Join us for our Facebook Live as we sit down with Bankruptcy Attorney, Darin Wisehart, to answer your most pressing bankruptcy questions. In this interview, Darin answers the following questions:
If you would like to speak with one of our family law attorneys, please call our office at (503) 227-0200, or visit our website at https://www.landerholmlaw.com.
Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.
Steve Altishin 0:28
Hi, everyone, I'm Steve Altishin, Director of Client Partnerships here at Pacific Cascade Legal, and I'm here today with Attorney Darin Wisehart to answer some commonly asked questions about bankruptcies. Hey, Darin, how you doing today?
Darin Wisehart 0:45
I'm great. I'm great. How about yourself?
Steve Altishin 0:47
I'm doing well. We had a little glitch at the start, so we're running a couple minutes late. But let's start in. And you know, these questions today basically fall into four categories, kind of when can I file? What happens when I file? You know, what kind of debt I can get rid of? And you know, what if someone else files? So let's start with a few questions about when someone can file a bankruptcy. And the first question is, do I have to be a certain age to file for bankruptcy?
Darin Wisehart 1:17
So the code doesn't really have any specific requirements for, you know, younger people to be able to file. Usually you don't see clients under 25, somewhere in that ballpark. And of course, you want them to be able to be 18 so that they can sign documents without having to do additional steps. But there is no lowest age or lower age limit. There's no requirement for that. There's a couple of random cases out there where children will have filed when they have ownership rights and houses, and that's to stop foreclosures. But no, there is no lower limit on the age amount that you have to be in order to file bankruptcy.
Steve Altishin 1:57
Got it. But here's an interesting question. And it's because it kind of is intuitive in that, well, do I have to have more debt than I have assets to file for bankruptcy?
Darin Wisehart 2:10
And that's a no as well. That's kind of one of those where you think most of the people that come to us have a significant amount of debt, of course, and usually it's over the amount of assets. That's typical. But that does not have to be the case. Of course, we can get into the conversation about exemptions and protecting your assets. So some states have a very large homestead exemption, which protects your house, and you can have a lot of equity in your house in some states, and still be able to file on an amount of debt that's under that amount. So it's not really, it's not a comparison as much as it is just, do you have enough debt to need to file bankruptcy? That's, I think, that's more of the focus of where your eyes should be when looking at this decision.
Steve Altishin 2:53
And that just brings up a real quick question. There's not a minimum amount of debt you need to qualify to file, do you?
Darin Wisehart 3:00
Nope, no minimum either, so you don't have that. But of course, the big question is, is it worth it to file? If you're going to take the negative to file bankruptcy, you want to make sure you have enough debt to where you can't get yourself out of that situation in a reasonable amount of time. I usually use two to three years. But you want to think that through. And that's part of the weighing on, is it a good decision to file the bankruptcy? Is it, you know, do you have more positive here or more positive here?
Steve Altishin 3:28
And part of that, I would assume, is because I don't think you can just file a bankruptcy again. I mean, aren't there rules about when you can file, or how ong, before your other bankruptcy?
Darin Wisehart 3:41
As far as Bankruptcy to bankruptcy, is that what we're talking about?
Steve Altishin 3:44
Darin Wisehart 3:45
Yes, there is absolutely rules set. And the interesting part about this is the rules don't necessarily say that you can't file the bankruptcy, because you can always file a new bankruptcy right after another bankruptcy. And sometimes that happens for reasons. But the question is, can you get a discharge of your debt? And that's what most people are looking for when they're talking about bankruptcy. They're talking about ridding themselves of that unsecured debt, the medical, the credit cards, the debt that's holding them down. And that's what you want, the technical term for that is the discharge, at the end of the case. That's what most people are coming to me for. And so if you file a case too early, or too close to another case-- in Chapter sevens, it's eight years, you have to wait eight years to file a new chapter seven from an old chapter seven. You have to wait that time period in order to get the discharge. So if you file earlier, then you can file and the court will let you get in and everybody will let you go through the process. But in the end, you don't get to that finish line. You're not allowed to discharge the debt.
