SPPE: The Supervised Practice Portfolio Examination Provides a New Pathway to Becoming a Lawyer in Oregon

This month the Oregon Supreme Court unanimously approved a new pathway to becoming a licensed lawyer in Oregon for law school graduates, which avoids taking the bar exam – a test that raises concerns of discrimination, is expensive, and takes substantial time to prepare for, with the most recent passage rate of only 69%. Under the SPPE, applicants must have at least 675 hours of practice under the supervision of a licensed practicing attorney and submit a portfolio of work with 8 projects, which will be reviewed and graded by the Oregon Bar of Board Examiners. Our neighbors in California and Washington are also considering alternative pathways for law graduates to become licensed practitioners. KGW has more information on this video or you can read the 28-page report by the Oregon State Bar.

Construction Liens in Oregon

House under Construction

Contractors and suppliers on construction projects not paid on time may not be able to keep current or meet their financial obligations. Lack of payment and late payments also leads to wasted resources and reduced profits. Industry surveys indicate that contractors and suppliers on construction projects are often paid late and many of them don’t consider filing a construction lien when payment is not made on time.

With current interest rates relatively high, banks are tightening up and construction financing may be difficult to obtain. In addition, there are concerns about a recession. These factors could very well cause contractors and suppliers on construction projects to encounter payment issues. Thus, it is important that contractors and suppliers take advantage of their construction lien rights to avoid late payments and help ensure they are paid. Just the simple step of providing notice of lien rights to the property owner at the beginning of a project can cause payment to be made in a timely manner. If a general contractor or owner is having cash flow issues, they are more likely to pay the contractors and suppliers who secured their lien rights by providing notice to the owner.

Construction liens are a very effective collection device for construction contractors and suppliers. To read more about what construction liens are and how they work in Oregon, click here.

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Oregon Appellate Court Requires that a Judge Give Specific Reasons Before Denying a Name or Gender Marker Change

City Hall - Portland Pride - Gender Choice

In 2017, the State of Oregon made it significantly easier for someone to change their name and gender marker by streamlining the process and providing statewide forms for use in every county. However, a judge may deny a change of name or gender marker if the change is not in the “public interest.” A judge in Marion County denied the change of an imprisoned woman’s name and gender marker, finding that it was “not in the public interest for [her] name and sex to be legally changed.” However, the court did not explain why it was not in the public interest seeming to rely only on the fact that she was in prison. The Oregon Court of Appeals found that the mere fact that a petitioner is incarcerated does not mean a change of name or gender marker is inconsistent with the public interest. Instead, the Court held that

[A] court may deny a petition for change of legal name or sex only where the record contains evidence that the change of legal name or sex is inconsistent with the “public interest”—that is, where the record contains evidence that change of legal name or sex is sought for some purpose harmful to the wellbeing of the general public, including, but not limited to, fraud, dishonesty, misrepresentation, evading creditors, or interfering with the rights of others.

Matter of Jondle, 317 Or. App. 303, 304 (2022). The Court of Appeals sent the case back to the trial court to make findings that the name/gender marker change was or was not in the public interest.

The State of Oregon’s forms for a name and gender marker change ask a petitioner to state whether they owe child support arrears; have a protective order, stalking order, or restraining order in effect against them; are currently on probation, parole, or under post-prison; or are required to register as a sex offender. However, answering yes to any of these questions does not mean the request to change one’s name or gender marker will be denied. These are only ways for the court to determine whether the public interest will be implicated. The Court of Appeals has now affirmed that someone cannot be denied outright without giving a reason why a denial is in the public’s interest. If you have concerns that you will be denied a name or gender marker change for one of these reasons, or another reason, you may want to enlist the help of an attorney with experience in name and gender marker changes.

State ex Rel Nicholas Kristof: What is an Oregonian?

Ordinarily, we stay out of politics, for that way lies madness. From time to time though, a case comes out of the political arena that is relevant to the lives of normal people. Such is the case of State ex Rel Nicholas Kristof v. Shemia Fagan.

