At Milly Whatley, P.C., we have over fifteen years of experience helping individuals and businesses in Bend, Redmond, La Pine, and throughout Central Oregon find relief from overwhelming debt through bankruptcy under Chapter 7, Chapter 13, Chapter 11, and Chapter 12. Below is a brief overview of the main options available in bankruptcy. Contact our office to learn more about which bankruptcy option may be best for you.
The most common type of bankruptcy is Chapter 7. It is usually, but not always, the simplest and least expensive. The Chapter 7 process involves selling non-exempt assets to pay off creditors, with most remaining debts being discharged by the bankruptcy court. In the majority of cases, people keep all their assets and receive a discharge of their unsecured debts. Secured debt (such as car loans) may also be discharged if you no longer want to keep the collateral securing the debt. Chapter 7 is most attractive to individuals with large amounts of unsecured debt, such as credit cards and medical bills.
Not all debts are dischargeable in Chapter 7, including certain tax debts, domestic support obligations, marital property settlements, and student loans. Also, Chapter 7 is only available to people who meet certain income requirements. If Chapter 7 is not right for you, or if you are not eligible, you may still benefit from relief under Chapter 13.
Chapter 7 is available to businesses that wish to liquidate in an orderly and inexpensive manner. Permitting liquidation by a Chapter 7 bankruptcy trustee absolves the business owner from claims by creditors regarding the manner in which the owner disposed of business assets.
In Chapter 13, clients make payments to a bankruptcy trustee for a minimum of three and a maximum of five years. The payments are distributed to creditors according to a Chapter 13 plan approved by a bankruptcy judge. While this may seem less appealing than a Chapter 7 discharge, Chapter 13 has many attractive features. Under Chapter 13, you need not worry about losing any assets (such as a car or boat) to a Chapter 7 trustee. Also, you may be able to discharge marital property settlement obligations; catch up on missed mortgage payments and save your home from foreclosure; eliminate your second mortgage completely; pay tax debt over a three to five year period rather than on a schedule demanded by the IRS or Oregon Department of Revenue; catch up on domestic support obligations without having your paycheck garnished; reduce the principal balance owing on your automobile; and reduce your monthly car payment. Chapter 13 is available only for individuals, not for businesses.
Because many payments can be stretched out over a period of five years, some people who file Chapter 13 actually have better cash flow despite the obligation to make a monthly payment to a Chapter 13 trustee. Depending on your income, you may be able to make generous retirement contributions while in Chapter 13. In some cases you are permitted to save money for a down payment on a car and finance a car while still in bankruptcy.
The amount of the monthly payment will depend on your ability to pay and what you are trying to accomplish in Chapter 13. Monthly payments range from under a hundred dollars a month to several thousand dollars a month. At Milly Whatley, P.C., our goal for Chapter 13 clients is to create a plan that allows them to keep as much of their income as possible.
Chapter 11 is sought primarily by businesses on the brink of insolvency. With a Chapter 11 reorganization, a company is allowed to restructure its finances and debts and develop a plan to pay its creditors over time. In most cases, the business owner acts as “debtor in possession” and continues to run the company throughout the term of the bankruptcy. Chapter 11 is often an attractive alternative to Chapter 7, which results in liquidation of the business.
Individuals may also file Chapter 11. The most common reason for individuals to file Chapter 11 is that they do not wish to lose assets in Chapter 7 but have too much debt to qualify for Chapter 13.
This section of the bankruptcy code contains special provisions for “family farmers” and “family fishermen.” This process includes a repayment plan and is similar to a Chapter 13 debt adjustment in many respects. However, it is often quicker and less expensive to file under Chapter 12, making Chapter 12 an important option to consider if you qualify.
Contact Us for Experienced Bankruptcy Representation
Please download and complete the Initial Questionnaire and Supplemental Questionnaire (if self-employed). These documents will let you know what to bring to your appointment with us and provide us with the information we need to make an initial determination and properly advise you as to your options. They also contain tips to help best position yourself in the event you file for bankruptcy. Contact Milly Whatley, P.C. for a time to come in and discuss your options, and get started on your way to freedom from debt.