Frequently Asked Questions
Raleigh Bankruptcy Lawyer, Raleigh Debt Collection Defense Lawyer, Raleigh Foreclosure Defense Lawyer
How does bankruptcy work?
Bankruptcy has several goals, including:
- Making sure that certain creditors are treated equally
- Providing a "fresh start" for debtors after debts are discharged while allowing the debtor to keep a certain amount of property
- Maximizing the debtor's assets to distribute among creditors
One of the most important advantages of bankruptcy is the "Automatic Stay." Its purpose is to protect the debtor and stops all creditor attempts to collect upon a debt.
The two most common types of consumer bankruptcy are chapter 7 and
chapter 13. Chapter 13 is for debtors with more assets to protect and above average income, disqualifying them from chapter 7.
Click here to learn more about how bankruptcy works.
What is Chapter 7?
Chapter 7 is often called "straight" bankruptcy or a "liquidation" case. That is where a bankruptcy trustee is appointed to sell or liquidate the debtor's assets and distributes the proceeds of the sale to the debtor's creditors. Chapter 7 is typically for debtors with limited assets and limited income with a discharge of debt coming approximately 90 days after filing.
To learn more about chapter 7, click here.
What is Chapter 13?
Chapter 13 debtors repay a portion of their debt through a bankruptcy plan that lasts 36-60 months. After tha plan is complete, remaining debts are discharged.Chapter 13 is often called a "wage earner's plan" or a "reorganization" case because it allows a debtor to modify some debts to either retain and/or reduce the debtor's monthly cash outlay. Chapter 13 also allows a debtor to catch up on delinquent payments over a defined period of time that may be longer than what the creditor might normally allow outside of bankruptcy.
Click here to learn more about chapter 13.
What is the process to file bankruptcy?
The basic process for filing bankruptcy is:
- The first step to filing bankruptcy is to determine if you want to hire a lawyer to help you.
- 180 days prior to filing the bankruptcy petition, tundergo consumer credit counseling.
- File a petition
- Participate in §341 Creditor's Meeting
- Complete Personal Financial Management certification (this happens before the Creditor's Meeting for chapter 13 filers)
- Chapter 7 filers receive a discharge and the case is closed. Chapter 13 filers have their repayment plan confirmed and the 3-5 year payment period begins, followed by a discharge at the end.
For more information about the bankruptcy process, click here.
How long does bankruptcy take?
Once the documentation is in order and the chapter 7 bankruptcy petition has been submitted, a 341 Creditor's Meeting will be scheduledabout four weeks from the filing date. Once the Creditor's Meeting has concluded, the trustee or creditors have 30 days to file objections to the debtor's claim of exemptions. Discharges typically are granted approximately 60 days after the Creditor's Meeting. So, the typical chapter 7 bankruptcy in North Carolina takes about 90 days from filing date to discharge date.
Chapter 13 goes through a somewhat similar process, but the primary difference is that there is a 3-5 year repayment plan before debts are discharged.
Click here to learn more about how long it takes to file bankruptcy.
Is bankruptcy expensive?
How much does it cost?
The type of bankruptcy for which you file as well as the specifics of your individual case will affect the overall cost of your bankruptcy. It does not, however, have to be an expensive process and, if done correctly, will save you a tremendous amount more than what it costs you to execute. The Chetson Firm provides top quality representation for reasonable
fees and can work out a payment structure that suits you.
Chapter 7 attorney fees range from $1,000-$1,400. Chapter 13 attorney fees are roughly $3,000, but nothing is paid up front and the fees are paid through the bankruptcy plan. There are also additional filing fees. For more information about The Chetson Firm's fees to file bankruptcy, click here.
Will filing for bankruptcy cancel all my debts?
The different types of bankruptcy address debt in different ways. A Chapter 7 completely cancels out all qualifying debt, such as credit cards, personal loans, medical bills and more. Some types of debt are not included and this is something that must be considered in determining the right option for you. A
Chapter 13 establishes a payment plan which helps you to pay down whatever portion of your outstanding balances you can afford.
Click here to learn more about discharging debts in bankruptcy.
Will I lose my property?
This is primarily a concern for chapter 7 filers, as chapter 7 is called a liquidation bankruptcy. However, every filer is eligible for exemptions that help protect property and assets. Your attorney will be able to help youdetermine the best ways to use your exemptions to protect important property such as your car, house and even important family jewelry.
To learn more about protecting your personal property in bankruptcy, click here.
What Are Exemptions?
The United States Bankruptcy Code allows you to keep certain property no matter what, even if you owe money to others. Every state has laws that designate specific property you get to keep so that you can continue living a productive life. There is a list of exemptions, but the big North Carolina exemptions are:
Homestead – A debtor is eligible for an exemption of up to $35,000 for your home. If your spouse is also filing for
chapter 7, then the amount doubles to $70,000. There is also a "widow's provision" for an unmarried debtor who is 65 years old or older whose spouse is decease that allows for an exemption of up to $65,000.
Motor Vehicle – A debtor is entitled to exempt up to $3,500 for one motor vehicle.
Tools of Trade – Up to $2,000 can be exempted for any implements, professional books, or tools of the trade.