Kristof, a Pulitizer-prize winning New York Times columnist co-authored a particularly bleak book looking at poverty in rural America with a focus on rural Yamhill County where he grew up. Kristof left the New York Times in October of 2021 and announced that he would run for Governor of Oregon that same month.

To qualify as an Oregon gubernatorial candidate, the Oregon Constitution requires that a candidate be a United States citizen, be thirty or more years old, and have been a resident of Oregon for at least three years before the candidate’s election. (Oregon Constitution, Article V, Section 2) On January 6, 2022, Oregon Secretary of State Shemia Fagan announced that Kristof was ineligible to run for Governor because he was not a resident of Oregon for sufficient time. Kristof appealed this determination on January 14 directly to the Oregon Supreme Court. Today, Secretary Fagan filed her response brief.

Why does this matter to ordinary Oregonians who care about tax matters? It is very likely that whatever factors the Oregon Supreme Court uses to evaluate Kristof’s residency will play a part in our discussions about tax residency for years to come.

Oregon taxes its residents on their worldwide income. Nonresidents are only taxed on their income from Oregon sources. The statute sets out a fairly mechanical test for residency once you know whether someone is an Oregon domiciliary. Oregon law defines a resident for purposes of personal income taxes under ORS 316.027 as either: (1) an Oregon domiciliary, unless that individual maintains no permanent place of abode in Oregon, does maintain a permanent place of abode elsewhere, and spends not more than 30 days in the state; or (2) a non-domiciliary who maintains a permanent place of abode in the state and spends an aggregate of more than 200 days of the taxable year in Oregon, unless the individual proves that the individual is in the state for only a temporary or transitory purpose. We understand a domiciliary of Oregon to be an individual who regards Oregon as their “true, fixed, permanent home.” OAR 150-316-0025(1)(a). So, there is a clear line between what it means to be a domiciliary resident and a non-domiciliary resident. It is also well-settled for tax purposes that you can be a resident of many jurisdictions but may only a domiciliary in one jurisdiction.

The Secretary of State’s brief would blur this line for election purposes. Secretary Fagan argues that Kristof was “Domiciled in New York – not Oregon – until at least December 2020.” Her brief notes that “plaintiff voted in New York, held a New York driver’s license, owned a primary residence in New York, lived and worked in New York, paid income taxes in New York, and sent his children to public schools in New York. Most telling is plaintiff’s voting record: Even for the November 2020 election, when he was apparently physically present in Oregon and Oregon voters faced important choices in Yamhill County and statewide, plaintiff voted by absentee ballot in New York.” Because the constitutional test is whether someone has been a “resident” for three years prior to the election, the Secretary Fagan’s brief makes the interesting assertion that “resident” in this context is synonymous with “domiciled.” Also interestingly, the brief refers to his Oregon tax returns but does not analyze whether they were filed correctly.

For his part, Kristof argues that the residency requirement is more akin to occasional physical presence and an emotional connection with the state. Neither addresses the test set out in the income tax statutes. He also argues that he never intended to abandon his Oregon residency and has always considered himself an Oregon resident.

Most Oregonians (or putative Oregonians) won’t run for Governor. However, many folks pay personal income taxes to the state under the law noted above if they are non-domiciliary residents. The state’s argument that resident and domiciliary should be read interchangeably opens an interesting window for discussion about what factors the courts will consider when they decide who gets to call themselves an Oregonian. It also raises the question of whether and why it’s logical to argue that the terms mean different things for tax purposes but mean the same thing for election qualification.

Additionally, the Supreme Court’s analysis of Kristof’s argument that he never abandoned his Oregon domicile will be instructive to those Oregonians who are evaluating whether they have taken adequate steps to abandon their own Oregon tax domicile. This is particularly important for our clients who, due to the ongoing pandemic, are now living and working outside of the state of Oregon.

