assess your financial records, deduct certain expenses, and determine your amount of disposable income. You may qualify for Chapter 7 if your disposable income is too low to repay your outstanding debt. If you still have a reasonable amount of disposable income, you may be able to repay your debts through a Chapter 13 repayment plan.
Calculating Median Income
As mentioned earlier, to qualify for Chapter 7 bankruptcy, your income must be less than the Oregon median income for your household size.
- One-Person Household — $61,303
- Two-Member Household — $73,378
- Three-Member Household — $88,474
- Four-Member Household — $100,533
*Add $9,000 for each household in excess of four members.
The figures listed above are for March 2021, but they're updated regularly. Attorney Lyndon Ruhnke can help you determine your eligibility for filing for Chapter 7.
Credit Counseling Providers
You will also need to complete a session with an approved credit counseling provider within six months prior to filing your bankruptcy case. Upon filing, but before the Oregon court issues your bankruptcy discharge, you will be required to take a debtor management course from a U.S trustee-approved agency in the state. Both courses can be completed online and take roughly two hours.
Turn to an Experienced Attorney
Just like many other states across the country, filing for Chapter 7 is quite common in Oregon. According to the United States Bankruptcy Court — District of Oregon, there were 6,303 business and non‐business bankruptcy filings statewide in 2020. These consumers didn't go through bankruptcy alone, and neither should you. A one-on-one consultation with a knowledgeable Oregon consumer bankruptcy attorney is crucial to help you navigate key decisions in your bankruptcy proceedings.
Attorney Lyndon Ruhnke offers relief and comprehensive guidance to individuals in the legal matters of bankruptcy. As an experienced bankruptcy attorney, he can review your situation and determine whether Chapter 7 is the ideal bankruptcy option for you. Using his extensive knowledge of Oregon's bankruptcy laws, he can guide you throughout every phase of your bankruptcy process and help you make informed decisions.