Speaking to a bankruptcy attorney isn't as bad as you think.

As a consumer bankruptcy attorney of over 10 years I offer a free initial consultation to go over debt relief options with people who are struggling and overwhelmed with debt. Many times, after the consultation, potential clients tell me "wow, talking to you about bankruptcy wasn't as scary as I thought".

Many people are paralyzed by the fear of facing their debt problems and even picking up the phone to call our office is hard. Once they are able to do that and get into our office, most people find that the consultation is basically just a friendly conversation about their debt problems where we offer options that will help resolve them.  As a bankruptcy attorney I am not here to judge or criticize anyone for being in debt. I am here to explain how they can best get out of debt and begin living debt free.  Sometimes I suggest bankruptcy as the best option, but other times I may see other, better options.  If bankruptcy is good option, I can explain the details involved in getting a case filed and explain the entire process from start to finish.

So, if you are feeling scared to talk to a professional about your debt problems just remember that making the call is usually the hardest part. If you come into one of our offices you will find a friendly face who is just there to help you out and let you know what options you have to finally deal with overwhelming debt.

If you live in the Portland, Oregon area and need more information about bankruptcy feel free to visit us at www.pacificbankruptcy.com.  You may also call us at 503-352-3690 (Oregon), or 360-213-2722 (Washington) to schedule a free bankruptcy consultation with a qualified bankruptcy attorney.

Tax Refunds and Your Bankruptcy

It’s that time of year again. Tax time! Some anxiously await their W-2, so they can file their taxes and get that refund as soon as possible. Others dread filing their taxes, because they suspect or know they will owe taxes and put off filing for as long as possible. Here are some practical ideas for taxes, as they relate to bankruptcy:

FILE YOUR TAXES. Everyone knows they need to file their taxes, if they are required to file. Additionally, everyone knows they are supposed to file their taxes on time, or, at least, get an extension. The number of people who don’t file taxes simply because they will owe is always amazing. Burying your head in the sand and not filing does not eliminate the tax debt, and it actually makes the situation worse by adding interest and penalties. Lastly, failing to timely file your taxes can delay or eliminate the possibility of discharging tax debt later.

Some Taxes Can Be Discharged. You read that last sentence correctly. Some taxes can be discharged! There are several potentially complicated requirements and dates that must be met to discharge taxes, but it is possible. Even if some taxes are not necessarily dischargeable, you may be able to pay taxes through a chapter 13 bankruptcy at a far lower rate than paying them yourself. If you have tax debt, you should contact us to discuss possible debt relief options in bankruptcy.

Dos and Don’ts for Refunds. There are several things you should consider spending your tax refunds on, and several things you definitely shouldn’t.

-Dos: Many people are worried that they will be judged by the Court or the Trustee for how they use their refund, or that it will get them in trouble. While it may not reflect well on a debtor for blowing their refund on a vacation or a big screen TV, in most cases it will have little impact. You will, however, want to keep track of what the refund was used to pay. Trustees want to be sure funds aren’t used for an impermissible use, discussed below, or that debtors aren’t trying to hide money. In most cases, a tax refund is exempt, and will not be taken by the Trustee. If you find it is difficult to save money to pay for a bankruptcy, you can use your tax refund to pay attorney and court fees.

Don’ts: Before paying any creditor within 90 days of filing your case, talk to an attorney before paying any one creditor more than $600. If they are a creditor you do not want unnecessarily burdened by your bankruptcy, you will want to avoid paying them more than $600 within 90 days of bankruptcy filing. These types of issues come up when paying a doctor, back rent, or friends/acquaintances. Also, if you are sure you will file bankruptcy, it is typically a waste of money to pay an unsecured creditor, like a credit card, before filing your case, since they will be discharged. Do not pay any family member $600 or more within 1 year of filing a bankruptcy, or a Trustee will sue them to recover the money.

Call us at 503-352-3690 or visit our website www.pacificbankruptcy.com to schedule free initial consultation to discuss tax issues in bankruptcy, and to take your first steps to becoming debt free!