Because Your Government CARES

Valerie Sasaki, of Samuels Yoelin Kantor, LLP facilitated a “Cocktails and Conversation” discussion with the Portland Chapter of Women in Insurance and Financial Services, which explored the recent Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act is Congress’ comprehensive legislation to provide relief to individuals, families, and businesses that are adversely affected by the Coronavirus pandemic. Despite frequent news coverage and criticism, the scope and effect of the CARES Act can seem impenetrable because it contains so many separate moving parts. In this discussion, Ms. Sasaki walked through the different components of the CARES Act and explained how each works to combat the economic hardship brought about by the Coronavirus epidemic.

The CARES Act is a $2 trillion economic relief package that creates new aid programs and expands existing programs. State and local governments will receive $339.8 billion, the majority of which goes to specific COVID-19 response efforts. The rest of the state and local government relief is divided between education, community development, and family assistance programs.

Aid to individuals totals around $560 billion. More than half the aid for individuals will come in the form of recovery rebates more commonly known as stimulus payments. In addition, the Act provides for a temporary $600 per week increase to employment benefits.  Independent contractors are eligible for direct government assistance through the end of 2020. On the public health side, the Act mandates that private insurance plans must cover COVID-19 treatments and vaccines and offer tests free of charge.

The second largest component of the Act is $500 billion for large businesses. Most of the relief to big businesses comes in the form of fully refundable tax credits available for 50{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of payroll compensation, although there is a substantial allotment of given directly to airlines. These larger business relief funds, however, comes with limitations (the “stick” to the “carrot”), which include: a 1-year ban on stock buybacks; additional reporting requirements; and, oversight by a Special Inspector General.

The $377 billion fund for small business is mostly allocated to the Payroll Protection Program (PPP). The PPP is a massive effort to provide forgivable loans to companies with less than 500 employees. To qualify for forgiveness, the companies must use 75{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of the loan for payroll. The Act also creates a substantial expansion of Economic Injury Disaster Loans (EIDL), an existing program designed to help small business meet expenses during a disaster. The Act reduces interest rates and provides emergency cash advances to EIDL recipients.

For more information about the CARES Act see the slides from Ms. Sasaki’s talk.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.


Top 5 Tips From My Service as a Pro Tem Judge

Scam Alert Network

With the growing divide between judicial budgets and the demand for court services, Oregon continues to look to part-time judges to help bridge the gap. These part-time judges are known as Pro Tem Judges.

As a private attorney serving as a Pro Tem Judge in the Washington County Probate Court, my public service has been a privilege and honor. And having one foot in both private practice and one inside the Court has provided me with a unique experience. The following 5 tips are specific to my familiarity of the Washington County Probate Court, but most of these tips are good best practices to apply to any probate matter in an Oregon court.

  1. Always respond promptly to an inquiry from the Court. And remember the Golden Rule by treating all Court personnel, from security guards and clerks to judges, as you would want to be treated. Those recommendations seem obvious, however I’ve seen attorneys who fail to do both.
  2. Docket important filing dates. Don’t wait for the Court to inform you that an Inventory or Annual Accounting is late. The Court is extremely busy, and each time the Court has to unnecessarily touch a file, the progress of every attorney’s filings are negatively impacted.
  3. When you are making a request from the Court, such as unrestricting an asset, the issue should be addressed in the pleading’s narrative, the prayer, and the proposed Order.
  4. Vouchers in the form of checks must be supported by complete evidence. In other words, copies of both the front and back of negotiated checks, and copies of voided checks should be submitted in numerical order with the Annual Accounting. And any missing or incomplete vouchers should be explained to the Court.
  5. As a general best practice in Washington County, seek approval from the Court before using debit and credit cards. And electronic transactions should be evidenced with statements and the relevant line items highlighted.

Please note, due to COVID-19 Oregon’s probate courts are staffed with only a small number of personnel who are focused on administrative and the most urgent judicial matters such as emergency conservatorships and guardianships.

