Questions and Answers
SHOULD I USE MY CREDIT CARD IF I AM PLANNING ON FILING FOR BANKRUPTCY?
No. If you are contemplating filing for a bankruptcy, do not make purchases using a credit card. Pay cash.
WHAT IS EXEMPT PROPERTY?
Exempt property is equity in property that you are allowed to keep under Oregon law or federal bankruptcy law. Equity equals the value of the property less any debt that is secured by the property. An exemption in property must be claimed by the debtor in a bankruptcy. Your attorney can advise you whether to choose state or federal exemptions in order to keep as much of your property as possible.
CAN I KEEP MY HOME IF THE EQUITY IN MY HOME EXCEEDS THE HOMESTEAD EXEMPTION?
In Chapter 7, the answer to this question depends on whether the trustee believes he or she can sell your home, pay the sales costs, pay you an amount equal to the amount of your homestead exemption, and have enough remaining proceeds to make a distribution to your creditors. If the equity in your home substantially exceeds your homestead exemption, it is likely that the trustee will sell your home. If you have equity in your home and want to file a Chapter 7 bankruptcy, consider selling your home prior to filing the bankruptcy. Consult with the attorney if you are in the situation.
In Chapter 13, you may keep your home, but you must pay an amount approximately equal to your "non-exempt" equity (net equity minus homestead exemption) to your creditors.
CAN I KEEP MY HOME IF I AM BEHIND ON MY MORTGAGE LOAN PAYMENTS?
In a Chapter 7 bankruptcy, you must be current on the mortgage payments or the mortgage lender can foreclose.
In a Chapter 13, you can keep your home if you are behind on your mortgage payments, if your plan provides for paying the past due payments over time. While in the Chapter 13, you must pay your current mortgage payments.
CAN I PAY ON UNSECURED DEBTS, SUCH AS CREDIT CARDS, PRIOR TO FILING BANKRUPTCY?
In most situations you should continue to pay your secured debts, such as car loans, if you wish to keep the collateral (the home or car). Also you should continue to pay child and spousal support obligations. If you plan to discharge unsecured debt, such as credit cards, in bankruptcy, in most cases you sould stop making payments on these debts if you plan to file the bankruptcy soon.
WHAT IF I PAY ON UNSECURED DEBTS, SUCH AS CREDIT CARDS, PRIOR TO FILING BANKRUPTCY?
If you pay more than a total of $600.00 to any on unsecured creditor on a personal debt during the 90 day period prior to filing the bankruptcy, the payment is considered to be a "preference" and a Chapter 7 bankruptcy trustee can require the creditor to turn over the payments to the trustee. If the debt re-payment is made to a relative or other "insider" within one year prior to filing bankruptcy, the payment is a "preference". You must disclose all payments of preferences in the Statement of Financial Affairs part of the bankruptcy petition.
SHOULD I TRANSFER MY INTEREST IN PROPERTY PRIOR TO FILING BANKRUPTCY?
Generally, any transfer of property should only be made as part of a sale of the property for fair market value and without intent to hinder, delay of defraud your creditors.
Consult with your attorney prior to making any transfer of property prior to filing bankruptcy. If you transfer property prior to filing bankruptcy without receiving full consideration for the value of your equity in the property, the trustee may be able to require an amount in dollars equal to the equity to be turned over to the trustee. Any such transfer must be disclosed in your filing.
CAN I DISCHARGE STUDENT LOAN DEBT IN BANKRUPTCY?
Generally the answer is no. If the student loan was made, insured or guaranteed by a government unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, the debt cannot be discharged in bankruptcy, unless you can show extreme and continuing hardship. In order to discharge student loan debt based on hardship, and expensive adversary procedure involving a trial is required.
CHILD AND SPOUSAL SUPPORT
Can I discharge child support and spousal support in bankruptcy?
No. Child support and spousal support debts are "priority debts" that must be paid. In a Chapter 13 Bankruptcy, delinquent child and spousal support will be paid by the trustee from the plan payments before any payments are paid on " non-priority" debts such as credit card debt.
DO I HAVE TO LIST ALL OF MY CREDITORS?
Yes. If you owe money to a creditor on the date of filing, you must list the creditsor. If someone claims that you owe money and you dispute that you owe anything, you should list the alleged debt. You can list is as "disputed".