Chapter 7 Bankruptcy is the type of bankruptcy most people choose to file. Chapter 7 is often referred to as a liquidation bankruptcy or a fresh start bankruptcy. There are three main factors we look at to determine whether you can file a Chapter 7 bankruptcy case.
First, we look at your income. If you do not have enough income available to pay your creditors after you pay your necessary monthly living expenses, you may be eligible to file Chapter 7. The bankruptcy laws require that we compare your income to the local median income to determine whether your income is greater than or less than the "median income." We also look at your actual personal expenses compared to your take home income to determine whether you have any money left at the end of the month to make payments to your creditors. If your income is below the median income and you don't have enough money available to pay creditors, you are usually able to file Chapter 7.
Second, we look at your assets. Assets include anything you own or are entitled to, including but not limited to houses, land, vehicles, bank accounts, investment accounts, wages, inheritance rights, and legal settlements. Bankruptcy laws are set up to protect most things that you may own. In Oregon, we can choose to use either Oregon bankruptcy exemptions or the more generous federal bankruptcy exemptions to protect the things you own.
Finally, we consider whether you have filed bankruptcy in the past. If you have never filed a bankruptcy case or filed a case more than 8 years ago, you are eligible for Chapter 7 based on income, and you don't risk losing any assets by filing Chapter 7, we typically recommend that you file a Chapter 7 case. If you have filed a previous case less than 8 years ago, you may still be eligible to file Chapter 7 but it is worth the time to call an attorney to find out.