As a result, I have not served as a Pro Tem Judge since the end of March. Not only have I missed helping attorneys and their clients with their probate matters, I have also missed experiencing the diversity of people in our community who utilize the Court. I look forward to the day that I get to roll up my sleeves and to actively serve as a Pro Tem Judge again.

Anastasia (Stacie) Yu Meisner is a member of the SYK Estate Planners practice. Her practice focuses on estate planning, mediation, probate, trust and estate administration. In addition, she also works with guardianships and conservatorships, as well as business transactions and formation.

Where’s My Stimulus Check?

The IRS sent out the first wave of stimulus payments this  past week to around 80 million Americans. In order to speed up the process, the IRS has prioritized sending payments to Americans that have previously submitted their direct deposit information with the agency. Those that have not authorized a direct deposit account with the IRS will receive their stimulus payment in paper check form. However, the IRS estimates that it only has the capacity to mail out 5 million checks a week, so many Americans will not receive their payment until likely August or later.

Based on the income level eligibility requirements, at least 90{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of Americans should qualify for at least some amount of stimulus payment. If you think you should have received your stimulus payment by now, here are several reasons why the IRS has delayed your payment.

Social Security Recipients

For recipients of Social Security and Supplemental Security Income (SSI), the IRS has announced that payments will appear alongside normal monthly benefits. Recipients are not required to file a tax return to receive payment and will receive their stimulus payment in the same format (direct deposit or paper check) of their normally received benefits.

Direct Deposit Not Authorized

Even if you filed your tax return electronically the last two years, the IRS may still not have direct deposit information saved for you. The IRS has only saved direct deposit information for those that have received a federal refund in 2018 and/or 2019. If you owed the IRS in either of those years, your direct deposit information may no longer be stored. The IRS is not using bank account information it used to withdraw from your account if you owed money. To check if you need to submit your direct deposit information, the IRS has set up a web portal for entering that information and checking on the status of your payment.

Change of Filing Status or Bank Account Information

Even if you received a refund and filed electronically, a change of filing status or a change in your direct deposit account could also delay your stimulus payment. For example, if you got married in 2019 and filed married jointly for the first time, or got divorced in 2019, and filed single for the first time in a while, the IRS may no longer have accurate direct deposit information on record. Similarly, if you changed banks or switched account numbers, the IRS will no longer have correct direct deposit information for you. Using the IRS Get My Payment Portal can verify if the IRS needs updated banking information.

Current Return Still Processing

Though the IRS extended filing of individual federal returns until July 15, 2020, many Americans still made efforts to file their 2019 returns in line with the normal April 15 due date. Due to the shutdown, the IRS has prioritized processing stimulus payments for Americans and has largely slowed down return processing for the next few weeks. Many service centers across the country have also closed entirely. If the IRS has receipt of your 2019 return but has not processed it yet, this may also delay your stimulus payment.


Millions of lower-income Americans who do not normally meet the income thresholds required for filing will need to also contact the IRS. Through use of a separate web portal entitled Non-Filers: Enter Payment Info Here, non-filers will need to confirm their identities and provide bank account information or address information to receive a stimulus payment.

Watch for Fraud

Remember that the IRS will never call you, email you, or otherwise contact you directly for your sensitive personal information. The IRS web portals will require you to enter information such as your social security number, your routing and bank account numbers, and other personal information. Otherwise this information should not be shared through any other method.

Nicholas Rogers - Attorney

Nicholas D. Rogers joins SYK Estate Planning and Taxation practice with a passion for helping individuals, small business and nonprofits. His practice includes a focus on estate planning, federal and state tax controversy, business formation and planning, as well as trust and estate administration.

COVID-19 Federal, State, and Local Prohibitions Against Non-Payment Evictions

Real Estate

“Landlords are temporarily prohibited from filing new eviction actions for nonpayment of rent as a result of COVID-19”

The ongoing COVID-19 pandemic has encouraged Oregon State Governor Kate Brown to issue a Stay at Home order effective statewide in an effort to curb the spread of the virus. As a result, many individuals are out of work, causing emotional stress and financial hardship.

