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Should you file Chapter 7 or Chapter 13 bankruptcy?

If your household finances feel out of control, you can use bankruptcy as a trampoline to bounce back from debt. Bankruptcy can stop creditor harassment, threats of foreclosure and can even wipe away your debt entirely. This may significantly reduce your stress and start you on the path to better credit. However, it is not a decision to make lightly.

You can file bankruptcy under one of two categories, Chapter 7 or Chapter 13. One may fit your situation better than another depending on your state. You might be able to keep your home and other assets. Only a financial advisor in Oregon can make the best recommendation for you.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy sets up a process that liquidizes unsecured debts. This might allow you to keep certain assets such as your home and your car that qualify for exemptions. However, it is not guaranteed in every case.

To qualify for Chapter 7 bankruptcy, you must pass or be exempt from the Means Test . If your calculated income is lower than Oregon’s median income for your household size, you may be able to file under Chapter 7. This will show that you do not have any disposable income to use to pay creditors.

After you file under Chapter 7, cannot act to seize your assets to settle your debt. You may even be able to discharge your debt within four months.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy helps individual to settle their debts but need to reorganize them. After you file under Chapter 13, you can restructure your debts under a new repayment plan. This can happen over 3-5 years. After the repayment period, the remaining debt is usually wiped away.

Chapter 13 can help you avoid repossession or foreclosure in ways Chapter 7 cannot. Candidates for Chapter 13 are those with a regular source of income and whose income is higher than the Oregon median income.

Only you and your advisor can determine which option is best for you. These legal and financial advisors are experienced professionals who understand the strain your debt has on you and your family. They are here to help you lighten your load and create a fresh start. With their help, you can begin rebuilding your financial future.

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Judson M. Carusone, Attorney and Counselor at Law
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Eugene, OR 97401

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