Steve Altishin 4:48
Right, that is good to know. So how about income? Do you need a specific income that either takes you out of or allows you to file a bankruptcy?
Darin Wisehart 5:00
So with a few exceptions, the income is one of the bigger conversations. There's a few exceptions to it being important in your case, of course; if your debt is generally business debt or something to that effect, then the income doesn't come up quite as much for qualifying for the bankruptcy. And that's what we're talking about, qualifying for Chapter Seven is really, you know, the lion's share of the conversation in that direction. So, when we look at how much you make, as far as you know, the last six full months, that's the time period that's crucial. On the first level, we're looking to qualify for the chapter seven, and it's a number that an attorney really can break down and you can tell if the person will qualify on that first level. And then if you don't qualify on the first level, there are ways to qualify, if you're close enough, if you have that ability to, maybe you're paying domestic support or something like that. But there are limits. And that's talking about what's called the Means Test. The Means Test is what qualifies you for that chapter seven. And if you don't qualify for that, you usually will qualify for a chapter 13, which allows you to do monthly payments over time, so that you can still get the same goal. But you have to go through that different process, a little bit longer process, to, you know, get to the end of the case.
Steve Altishin 6:18
Is there a spousal, like husband wife filing, that the Means Test-- will it cover both of them?
If both people are filing together, you mean?
Darin Wisehart 6:27
If both are filing together, you do get to add the household size. So you'll add your children as household size, because the Means Test has this element that is, it's the income number of the household. Okay, so both people that are contributing to the household, and then it will also look at how many kids you have. So of course, the more kids you have, the higher the number that you're able to make in order to qualify for the chapter seven. It's on a scale of families your size, and it's in your state. So there's that number, and you'll see that as the first sentence, the first two sentences, if you were to look up means test or look up, qualify for Chapter Seven, you'll see it broken down exactly that way. There are some offshoot exceptions that any attorney would need to talk to you about. But for the most part, that's what you're talking about is household size versus income to make sure that you qualify for that chapter seven. And a lot of people, that's where they want to be, because that's your shorter, that's your three to four months and you're done with the thing, rather than continuing it on for five years, potentially.
Steve Altishin 7:34
Yep. Okay, here's a little bit of a curveball question, and I'm asking it because, actually, it's a question that someone asked me about. And it's not unique to Oregon, but in Oregon, this would be an issue, I guess. And that's, well, what if I have a marijuana business? Can I still file bankruptcy?
Darin Wisehart 7:51
Yes, you can. It's caught in the middle ground right now. And that's such an interesting topic, if you had 10 attorneys that do bankruptcy in the same room, you'd have a lot of different viewpoints of where we are and where we can go. Because, you know, with the federal level, it's still technically illegal. And whether they're going to enforce it, you know, they are right now in our state, and I think across the nation they probably are, but who knows how long that lasts. And you know, that's one of the reasons that you definitely want to speak with an experienced attorney. Because those are the types of questions that when you get in, and you want to be sure that you're not in a spot where you're not going to get what you want out of the process. You want to make sure that you're in the right location. So speaking with that attorney, if you have the marijuana business, is right off the bat, you want to be doing that.
Steve Altishin 8:42
Yeah. So let's move on. Now, what about evictions? Can my landlord evict me, or continue to evict me, when I file for a bankruptcy?