Federal, state, and local governments have each taken action in an attempt to reduce financial stress on residential and commercial tenants.

Federal Response

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). In Section 4024, the CARES Act imposed immediate protections for some residential tenants. Specifically, the CARES Act placed a federal eviction moratorium for nonpayment of rent on covered properties. Landlords are temporarily prohibited from filing new eviction actions for nonpayment of rent as a result of COVID-19, as well as prohibited from charging late fees or other penalties for tenants’ nonpayment of rent. It is critical for landlord to review the definition of covered properties, and confer with a knowledgeable attorney is they are unsure whether they own a covered property.

The moratorium took effect immediately on March 27, 2020 and expires July 25, 2020. Landlords, that own covered properties, are prohibited from evicting residential tenants for nonpayment of rent during the entire course of the moratorium. After the moratorium expires, the landlord may take action against non-paying tenants, subject to a federally imposed 30-day notice to vacate. Please note that the CARES Act does not affect evictions unrelated to non-payment.

Oregon Response

On April 1, 2020, Governor Kate Brown issued Executive Order 20-13 (“EO 20-13”). EO 20-13 declared a moratorium on certain terminations of residential rental agreements and non-residential leases.

During this moratorium, any residential or non-residential tenant who is or will be unable to pay the full rent when due under their rental agreement or lease shall notify the landlord as soon as reasonably possible. Additionally, tenants shall make partial rent payments to the extent that they are financially able to do so.

With regard to non-residential tenants, the tenant must provide their landlord, within 30 calendar days of unpaid rent being due, with documentation or other evidence that nonpayment is caused by, in whole or in part, the COVID-19 pandemic. EO 20-13 does not require similar proof for residential tenants.

Consequently, the landlord may not, for reason of nonpayment of rent (which EO 20-13 defines to include evictions without cause), late charges, utility charges, or any other service charge or fee, terminate the tenant’s rental agreement or take any action, judicial or otherwise, relating to an eviction arising under ORS 105.105 through ORS 105.168. Prohibited actions include, without limitation, filing, serving, delivering or acting on any notice, order or writ of termination, or interfere with the tenant’s right to possession of the premises.

The moratorium does not relieve a tenant from paying rent, utility charges, or any other service charges or fees. The moratorium does, however, relieve a tenant from paying for late charges or other penalties arising from nonpayment.

The moratorium began April 1, 2020 and will continue in effect until June 30, 2020, unless terminated sooner by Governor Kate Brown. Any person found to be in violation of EO 20-13 is subject to criminal penalties.

Multnomah County Response

Prior to the announcement of EO 20-13, on March 11, 2020, the Multnomah County Chair signed Executive Order 388 (“EO 388”), declaring an emergency for Multnomah County and announcing a moratorium on residential evictions for nonpayment of rent and rent deferral  in Multnomah County. EO 388 was ratified by the Multnomah County Board of Commissioners on March 19, 2020, and the Multnomah Commissioners adopted Ordinance 1282 putting in effect the County wide eviction moratorium. On April 16, 2020, the Multnomah Commissioners passed Ordinance 1284 that suspended the enforcement of Ordinance 1282, in order to align the County with the Governor’s EO 20-13. Ordinance 1284 continues the six month grace period for residential tenants to repay their unpaid rent, but tenants no longer need to provide proof of the substantial loss of income to their landlords or notify their landlords on or before the day that the rent is due that they are unable to pay rent. The tenants instead need to notify their landlords as soon as reasonably possible that they are unable to pay rent.

Multnomah County Ordinance 1284 does not relieve a tenant of paying rent. The tenant must still pay the missed rent within 6 months after expiration of the emergency; however, no late fees will accrue.