Household Furnishings – A debtor can exempt up to $5,000 plus $1,000 for each dependent not to exceed $4,000 for a total exemption of no more than $9,000 for household furnishings, household goods, clothing, appliances, books, animals, crops or musical instruments.
In North Carolina, there is also a "Wild Card" exemption. This allows a debtor to exempt his/her interest in any property up to $5,000 in value of any unused exemption amount to which the debtor is entitled. This is the only exemption under North Carolina law that applies to any type of property regardless of its use or function, which is why it's called a "wild card."
This is not a complete list of exemptions. Click here to learn more.
Can bankruptcy stop foreclosure?
YES! Once a bankruptcy petition is filed, all creditors, including mortgage companies are required to stop collection activities under the automatic stay until the bankruptcy case is resolved. For
chapter 7 filers, bankruptcy gives debtors breathing room to determine how they want to address their mortgage debt - either by reaffirming the debt and curing the arrears or by deciding to let the house become part of the liquidation plan.
Chapter 13 filers can include their mortgage payments and payments to cure arrears through their bankruptcy plan, giving them 3-5 years to catch up on delinquent payments. In both cases, your attorney can negotiate with the mortgage company to try to adjust interest rates, payments and potentially even mortgage balances.
To learn more about avoiding foreclosure, click here.
Can bankruptcy stop repossessions?
YES! Just like foreclosures, the automatic stay stops creditors from trying to collect on any debts, including car debt. If your car is repossessed after the bankruptcy petition has been filed, it is a direct violation of the automatic stay and the car must be returned immediately. The automatic stay will give you the opportunity to reaffirm the car debt and catch up on any delinquencies so that once your case is discharged, you can keep your car. To learn more about preventing repossessions, click here.
Can bankruptcy stop judgements?
YES! Again, the automatic stay saves the day. The automatic stay prevents the award of judgements and for judgements that have already been awarded, it prevents the execution of the judgement or the creditor's ability to collect. Click here to learn more about how bankruptcy can protect you against judgements.
Can bankruptcy help with student loans?
Sometimes. While generally student loans are not dischargeable in bankruptcy, if paying them back would cause undue hardship, there may be a way to discharge student loans. Click here to learn more about how bankruptcy can help with student loans.
Will bankruptcy help with back taxes?
YES! Taxes for tax returns filed more than three years ago are eligible for discharge. Taxes that are newer than three years and tax liens are not dischargeable. Click here to learn more about how bankruptcy can help with taxes.
Will bankruptcy get rid of my child support or alimony payments?
Unfortunately, no. Domestic Support Obligations or DSO's are not dischargeable in bankruptcy. To learn more about DSO's in bankruptcy, click here.
Will my wages be garnished?
In North Carolina, wages can only be garnished for taxes, Domestic Support Obligations, student loans, and in some counties, ambulance services. So creditors cannot garnish your wages for debts that you have incurred. The exeption to this is if the debt was incurred in a state that does allow wage garnishment. If a creditor receives an order from a court in a state that allows garnishment, that order can be presented in North Carolina for a garnishment to be put in place. Click here to learn more about garnishment.
Will my bankruptcy be published in the newspaper?
A bankruptcy filing is a matter of public record, but rarely are personal bankruptcies covered in the local paper. In most cases, the only people that will know about your bankruptcy are the people that you tell.
To learn more about your privacy in bankruptcy, click here.
What will bankruptcy do to my credit score?
In the short term, bankruptcy will hurt your credit score. But by the time that your discharge rolls around, or shortly thereafter, you will be able to do things to start rebuilding your credit. From a creditor's perspective, once you file bankruptcy, you are actually more attractive to lend to because your debt has been wiped out and your debt to income ratio looks good as opposed to the ratio looking really bad when you had more debt than you could afford to pay. So, in the long term, bankruptcy can actually help your credit score.
Click here to learn more about how bankruptcy affects your credit score.
How long will a bankruptcy be on my credit report?
How long will it take to rebuild my credit?
A bankruptcy will appear on your credit report for 7-10 years. But there are things you can do in the meantime to begin rebuilding your credit and improving your credit score. With each successive year, your credit score will get better, even leading to the point where you will be able to buy a home from a credit perspective.
To learn more about rebuilding credit, click here.
Are there any options besides bankruptcy?
There are many options available to you when you are facing overwhelming debt. Alternatives to bankruptcy include such actions as
debt settlement,
debt negotiation, debt consolidation, loan modification, a short sale or a deed in lieu. The attorneys at the firm can review your financial position and help to determine the most suitable approach for you, which may or may not be bankruptcy.
What can I do if I'm having trouble with creditors?
Wil bankruptcy get creditors to stop harassing me?
Creditor harassment is illegal and you have rights under the law to protect you from this type of treatment. A
Raleigh bankruptcy attorney can assist you when you need to
stop abusive debt collectors so that you can resume a life free of the immense stress they can cause. In addition, once a bankruptcy petition is filed, the automatic stay prevents creditors from trying to collect.
To learn more about your rights in terms of creditor harassment, click here.
Contact a Raleigh bankruptcy attorney when you need answers to your questions about resolving your debt problems.