Darin Wisehart 8:53
So just like everything else, when it comes to the estate, once you file a bankruptcy, they're supposed to stop the process of eviction or up to eviction. Now, there's a lot of complication with this one, and you want to be sure that you're hitting the line right. So this is not one of those areas that you want to dabble in, you want to know where you are with the eviction process. And you want to make sure that you convey that to your attorney, because this is one of those where you can definitely do things, and if you plan on continuing to pay the payments for the apartment, for the rental for wherever you are, then you're going to probably be able to keep it with one of the two bankruptcies. But it's just a question of how quickly you need to repay the amount that you are behind. And it's about the same thing as a foreclosure on a house in the beginning, with the first picture, but then it takes a different direction pretty quickly. And you want to be sure that your attorney is ready for that. When you're looking at an eviction and you you might want to keep the the residence, and you want to stay there, then you want to be prepared to continue making payments once you've filed, and that's one of the requirements. The other one is you want to be prepared to catch it up somehow, if you're looking to stay with it. Unless you're gonna surrender the lease and walk away from it, then you want to be sure that when you get in this with an attorney, that you're ready to talk the details, because you want to be sure that all the goals are out there, and then you're able to try to achieve as many goals as you can.
Steve Altishin 10:24
What about just people calling? You know, can I stop the creditors from just even calling me? Maybe they can't collect, but they're still calling and bugging me. But can they do that once a bankruptcy is filed?
Darin Wisehart 10:40
Yeah, well, once the bankruptcy is filed, no. So the automatic stay comes into effect. And the automatic stay is that technical term that we use for quiet. We always want everything to be quiet so the dust can settle on what you have, what we can put it all in the documents and figure out if we can protect it, and what we need to do as far as that particular property or item. But also the collection has to stop. So they can't continue to try to call you and send you billing statements and you know, emails, texts, all the different methods that we get collection nowadays. They can't continue to do that once you filed the bankruptcy. That's the automatic stay. And if they do continue to do that, it's usually a violation of what they're trying to do, especially if they're collecting on dollar amounts. So you know, you want to make sure you're talking to your attorney about that to be sure that it's conveyed, because the worst thing you can do is you continue to get those calls after you filed and you don't let the attorney know, because they don't know unless you tell them.
Steve Altishin 11:40
Yep, final kind of question on this. And this was one that I think comes up a lot. What happens to my retirement funds, like 401k, my IRA, maybe if I have a pension, I mean, do I lose those by filing a bankruptcy?
Darin Wisehart 11:55
The typical process with assets that would be exempt, and that's what we're talking about here, we're talking about the umbrellas that protect certain categories of things. And when you file a bankruptcy, the idea is that they don't leave you out with a barrel in the middle of the road, okay? They want you to have these certain things so that you can continue living your life in a normal way. And you know, your basic clothes, your basic car, your basic household goods, and furniture, all of these kinds of things. They're usually written in, and they differ from state to state, so those are called exemptions. That's what protects your things. When you file bankruptcy, one of those things is your retirement, 401k, those pensions, the things like that, that you want to have down the road. Now, most states will have protections, the federal has protections. There are different exemptions for different states. And it really depends on where you are on what you're going to use as far as that, but they are usually protected. And that's because the statute, when they drafted bankruptcy as a code, as a big book of information of statutes, they wanted to be sure that you had a 401k down the road, and that you filing the bankruptcy didn't forfeit your ability to eventually retire. And that means that, you know, you want to make sure there's an exemption, you want to make sure it fits your asset, but if it does, then you get to keep it, the trustee is not going to be concerned with it, as long as you're telling the truth on everything.
Steve Altishin 13:24
Is that the same for like a trust? What if I've got a trust that my great uncle gave me?
Darin Wisehart 13:33
If you have a trust that your great uncle gave you, which can be yours, it can definitely get in the weeds very quickly. And you want to make sure that you've got an attorney that knows what they're talking about. So this is one of those areas that, you know, I can give you a lot of different information, and it would be all over the place. But every specific trust needs to be analyzed specifically for that case, and you can't go flying by the seat of your pants on something like that. That's not one of those you want to delve into like that. You just make sure you have an attorney that knows what they're doing when it comes to something like that.
Steve Altishin 14:07
So let's talk a little bit about what debts bankruptcy can get rid of. I want to start with, is there a maximum amount of debt that I can get rid of in a bankruptcy? I mean, is there a set upper limit?