Civil proceedings to enforce Ordinance 1284, may be instituted by Multnomah County or the tenant. A landlord that fails to comply with any of the requirements set forth in Ordinance 1284 shall be subject to appropriate injunctive relief, and for an amount up to 3 times the monthly rent, as well as actual damages, reasonable attorney fees, and costs.

Properties within Multnomah County are subject to both the statewide EO 20-13 moratorium and the Multnomah County Ordinance 1284.

For assistance in determining how your property may be affected by the CARES Act, EO 20-13, and Ordinance 1284, we encourage you to speak with a knowledgeable real estate attorney.

Denise Gorrell draws upon her extensive knowledge of restaurants and the wine industry to inform her real property and commercial law practice. She helps hospitality industry clients navigate complex, important issues such as business formation, real estate agreements, trademarks, OLCC rules and other governmental regulations.

Colleen Munoz


Colleen O. Muñoz is a law clerk at and certified law student at SYK who graduated with honors from Lewis & Clark Law School in January 2020. She published a law review article in March 2020 dissecting the categorical approach to contested deportation proceedings.

Treasury Department Releases Additional Guidance on Paycheck Protection Program

On April 8, 2020, the U. S. Treasury Department updated its “Frequently Asked Questions (FAQs)” guidance on the Paycheck Protection Program (PPP) that is being administered by the Small Business Administration (SBA). While this document was previously issued by the Treasury Department, it has been updated to address some of the questions that borrowers and lenders have raised as lenders have been inundated with applications for the forgivable loans under the PPP. Congress is currently considering allocating another $200 to $250 billion to the PPP.

Here of some of the highlights under the FAQs:

  • Computing the $100,000 Cap. For purposes of computing a borrower’s “payroll costs” (which is then multiplied by 2.5 to determine a borrower’s loan amount up to $10 million), the $100,000 cap on an individual’s compensation is limited to “cash compensation,” and does not include employer contributions to defined-benefit or defined-contribution retirement plans (e.g. employer 401(k) contributions), group health care coverage including insurance premiums, and state and local taxes assessed on employee compensation.
  • Vacation, Family Leave, Etc. PPP loans cover payroll costs, including costs for employee vacation, parental, family, medical, and sick leave. However, this does not include qualified sick and family leave wages for which a credit is allowed under the recently passed Families First Coronavirus Response Act.
  • Time frame of Payroll Costs Calculation. In calculating “payroll costs” for purposes of determining a borrower’s loan amount, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019.
  • Independent Contractors. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor are excluded from the “payroll costs” calculation. However, independent contractors and sole proprietors are themselves eligible to apply for their own PPP loans.
  • Use Gross Wages for Calculation. “Payroll costs” are based upon an employee’s gross compensation (i.e. not after-tax withholdings). However, the employer-side federal payroll taxes imposed on employee’s compensation is excluded from the payroll costs calculation.
  • Spending the PPP Money. For purposes of computing the loan amount that is eligible to be forgiven under PPP, the borrower must spend the loan proceeds within eight weeks beginning on the date “the lender makes the first disbursement of the PPP loan to the borrower.” The SBA has previously indicated that, for purposes of the loan forgiveness requirement, no more that 25{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of the loan proceeds can be used for non-payroll costs permitted under PPP (i.e. rent, interest on mortgage obligations and utility payments).

The FAQs still do not address whether the income allocation to partners in a business taxed as a partnership are included in the payroll costs calculations. Our experience is that lenders have varying interpretations of this issue. Hopefully, more guidance with continue to be provided by the SBA and Treasury Department on this and other issues that have arisen under the PPP.

Michael D. Walker is a business, tax and estate planning attorney who has worked with individuals and small to medium-sized businesses for nearly 30 years. A careful listener, Michael skillfully guides his clients to meet the wide variety of legal challenges they face in our current complex world.

