Bankruptcy Blog

The protection you get from most creditors through the homestead exemption does not apply to some categories of creditors. We listed the most important of these categories in recent blog called The Homestead Exemption in Action. We said there that even though these special creditors can defeat the homestead exemption, they can still often be handled in a favorable way through certain bankruptcy procedures. That’s what we talk about here. Plus how sometimes owing money to these special creditors can even be turned to your advantage.

Last week’s blog introduced the Oregon "homestead exemption." We explained how to qualify for it, and the kinds of homeownership it applies to. This week we tell you how this important tool actually works, and how it protects your home from some creditors but not others. Then In the next couple weeks we will show how bankruptcy can effectively handle the creditors that could otherwise defeat the homestead exemption.

When a business goes out of business, its owners can be left owing many of the tax debts of that business. Have you recently shut down a business and are concerned about whether you are personally liable on any of the taxes of the business? Or have you been closely involved in the finances of a business in which you were NOT an owner, and that business was shut down and still owes taxes? Finally, are you considering shutting down your business but need to know how to deal with its remaining tax debts?

In our blog two weeks ago we talked about some of the most basic and important home-saving tools in Chapter 13:  1) the “automatic stay,” 2) curing mortgage arrearages, and 3) catching up on property taxes. In last week’s blog we talked about some of the more sophisticated tools that Chapter 13 may be able to provide for your home: 1) junior mortgage “strip-off,” 2) judgment lien “avoidance,” and 3) cure and release of income tax liens. This week we wrap up this series with a set of tactics that pull all this together. You might want to read the other two blogs before this one.

Chapter 13 bankruptcy helps you save your home with a set of different powerful tools. In fact so many that we will discuss just some of the most important ones here in this blog, and then more in next week’s blog.  As helpful as these home-saving tools are, they each come with conditions and limitations. Knowing these pluses and minuses helps you get the most out of a Chapter 13 case.

In the last two months we’ve written blogs called "I Need a Divorce and a Bankruptcy: Which Comes First?" and “How to Protect the Rights in My Divorce Decree from My Ex-Spouse’s Bankruptcy?” Now in this blog we clear up some major misconceptions about what you can and can’t do with spousal and child support obligations in your bankruptcy case.

For the last two years many programs have been put into place to try to stem the tidal wave of foreclosures. The early efforts flopped for many reasons but mostly because banks and mortgage servicers had more incentives to AVOID doing mortgage modifications than to approve them. Mortgage servicers particularly receive many forms of additional fees through the processing and foreclosure of delinquent mortgages. This creates a huge disincentive for them to do modifications. There is some evidence now that the Obama Administration’s Home Affordable Modification Program (HAMP) is helping many more homeowners than earlier efforts. That’s because it at least directly addresses this problem by including some incentives to mortgage servicers to go through the trouble of processing modifications. But servicers’ fees continue to play a big role, and so anyone dealing with or considering a mortgage modification needs to understand them.

There is no “Chapter 20” bankruptcy option, at least not in the same sense that a person can file a Chapter 7 case or a Chapter 13 one. Instead “Chapter 20” is a shorthand way of talking about filing a Chapter 13 case after having filed an earlier Chapter 7 one. (13 + 7 = 20.) This option has been significantly limited after major amendments to the bankruptcy laws in 2005, but “Chapter 20” can still provide critical help in certain special situations.

Last month we wrote a blog called "I Need a Divorce and a Bankruptcy: Which Comes First?" In it we addressed that question by looking at some scenarios that our clients have faced. Now in this blog we assume that you are definitely getting a divorce but your spouse has threatened to get out of the divorce obligations to you by filing a bankruptcy right afterwards. Can you protect the rights in your divorce degree and prevent them from being hurt by bankruptcy?

This summer the Oregon homestead exemption was increased. That helped some people living in regular houses, but arguably the biggest benefit went to homeowners living in manufactured and floating homes. Their homestead exemption increased much more, as the law did away with a number of homestead categories and raised all the homestead exemptions to the same level.

If you have a choice between doing either a Chapter 7 “straight bankruptcy” or a Chapter 13 “wage earner plan, why would you do the Chapter 13? Some people don’t qualify for Chapter 7, and so do not have any choice. But every year at least tens of thousands of people intentionally choose Chapter 13 because it is better for them. Often it’s because of their vehicles: Chapter 13 can SAVE a vehicle that you would otherwise LOSE in a Chapter 7 case. And it can enable you to KEEP a vehicle by GIVING YOU MORE TIME TO PAY FOR IT and sometimes PAYING LESS to your creditor—sometimes LOTS LESS—than you would in Chapter 7.

Turmoil in the economy sadly often leads to a higher divorce rate. Unemployment and underemployment and the intense stresses these can bring to married life push many past the breaking point. Then divorce often leads to bankruptcy, and even more so during this troubled economy.

We know that dealing with the breakup of a marriage and with major financial problems at the same time can be extremely difficult. It can be downright debilitating. How do you know where to even begin? If you think you need a divorce AND may need a bankruptcy, which is best to do first? Does it sometimes make sense to try to "clean up" your finances with a bankruptcy filing before the divorce?

This summer the Oregon legislature unanimously passed and Governor Kulongoski signed into law a significant increase in the homestead exemption. In the meantime, during the last year or two home values have significantly decreased for hundreds of thousands of Oregon homeowners. These two happenings have created important opportunities for those who know about them.

A Chapter 7 bankruptcy is quite rigid about what possessions you are allowed to keep. If you own anything that is not on the list of "exemptions" or is worth more than the one-size-fits-all exemption dollar limit, you must give it to the Chapter 7 trustee. If you are in this situation, Chapter 13 could provide an excellent way to keep everything own, or everything you want to keep.

If your home value has gone down a lot, you may be able to turn that bad news into good news. If your home is now worth less than your first mortgage, with the help of bankruptcy law you can often write off your second mortgage and stop making payments on it, permanently.

A Chapter 13 plan provides you with many powerful tools to write off and reduce your personal income tax debt load. It can often turn what seems like an impossible situation into a very manageable one.

Bankruptcy can in many situations be just the right tool for saving your home.

Nearly 1 million individuals and businesses filed bankruptcy in the 12 months ending June 30, 2008.

Even if you have filed for bankruptcy, unscrupulous collection agencies may still illegally attempt to collect on your discharged debts.

A former Republican U.S. Housing Secretary urged allowing bankruptcy judges to erase some mortgage debts.