Q: Can I apply for a loan and still file for chapter 7 if I am denied the loan?
I am about to be garnished for my full check for 2 and a half months.
I am wondering if I can apply for a loan to survive. If I get the loan I am okay. If I don't get the loan, will having applied for it prevent me from filing for bankruptcy?
The simple answer is no, applying for a loan does NOT make you ineligible for bankruptcy relief. Do NOT make any material misrepresentations on your loan application. (It's a crime to make a false statement to a financial institution, insured by the federal government, in a loan application. If you do so, you may also be denied a discharge if you do file for bankruptcy relief.
But your question raises a host of other issues. How do you know your bank account is about to be garnished? Did a collection agent, by phone or letter, threaten you with that prospect? Collection agents are notorious prevaricators, and there are laws in almost every state regulating them to prevent them from terrorizing debtors with such threats.
Has a judgment been entered against you by an Oregon court? A creditor can only issue a garnishment writ after it has obtained a judgment.
I've practiced, and appeared in courts in Oklahoma, Texas, Georgia, PA, NJ and DE; in none of those states can a judgment creditor take all of your earnings. A common limitation upon garnishment amounts is 25% of a wage payment. (I am not familiar with Oregon law, however). In some states, e.g., Delaware, a judgment creditor is prohibited from garnishing a bank account. In PA, state law prohibits a judgment creditor from garnishing wages.
As soon as possible, consult with an Oregon bankruptcy lawyer about all these issues, and listen carefully to the advice you are given. If you have no other sizable debts, it may not make sense to file for bankruptcy because of one threatening creditor.
There are other bankruptcy-related issues that you need to understand, and a bankruptcy lawyer in Oregon is your best bet.
Applying for a loan won't have any effect on your ability to file bankruptcy if you end up needing to do so.
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