We are not accountants, tax attorneys, or any other licensed tax professional, and cannot offer tax law advice. The purpose of this article is to provide helpful ideas of what to do and what not to do with taxes as it relates to bankruptcy. If you need tax advice, you should consult with a licensed tax professional.

“I Don’t Want to Include That in My Bankruptcy”

When speaking with a prospective client in our free, initial consultation, I am frequently told that they don’t want to include a certain debt or asset in the bankruptcy for one reason or another.  Unfortunately, as I tell everyone, bankruptcy is all or nothing. When filing bankruptcy, a debtor must disclose and include all debts and assets, and a debtor swears under oath that all debts, income, and assets have been disclosed in the bankruptcy petition. With that being said, this does not necessarily mean a person filing bankruptcy will lose everything in the bankruptcy.

Most people concerned about including everything in the bankruptcy worry that they will lose collateral, like their house or car, if it is included in the bankruptcy, especially if they owe money on the collateral. Under most circumstances, a person filing bankruptcy is not at significant risk of losing their vehicle or house. If money is owed on the collateral, a debtor can continue paying for the collateral and/or reaffirm the debt to reinstate the contract.

Another concern in Chapter 7 is the concern that the Trustee will liquidate a debtor’s possessions. Since the implementation of Federal Exemptions, most assets are exempt. Those items that are not exempt may be retained in exchange for a cash settlement paid to the Trustee to avoid liquidation.

Lastly, a very common concern for those considering bankruptcy is including a debt they don’t wish to be included. This can include a particular credit card they like, an overdrawn bank account, or a friend or family member who loaned them money in a tight spot. Again, bankruptcy is all or nothing, and every debt must be listed. Once some people find this out, they try to pay the debt off before filing, but this may cause more harm than good. A Trustee can avoid and recover large payments to general unsecured creditors, like credit cards, that exceed $600 within 90 days of filing the case, and payments exceeding $600 to insiders and family members made within ONE YEAR of filing the case. How the Trustee recovers these large payments is by suing the person that received it, and redistributing the funds to other creditors. This is called a preference payment.

While there may be a significant amount of anxiety with including all assets and debt, talking to an experienced bankruptcy attorney can limit that anxiety and the negative consequences of filing bankruptcy. Call us today at 503-352-3690 or visit our website www.pacificbankruptcy.com to schedule a free initial consultation.

How does a chapter 13 Trustee get paid?

If you file a chapter 13 bankruptcy in Oregon, a person called a "Trustee" is assigned to your case. One of the main jobs of the Trustee is to accept/collect your monthly chapter 13 payments and distribute them to your creditors.

I get a lot of questions for clients who are curious as to how the Chapter 13 trustee is compensated.  Essentially, for each dollar that the Trustee distributes they will receive a percentage of that payment. The percentage varies, based on the Trustee's budget, but will generally range from 2% to 7% or so. Their commission can never be over 10% by law.

Although the Trustee is a private company, they are contracted by the Federal Government, and must submit very detailed budgeting reports to the United States Trustee and conform with certain guidelines to ensure that they can operate effectively, but also maintain a fair commission structure.  Simply put, they are not allowed to increase their commission on your chapter 13 payments to make a larger profit for themselves.

For more information about the standing Chapter 13 Trustee for the Portland, OR and surrounding areas, visit www.portland13.com.

For more information about our firm visit www.pacificbankruptcy.com  We are here to help.

Wage Garnishments and how Bankruptcy Can Stop Them

One of the worst feelings for my clients is when a creditor gets a hold of a portion of their wages.

Below are answers to the most common questions I get about garnishments:

When can a creditor or collector garnish my wages?
First, a creditor must have a judgment against you. This means they have sued you in state court and "won". Many times creditors win by default, as a debtor fails to appear or answer a lawsuit.  Once a creditor obtains a judgment, they just need to draft papers called a "writ of garnishment" and send to your employer. Your employer is required to withhold a portion of your wages by law and send to the creditor at that point.

How much can be garnished?
In Oregon, a creditor who obtains a valid judgment against a debtor can garnish up to 25% of a person's net wages!  This means that if you normally bring home $3,000 per month and got hit with a garnishment, your income would drop to $2,250. I don't know about you, but this would be devastating to almost anyone's budget.