Darin Wisehart 14:23
With chapter sevens there is no set limit. You can zero out as much as you can, as much as you have. Obviously, there's different categories for the debt. So it depends on, you know, not every debt is just a general credit card that you use normally for everyday stuff, it built up to a certain dollar amount, got too high, and then eventually you just couldn't do anything about it other than file bankruptcy. There's a lot of different areas, but no, for chapter seven, there's no amount. Now chapter 13, it's changed recently. And with that recent number the number has gone up and they've made it I think more logical for the number that they've used. As far as qualifying for a chapter 13, and that is to say that, you know, a secured and an unsecured amount used to be a little bit off, and now it's combined, and it's up to a certain amount, and it's a little bit higher than it was before. So it allows more people to qualify for a chapter 13 that might have otherwise not been able to do it. But those are all things that when you're speaking about the case, and you're starting to kind of analyze the case, a good attorney is going to put that into where it needs to be and make sure that you qualify. And that's also what the trustee is looking at to see if you're in the right spot.
Steve Altishin 15:36
Yeah, what about student loans? Can we get rid of those in our bankruptcies?
Darin Wisehart 15:45
And here's one where you put five attorneys in the room, and they'll have a little bit different tastes, not too different. But bankruptcy has always been allowed to discharge the student loans. But about 15 years ago, Congress made it very difficult to do that. And so there were the three prongs of the, you know, test that was always applied. And it became very difficult for most people, because the last prong was, could you eventually pay it back? And something to that effect was going to make it difficult for a lot of people to discharge student loans, because a student loan company could always come back and say, Well, wait a second, you can pay back this much and who knows what happens, you know, 10 years down the road. And so there have been some arguments that you can make, the good thing is, as consumer attorneys, as bankruptcy attorneys, the whole group of attorneys across the nation, have constantly been trying to chip away at this and make it so that what we think is the proper decision-- I mean, I don't want to speak for all bankruptcy attorneys--but what I would think is the proper decision is to allow bankruptcy to zero out student loans, in a lot of situations. And when somebody is in bankruptcy, they're obviously in a spot where they need the help, they need that fresh start. And in order to get that fresh start, you know, student loans falls into that. So, you know, there was a span of time where a lot of attorneys would just say, oh, you can't discharge those in bankruptcy. And that was the answer. And it was just a flat answer. And then the clients would say, okay, and I even have, even to this day, I have clients who call me and say, Oh, I know you can't discharge the student loans in bankruptcy, but I want to take care of this other stuff. And that's a good starting point. Because you have a frame of mind to say it might be difficult, and it might not happen in a lot of cases where they have income, and they have ways of, you know, paying it back, it becomes very difficult nowadays, but it's more of a conversation. And it's not just that they're non-dischargeable, it's that they can be discharged. But it's difficult to do for sure.
Steve Altishin 17:55
That leads to the next one. You know, what's the saying, there's nothing certain but death and taxes? Well, can the bankruptcy get rid of back taxes?
Darin Wisehart 18:04
Yes, bankruptcy can zero out and discharge back taxes. There are some rules. There are four big rules, and then there's about 20 smaller rules that come into play. So in this one, also, this is another one of those where, you know, you can talk for an hour, I could easily, we could easily do another one of these on just taxes. And it can get complex, because it's such a big area. I think, between us, I think Congress knows where they get paid. So of course, they make it a little more difficult to zero out the taxes, but they can be discharged in the bankruptcy. They just they have to fit certain guidelines, and you have to know-- and even then, you know, every once in a while you get a wrinkle that you think, well wait a second, what exactly happened with that? So it's not perfect, you're gonna take your lumps with bankruptcy when you're dealing with taxes, but there are ways to do chapter seven, there's ways to do chapter 13. A lot of times, you know, chapter 13 will allow repayment of those newer taxes and then if it can discharge the older taxes that you file the taxes, and they don't have a lien, you know, there's a possibility that chapter 13 has more creativity in dealing with your tax debt. So a lot of times that's what attorneys will look at, but it definitely is a much more complex issue. They can go away, but in your situation, are they going? Do they meet all the all the pieces that they need to in order to go away?
