Bankruptcy in Oregon: Which personal bankruptcy plan is right for you?

June 01, 2013 (Press-News.org) The economic crisis and burst of the real estate market of a few years ago is still being felt by many people in Portland and across the United States. While things are starting to calm down, homeowners and others may still be struggling to manage their debt. One way to obtain financial relief is to file for bankruptcy.

Personal bankruptcy options

When it comes to personal bankruptcy, there are generally two options to choose from: Chapter 7 bankruptcy and Chapter 13 bankruptcy.

People without consistent income may want to consider Chapter 7 bankruptcy protection in which the filer's assets and property is sold to settle outstanding debts. Chapter 7 puts creditors on notice that the property owner intends to sell assets and property in an effort to pay them. A person called a trustee is given control over the property that is to be sold and tries to sell it for as much money as possible. Chapter 7 bankruptcy helps people eliminate debt that is unsecured, such as credit card debt. In addition, a person who files Chapter 7 may benefit from property exemptions thereby protecting some property, such as a home or car, from liquidation.

A Chapter 13 bankruptcy is usually filed when a person has regular income and wants to keep secured property, such as a home. One of the biggest advantages is that it can protect a home from being foreclosed upon. In a Chapter 13 bankruptcy the filer pays debts over a three-to-five year time period. The trustee, assigned by the court, handles the financial matters of the person or couple filing, paying off bills as soon as possible, making payments on mortgages and paying down balances on unsecured debt. At the end of the payment period, any unsecured debt is discharged and secured property may be able to be kept if payments are current.

Protecting what is important

People often believe that they have to try to sell off everything after they file for bankruptcy but that is not always true. The purpose of bankruptcy is to deal with creditors while also providing a fresh financial start for the person. For example, a person who files can often protect their retirement plans, investments and personal property, giving a filer a chance to rebuild their financial wealth.

This means that a person may keep financial assets and personal items after the bankruptcy process has concluded. However, what people planning to file for bankruptcy want to avoid is appearing to hide valuable property. Filers should be upfront and honest when asked to provide an inventory of items they own such as:
- Expensive jewelry
- Vehicles
- Secondary homes, land
- Valuable art pieces
- Recreational vehicles (boats, planes, motorhomes)
- Guns

Choosing a bankruptcy plan

When choosing a bankruptcy protection option, it is important to evaluate the negatives and the positives that each plan provides. For instance, under Chapter 13 protection, a homeowner may be able to keep their home, but they still need to be able to make payments on the mortgage. In addition, if a Chapter 13 filer experiences hardship and can no longer meet the repayment terms of the Chapter 13 plan, the bankruptcy may be able to be changed to Chapter 7 liquidation plan.

For people considering bankruptcy in Washington County, contact an experienced bankruptcy attorney to understand if bankruptcy is the right choice for you and what type of bankruptcy is best.

Article provided by The Law Offices of Alexzander C. J. Adams, P.C.
Visit us at www.portlandbk.com