How long will a garnishment last?
A garnishment will continue until the debt is paid in full, or for 90 days. After 90 days, the creditor may renew the writ of garnishment and continue garnishing until they are paid off.

How can I stop a garnishment?
Once a garnishment is in place the only way to stop it is to pay off the debt, settle with the creditor, or file bankruptcy.  A chapter 7 and a chapter 13 bankruptcy will stop a garnishment in it's tracks. As soon as the case is filed you will want to have your attorney send a notice of filing to your employer and they will be required to stop the wage deduction immediately.

If I file bankruptcy, can I get any of the garnished funds back?
Sometimes, yes. In certain cases we can recover amounts garnished within the 90 days leading up to the bankruptcy. Several factors may affect your ability to recover funds, so you will want to discuss this with an experienced bankruptcy attorney.

If you are facing a wage garnishment that you would like to be stopped, call us today to discuss your options. We always offer free initial consultations 503-352-3690.

Automatic Stay: Filing Bankruptcy Will Stop Collection Calls and Garnishments

Many people considering filing bankruptcy have severely fallen behind on payment of their debts, and receive endless collection calls. Some people have fallen so far behind that the creditors have sued them, and have obtained, or soon will obtain, garnishments and liens. We are often asked whether filing bankruptcy will stop these collection calls and garnishments, or if they will have to wait until they actually receive their discharge.

Filing bankruptcy places the debtor under the protection of the automatic stay, which prohibits all creditors, with limited exceptions, who received notice from all collection activities. The automatic stay protects the debtor from all collection calls, and stops any pending garnishments. Any money taken by a creditor after the date of the filing must be returned, even if they creditor wasn’t aware of the filing when they took the funds. In some circumstances, we may be able to recover funds garnished prior to the filing of the bankruptcy.

Even after we have informed clients and prospective clients of these protections, we are frequently asked what happens if the creditors simply ignore the bankruptcy notice and continue collection efforts. The short answer is: they must! Except for particularly egregious violations, we will give creditors the benefit of the doubt, and assume they simply did not receive or process the bankruptcy notice. We will send the violating creditor a letter notifying them of the bankruptcy, and demand that they cease all further collection efforts. If this fails to stop collection efforts, we may send an additional warning or file a complaint in bankruptcy court. If we file a complaint in bankruptcy court, the debtor may be entitled to damages, attorney fees and costs. The filing of a complaint will often solve the problem, but it is possible that a hearing may be required to establish the violation.

If you are, or will be, behind on your bills, at threat of garnishment, and receiving endless, harassing collection calls, you should consider calling us to discuss your debt relief options. Initial consultations are free. Call 503-352-3692, or visit www.pacificbankruptcy.com

Bankruptcy Hearings: Will I Have to Appear in Court Before a Judge?

With rare exceptions, people filing bankruptcy (debtors) do not have to go to a courtroom, and appear before a judge. However, debtors will have to attend a Meeting of the Creditors, and speak to the bankruptcy Trustee. This is essentially a deposition with the person who will administer the debtor’s case. The trustee will ask the debtor several questions under oath to confirm the information contained within the bankruptcy petition (documents filed with the bankruptcy court). These questions are very similar to the questions we ask potential clients in our free initial consultation.

Another concern most have, after concerns of appearing in court, is whether creditors will actually show up to the hearing. While creditors are entitled to appear at the hearing and ask questions, most creditors do not. If a creditor does appear to ask questions, they must limit their communications to exactly that. They will not be allowed to yell at or criticize you, and must limit their questions to bankruptcy. In fact, the first thing most clients say after we have finished their hearing is: “Well that was quick and painless!”

Bankruptcy, and all that in entails, can be very stressful. With good, experienced legal representation, the entire process can be quite painless. Having filed thousands of cases, we understand the process and the toll it can take on our clients, and we developed a system to make the entire experience as easy and comfortable as possible. Call our office to schedule a free consultation today, and find out what debt relief options are available to you at 503-352-3690. You may also visit us online.