Steve Altishin 19:32
The last wrinkle, hopefully, on this, and again, this comes from a person who asked me the marijuana question, and it was, can bankruptcies wipe out court fines or court ordered payments as well?
Darin Wisehart 19:49
There is another one! So in our wildcard Facebook Live that we're doing here, if you had five attorneys in the room, they may have different takes on certain ones. Now, the basic fines are just your money fines that are reduced to dollars, those should zero out. And there's not, you know, there's not too much of a question on some of them for sure. And it's more of a question when you get into, was it criminal restitution? Was it, you know, what was the level of traffic fine? You know, certain things will fall into different levels. And even for an experienced attorney, it's tough to look at and see exactly what you're looking at when you're talking about fines and discharging fines. It's, you know, it's a conversation of what type of fines do you have? When did you get them? How did they come about? How much are they? Is it county, state, is it federal? All of the different questions need to be asked on that one. And once again, like our trust question, like the question a couple of questions before, definitely best to tackle this right away with an attorney that you can get on board with and they ask the proper questions. You don't want an attorney that doesn't go and delve into the data on this because you want the best chance of it discharging in a bankruptcy, if you can.
Steve Altishin 21:08
I hope this is a lack of wrinkle question, but what about debts that occur after I file? Can I get rid of those in my bankruptcy?
Darin Wisehart 21:21
Okay so, technically, with the way the bankruptcy is designed, bankruptcy is designed as a slice in time. And that means the second I push the button to get a case number, the old example was if you walk out and you do something, do damage to somebody's property, that will not be dischargeable in bankruptcy. Or maybe somebody gives you a credit card or something, it usually doesn't happen. But the example is there that if you incur debt after the bankruptcy, that is non-dischargeable. And that's similar to when we talk about evictions and things like that. If you continue to live in the place, and you continue to incur rent, that would not be projected as dischargeable, because you're talking about a dollar amount that is incurred after you filed your bankruptcy, that is not included in that push of the button that you had prior to that. So it's a little bit more complex, because there are ways that you can roll that in. Say, for example, a short example is the chapter 13 that you file that you are able to convert to a chapter seven. Sometimes you can write those debts that you, between the chapter 13 and when you converted it to the seven, you can write those into the chapter seven. So there are a couple of exceptions to that which, I mean, that's part of bankruptcy. There's exceptions to almost everything right? So that's kind of how it always works. There's always an offshoot of well, maybe this but look at this, too.
Steve Altishin 22:49
Just like Yogi Berra was asked about baseball once and he said, baseball is a game of inches. It's like that, maybe they're just little differences that make a difference. Okay. Just a couple more questions. And really, it's about not even my bankruptcy, but about someone else's. And the first one I get asked all the time is, you know, hold it, I co-signed on this person's loan, and now they filed a bankruptcy. Am I liable?
Darin Wisehart 23:18
So bankruptcy, the banker who has filed for somebody else, there is a co-debtor stay. So that's chapter 13, that's something that comes in every once in a while, it becomes important in cases. The big takeaway for that question, though, for most people that would be listening to this is, if somebody files a bankruptcy, and you are co-signed on that loan, you're still on the hook for the debt. So you would still be out there, and now, I mean, it seems like you would be more out there because no longer does the creditor have the ability to go after that other person for the debt. They can really only go after you. So it is your liability, that doesn't go anywhere. It doesn't extinguish because you didn't file the bankruptcy, only the other person, did. Whether the liability goes away for them, and it's discharged in some form of bankruptcy, is up to their case. But for you, you're kind of standing there going, alright, I'm here taking on this dragon by myself rather than with both people.
