Can I do a "Means Test" on my own?

The most significant change to the bankruptcy law changes in 2005 was the implementation of what is called the "Means Test".

Broadly speaking the Means Test determines two things: 1) whether a debtor can qualify for Chapter 7 bankruptcy, and 2) if not, how much they will be required to pay to their unsecured creditors in Chapter 13 bankruptcy.

If your gross income is above the median for the state that you file in, you will be subject to the means test.

Just because your gross income is above the median does not mean you don't qualify for Chapter 7. A good number of our clients have gross income above the median for their household size in Oregon and still qualify for Chapter 7 bankruptcy. However, in these cases it is critical that the means test be accurate.

There are several online places that claim to be able to perform the means test. In my experience clients who attempt to do their own means test do not do it correctly. The means test formula is extremely complicated, and there can be variances in how your local jurisdiction interprets the means test. In my opinion it is worth having an experienced bankruptcy attorney do the initial means test formula to determine your eligibility.

If a client is on the border for qualifying for Chapter 7 our firm performs an initial means test for an affordable fee, and can then discuss the client's options based on the result of the means test. Many of our clients start with this, and then proceed to file Chapter 7, or Chapter 13 bankruptcy.

If you would like more information about our consumer bankruptcy firm visit www.pacificbankruptcy.com.

You can eliminate a deficiency balance on a second mortgage or line of credit with a bankruptcy

Many clients have been asking me lately what happens to a second mortgage or line of credit if their home is foreclosed on.  Usually in a foreclosure the second mortgage lender or line of credit lender will receive little to nothing on the debt.  If this happens you can still be held liable for what you owe on these loans. This is known as a "deficiency balance". For example, if you owe $200,000 on your first mortgage and $60,000 on your second mortgage and the first lender forecloses and receives less than $200,000 in the sale, you may still be liable for the $60,000 second mortgage or line of credit.

If you file bankruptcy, this $60,000 is simply treated as unsecured debt just like a credit card or medical bill.  In most cases the debt can be discharged with the bankruptcy.

Given the weak housing market this sort of deficiency balance is very common.  The good news is that with bankruptcy you can protect yourself from liability in this situation.

For more information about bankruptcy and our law firm visit www.pacificbankruptcy.com

When you are preparing to file bankruptcy HONESTY is the best policy.

If you meet with an attorney to discuss your debt relief options, including filing for bankruptcy the worst thing you can do is not tell the attorney the whole truth. Hiding assets, failing to disclose transfers, under-reporting your income and other falsifications can not only put your fresh start at risk, it is also a crime. When you file a bankruptcy case the petition and schedules are signed under the penalty of perjury. So, if they aren't accurate you are essentially lying to the Federal Court - not good.

The more information the bankruptcy attorney has from the start, the better the attorney will be able to help you. Most situations that a client thinks is bad, and is scared to tell their attorney about are not a big deal as long as the attorney has the information. Once the attorney has the information they can help the client find a solution that works. I once had a Chapter 7 client who told me they lived in a manufactured home as a renter and had no ownership interest. Before filing the case a routine property search was done and it turned out the client was on the title as an owner of the manufactured home. I asked the client why they didn't tell me about that and the client told me they were afraid they would lose it in the bankruptcy. The home was 100% exempt, which means there was no chance of the home being liquidated or affected in bankruptcy. I explained this to the client, discussed why it needs to be disclosed and made sure the client understood the implications of not properly disclosing everything. The Chapter 7 case was filed, the home was protected and the client got their discharge and fresh start. Basically, everything was good and the client was debt free. Had the client's case been filed without disclosing the protected asset there could have been a disastrous outcome, including losing the discharge and possible criminal sanctions.

So, remember - your bankruptcy attorney can only help you if they have all of the relevant information from you. When they ask you questions, listen carefully and answer honestly. If you have a doubt whether the attorney needs a certain piece of information just tell the attorney. An experienced bankruptcy attorney will be able to tell you whether it is an issue or not. If it is an issue there may be a solution. But, the attorney can't find a solution unless they have all of the information.

For more bankruptcy information visit ww.pacificbankruptcy.com. Our firm is devoted 100% to helping individuals file cases under Chapter 7 and Chapter 13.