How to Prepare for Bankruptcy

This sudden economic downturn will cause a large number of individuals and corporate entity debtors to consider bankruptcy in order to get a better handle on their financial situation. While many associate declaring bankruptcy as an admission of failure or destitution, bankruptcy can actually offer debtors a path toward recovering from a devastating financial situation. When considering whether bankruptcy is the right option for your situation, it is essential to have a basic understanding of how bankruptcy works and the initial actions you should take should you need to proceed with bankruptcy.

Understand the Different Types of Bankruptcy

The different types of bankruptcy are referred to as “Chapters”, and likely only one form will apply to a specific situation.

  • Chapter 7 Liquidation
    • The simplest and most common bankruptcy, a “straight bankruptcy”.
    • Individuals and most corporate entity debtors can qualify for Chapter 7.
    • Debtors are not required to submit to a repayment plan, but it does require liquidation of all nonexempt assets to payback creditors.
  • Chapter 11 Reorganization
    • Form of bankruptcy for both individuals and corporate entity debtors.
    • Rather than liquidation, the debtor submits a reorganization plan that explains how it will be able to repay creditors over a period of time.
  • Chapter 13 Debt Adjustment
    • Form of bankruptcy for individual debtors only.
    • The individual debtor must have a certain level of income to qualify.
    • Rather than liquidating all assets, it allows the debtor to protect certain property and have enough time to pay off your debts within a monthly payment plan.

There are other much less common chapters of bankruptcy, but 7, 11 and 13 are the most utilized.

To properly prepare for bankruptcy, there are also a number of steps we recommend.

Gather Financial Statements

Regardless of the form of bankruptcy applicable to the situation, the first step requires getting financial statements in order. Order copies of all banking and financial account statements, obtain past filed federal and state tax returns, and figure out your income level from pay stubs, Form W-2 and Form 1099 and more. Depending on the amount of disposable income available, a debtor may or may not qualify for different chapters of bankruptcy.

Prepare an Asset List

Bankruptcy also requires a list of all assets and property owned. This does not mean listing out every piece of furniture or article of clothing, but rather a list of every significant asset that has actual value. Real property, bank accounts, investment accounts, retirement accounts, vehicles, luxury items all need inclusion on an asset list.

Get Current with Taxes

Debtors not current with their federal and state taxes will often encounter great difficulties in qualifying for bankruptcy. Tax returns determine past and current earning and asset holdings, and inform the IRS whether a debtor owes any additional taxes beyond W-2 withholding or past payments made. Any tax owed on returns not yet filed is also not dischargeable in bankruptcy.

Prepare a List of Creditors

Bankruptcy requires a debtor’s complete disclosure of all debts not only to the court, but also to all creditors. Any creditor left out will not be included in the bankruptcy, which could cause massive complications for a debtor thinking it will get a clean slate. Ordering a credit report from one of the three major credit agencies is a good way to confirm that no creditor is left off the list. The creditor list needs to include all secured, unsecured, and priority unsecured creditors. If you owe back taxes, the IRS is also considered a creditor.

Avoid Fraudulent Transfers

In the period leading up to a bankruptcy, a debtor’s actions and transfers will receive heavy scrutiny from both the court and creditors. If one attempts to sell, transfer or hide assets before a bankruptcy, the court may block the discharge of any debts and the debtor may even be subjected to criminal penalties. Payments in the ordinary course of business are permitted, and transfers or sales made in furtherance of paying debts and expenses are also allowed, but may require additional explanation and verification from the court and creditors. Also avoid preferential transfers to family member debts as those will also be potentially considered fraudulent transfers.

Retain Qualified Counsel

Navigating the complex bankruptcy laws also requires having effective legal representation. Our team of experts at SYK can help you make the right decisions and provide the advice you need in the event of bankruptcy.


Nicholas Rogers - Attorney

Nicholas D. Rogers joins SYK Estate Planning and Taxation practice with a passion for helping individuals, small business and nonprofits. His practice includes a focus on estate planning, federal and state tax controversy, business formation and planning, as well as trust and estate administration.