Steve Altishin 24:17
Yeah. And I imagine that works in a spouse situation, if your spouse or ex-spouse files, those debts may still be yours, too.
Darin Wisehart 24:32
It gets into the weeds on this one, but in my state ,in Oregon, if you are not on that debt, there's a couple of exceptions to this in Oregon statute, where they can pull you in as a debt of the family. But most of the time, if you are not signed on to that debt, you're not liable for that debt. If your spouse files, they can file separate in Oregon, and they're allowed to file their own case without the spouse filing. And the non-filing spouse, if the not on a debt is not liable for those debts that the filing spouse is on-- especially, well, in the case of them not signing or having otherwise giving them approval of, I'm liable for these debts. So it's a little bit of a longer conversation, but for the purposes of this, kind of the basic information, is if your name doesn't show up on it, and there's no reason for you to be tied to it as far as the legality--what you signed, or did you use the card and that kind of stuff-- then you should not be liable for that debt if your spouse goes to a bankruptcy and discharges the debt.
Steve Altishin 25:40
Okay, that leads to my final, the million dollar question that that I think you've answered a few times today, which is, well, can I just file a bankruptcy on my own? Why do I need a lawyer?
Darin Wisehart 25:54
Exactly. I think there's definitely a situation where if you had attorneys in the room, and they were talking, every attorney is going to tell you that you can file on your own. We're the United States, we have that right to represent yourself, we always do. In areas that you know you're confident with what you're doing, that's something that you want to experiment with, you want to look at, and maybe you want to wrestle with it. It's always a wrestling match, because you've got to learn everything that the opposing side or the trustee in this case will know. And you've got to follow the rules. And every once in a while you've got a situation that really comes in and doesn't work out. Now one of the things that I always tell clients is first, bankruptcy attorneys do a really good job keeping the fees reasonable. And there are always bankruptcy attorneys around every city in the United States that can keep the fees reasonable. Our firm does a good job keeping the fees reasonable so that it's manageable, and you're able to pay the fees. And the fees are typically lower than they will be in a lot of other areas of law. So a lot of people call and expect a much higher dollar amount when we quote a dollar amount for their case. And that's just, it's a lower dollar amount for bankruptcy. And it's a small price to pay, especially if you have something that you could potentially lose. Because with a chapter seven, once you jump in the river, once you file, you're in, you can't get out, you can't just sa,y I don't like where I'm at, I'm gonna get out of the river. Can't do it. The trustee now has them, they have the right to do whatever you can legally, and if that means you lose your house-- every once in a while you see one of those cases that somebody didn't expect to to have the trustee do what they were doing. And even with an experienced attorney, you can have unexpected things happen. But when you jump in the river, you've got to be prepared. So what I always tell clients is yes, you can absolutely represent yourself. And that's something that you can do. But understand that you're taking a bit of a risk when you do that. And it's not overly expensive, you don't get priced out of bankruptcy representation as quickly as you might for other areas of law that tend to be a lot more time intensive. Like you know, anytime you have to go to court, you have to pay extra money for the attorney to prepare correctly, and it becomes a different situation. But in bankruptcy there usually can be a flat rate, and it's typically a very fair rate.
Steve Altishin 28:27
Well, that's a good thing to know. Well, we have reached our 30 minutes. And this was incredibly informative. Thank you, Darin, for once again kind of bringing your clear depth of knowledge and also just sort of a matter of fact clarity to your answers. You know, these are, as you were saying, these are complex rules, and you make them understandable. So thank you very much for that.
Darin Wisehart 28:56
Yeah, no problem. Thanks for having me.
Steve Altishin 28:58
Well, we're gonna do this again, because we just hit about five topics that we can go into more depth. Okay, everyone else, thank you, also. Thank you for coming. Thank you for staying through our little bit. And until next time, stay safe, stay happy, and be well.
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Landerholm Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at landerholmlaw.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.