Getting Nowhere - Minimum Payments and Credit Card Debt

Today I was reviewing a chapter 13 client's file. I noticed the disclosures given on their Bank of America credit card statements.  It is truly depressing to see how long it would take for a consumer to pay off a small credit card balance by making the minimum payments. Here was the breakdown:

Client had a current balance of $5,011.61 on her Bank of America Visa card. Small, and manageable, right? Well, if this client is struggling, and can only manage the minimum payments it would take her 25 YEARS to pay this balance off. This is assuming that no further purchases are made on the card and she is only paying on it.  What is even more depressing is to see that she would pay a total of over $14,000 of payments over the 25 years!!!

Now, this if for a small card. Many of our Oregon bankruptcy clients are carrying much larger balances and have several different credit cards.  They are essentially a slave to the credit card companies by the time they come see us.  Many see chapter 7 or chapter 13 bankruptcy as their best option to finally free themselves from such burdensome debt.

If you are caught up in the viscous cycle of credit card debt, or have other debt that is a problem it may be time to talk to a bankruptcy attorney.

For more information about bankruptcy in Oregon and SW Washington, visit www.pacificbankruptcy.com

How long do you have to wait between bankruptcy filings in Oregon?

If a person has filed a Chapter 7 bankruptcy and received a discharge in that case within 8 years they will not be able to receive a discharge in another Chapter 7 case. The dates that count are the dates of filing, not the dates of discharge. For example, if your Chapter 7 bankruptcy was filed on 1/15/02, and discharged on 4/20/02 you would be able to file a Chapter 7 after 1/15/10. You would not need to wait 8 years from the chapter 7 discharge date.

If you are not eligible to file a Chapter 7 you may still find a lot of protection in a Chapter 13 bankruptcy. It is common for people who have filed and received a discharge in a chapter 7 case to find themselves in a bind due to unexpected medical bills, a car repossession or other debt. In these cases if 8 years haven't passed they may be able to file a Chapter 13 that affords the same bankruptcy protection (the automatic stay) as a Chapter 7. A chapter 13 will allow the debtor to repay the creditors an amount that is affordable based on their budget.

If you have filed bankruptcy in the past and are now facing a wage garnishment, repossession, creditor harassment, etc you may want to seek the advice of a bankruptcy attorney. There may be a lot more protection out there than you realize.

For more bankruptcy information and information about our bankruptcy law firm, visit www.pacificbankruptcy.com. Our office practices exclusively in the area of consumer bankruptcy, representing debtors in bankruptcy in Oregon and SW Washington.

New Eugene, Oregon Bankruptcy Judge Appointed

Portland attorney Thomas Renn has been appointed to serve as a judge of the U.S. Bankruptcy Court for the District of Oregon. He will fill a new judgeship left vacant when Bankruptcy Judge
Albert E. Radcliffe died suddenly on January 19, 2011.

Mr. Renn has been a solo practitioner, working as a Chapter 7 panel trustee in the Portland
division of the Oregon bankruptcy court since 2002.

Oregon Bankruptcy Exemptions

Exemptions are laws that allow a debtor to protect certain assets in bankruptcy.  Since Chapter 7 is a liquidation bankruptcy applying the correct exemption to a debtor's property is very important.

There are several exemptions in Oregon that are available to debtors. The most common ones are:

1) Vehicle - $3,000;
2) Equity in Homestead - $40,000 (or $50,000 for joint debtors);
3) Wages owed at time of filing, or wages held - 75%;
4) Tools of Trade - $5,000;
5) Clothing/Jewelry - $1,800;
6) Books, Pictures, Musical Instruments - $600;
7) Household Goods - $3,000;
8) Personal Injury Awards - $10,000;
9) Animals - $1,000;
10) Erisa Qualified Retirement Accounts - 100%;
11) Earned Income Tax Credits - 100%;
12) Child Support/Alimony - 100%

The law can be confusing on what exemptions to use. For example, if you file your bankruptcy in Oregon, you may not be entitled to Oregon exemptions if you haven't lived in Oregon for the last 2 years consecutively.

Some of the above exemptions may be doubled if a debtor files a joint case with their spouse.

Since exemption laws can be tricky it is smart to contact an experienced bankruptcy attorney that knows which exemptions to apply and how to properly apply them to your case.

For more information about bankruptcy in Oregon and Washington visit www.pacificbankruptcy.com