As frightening as bankruptcy may seem, there's nothing more terrifying than grappling with debt and past-due payments. Bankruptcy is a beneficial tool that helps you regain control of your finances—easing your stress. For most people, it's the perfect remedy to untangle the financial burdens you may be dealing with. 

The term "personal bankruptcy" is specifically used when an individual or a married couple files for bankruptcy.  

When it comes to personal bankruptcy in Oregon, you have two main options: Chapter 7 and Chapter 13. Each serves a different purpose and is suited for different financial situations. At Lyndon Ruhnke, P.C., I can help you navigate the complexities of personal bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, known as liquidation bankruptcy, provides an opportunity for you to discharge most, if not all, of your debts. This path can be particularly helpful if you're facing foreclosures, wage garnishments, vehicle repossessions, or constant harassing phone calls from debt collectors. In some situations, it can even help you eliminate back taxes. 

When you file for Chapter 7, a trustee is appointed to collect and sell your non-exempt assets. The proceeds from this sale are then used to pay your creditors. It's important to note, though, that certain debts, such as alimony, child support payments, student loans, and fraudulent debts, cannot be discharged through Chapter 7 bankruptcy. 

If you have a car and are considering Chapter 7, there's good news. You may be able to keep your car if the exemption fully protects the equity. However, if your car's value exceeds the exemption amount, the bankruptcy trustee may sell the vehicle and distribute the remaining amount to your creditors. 

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is more about reorganization than liquidation. This option involves proposing a three to five-year repayment plan to your creditors, offering to pay off all or part of your debts from your future income. 

Chapter 13 is often chosen by those looking to prevent house foreclosure, pay back missed car or mortgage payments, or prevent the seizure of valuable non-exempt property. If you adhere to the terms of the repayment agreement, all remaining dischargeable debt will be released at the end of the plan, which typically lasts three to five years. 

For Chapter 13 bankruptcy, there are certain requirements. These include a regular source of income and some disposable income for the repayment plan. The advantage here is that in Chapter 13 bankruptcy, you can keep all your property, including your car. However, you may need to pay the value of the car not covered by an exemption through your repayment plan. 

It's important to understand each option's specifics and consider your personal financial situation before deciding. As always, it's recommended to consult with a trusted attorney to help guide you through the process. 



Bankruptcy Exemptions

In Oregon, the bankruptcy exemptions are quite generous and designed to help you maintain a basic standard of living. Here's a breakdown of some of the key exemptions: 

  • Homestead Exemption: In Oregon, you can exempt up to $40,000 of equity in a home, floating home, or manufactured home on up to one urban block or 160 rural acres. If the property is jointly owned, the exemption amount increases to $50,000. 

  • Personal Property Exemptions: Oregon law allows you to exempt up to $3,000 for household items, furniture, utensils, TVs, and radios, and up to $1,800 in total for clothing, jewelry, and personal items. You can also exempt health aids, books, pictures, and musical instruments up to $600, and food and fuel to last 60 days. 

  • Motor Vehicle Exemption: You can exempt up to $4,450 for any motor vehicle under Oregon law. 

  • Wildcard Exemption: This is a flexible exemption that allows you to protect up to $400 of any personal property not covered by another exemption. 

  • Retirement Accounts: Tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, defined benefit plans, and traditional and Roth IRAs are fully exempt up to $1,512,350 per person. 

Remember, these exemptions apply if you choose to use the Oregon state exemptions. You have the option to use the federal bankruptcy exemptions instead, which might be more beneficial in some cases. It's crucial to consult with an experienced personal bankruptcy attorney like myself to understand which set of exemptions is more favorable for your situation. 

Bankruptcy FAQ

1. Will I lose my retirement accounts if I file for bankruptcy? 

No, you won't lose your retirement accounts when you file for bankruptcy. Federal law allows filers to keep tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, defined benefit plans, and traditional and Roth IRAs up to a certain limit. 

2. Does bankruptcy stop creditor calls? 

Yes, filing for bankruptcy will stop creditor calls. Once you file, the court issues an "automatic stay" that prohibits most creditors from continuing to ask you for payments. If you hire a bankruptcy attorney and refer your creditors to them, they're required to stop contacting you.

3. How long does bankruptcy appear on a credit report? 

Bankruptcy can remain on your credit report for seven to ten years, depending on the chapter filed. Chapter 13 bankruptcy generally stays on your credit report for seven years, while Chapter 7 bankruptcy remains for ten years. 

4. What if creditors don't respect my bankruptcy discharge? 

If creditors aren't respecting your bankruptcy discharge, it's considered a violation of a court order, and they can be held in contempt. You should contact your attorney or the bankruptcy court immediately if this occurs. 

5. Can I file for bankruptcy more than once? 

Yes, you can file for bankruptcy more than once. However, there are time restrictions between filings. The waiting period varies depending on the chapter previously filed and the chapter you plan to file. 

6. Do I need a bankruptcy attorney? 

While it's possible to file for bankruptcy on your own, it's highly recommended to hire a bankruptcy attorney. An experienced bankruptcy attorney can help you understand the process, qualify for the chapter of your choice, determine when it's time to file, help you keep the property you want, and ensure you don't run afoul of fraud or other issues. 

Personal Bankruptcy Attorney Serving Gresham and Beaverton, Oregon 

At Lyndon Ruhnke, P.C., I can guide you through the bankruptcy process, helping you understand each option and how it applies to your situation. I can provide personalized attention and assurance, acting as your trusted guide in these challenging situations. Contact my firm for a chance to start fresh and build a more secure financial future.