Bankruptcy FAQ

The following are common questions regarding Bankruptcy. The answers are generalized based on a typical case. However, each Bankruptcy case is unique based on the specific circumstances of the people filing. Please refer to the questions below to give you a general idea of the typical Bankruptcy case, but you should seek an experienced Bankruptcy Attorney to advise you on your specific circumstances. Our office offers FREE CONSULTATIONS with an experienced Bankruptcy Attorney. 

  • Is Bankruptcy a complicated process?

    • Without an experienced Bankruptcy Attorney, it certainly can be.
    • My office will walk with you through the process, step by step.
    • We take the information you provide and prepare the Bankruptcy Petition that is filed with the Bankruptcy Court.

  • Can I keep my house if I file Bankruptcy?

    • Yes, North Carolina offers exemptions that can protect the equity in your home.
    • Chapter 13 Bankruptcy is a great way to save your house from foreclosure.
    • Chapter 13 Bankruptcy can help you catch up on your mortgage if you are behind. 
    • You can file Chapter 7 and keep your house, but your mortgage must be current.

  • Can I keep my car if I file bankruptcy?

    • Yes, North Carolina offers exemptions that can protect the equity in your car.
    • Most of my clients keep their car whether in Chapter 13 or Chapter 7 Bankruptcy
    • You can save your car from repossession in Chapter 13 bankruptcy.
    • If you file Chapter 7 your car payment needs to be current
    • Bankruptcy can be a great tool to get rid of an unreliable car. 
    • You can also surrender a car where you owe more than it is worth.
    • In Chapter 13, you may be able to keep a car and only pay back what it is worth. 

  • Will I lose my assets if I file Bankruptcy?

    • Not if the value of your assets falls within North Carolina’s exemptions.
    • If you own a $50,000 ski boat free and clear I will not be able to exempt it
    • Our office will evaluate your assets and advise you whether Bankruptcy is your best option.

  • Does Bankruptcy stop foreclosure?

    • Yes, stopping Foreclosure is the most common reason I file Bankruptcy for my clients.
    • Filing bankruptcy forces the mortgage company to accept your monthly payments again.
    • Chapter 13 Bankruptcy allows you 36 to 60 months to get caught up on your mortgage.

  • Will my credit be ruined forever if I file Bankruptcy?

    • No, bankruptcy will temporarily affect your credit.
    • Most Bankruptcies are eliminating large amounts of debt, so the debtor’s debt to income ratio is likely to improve greatly.

  • Can filing Bankruptcy actually improve my credit?

    • Yes, it can improve your credit in the long run by eliminating debt and improving your debt-to-income ratio.
    • I advise my clients that one of the best ways to rebuild your credit is never allow your payment to be 30 days late on any debt that remains after their Bankruptcy (for example, their car or mortgage).  

  • How long does Bankruptcy stay on my credit?

    • Bankruptcy can remain on your credit report for up to 10 years. 
    • Many people will improve their credit within a few years after filing

  • How can I rebuild my credit after filing for bankruptcy?

    • Pay your bills on time and never be 30 days late.

  • Can I still get a loan after bankruptcy?

    • Yes, but to get the best terms it is typically better to wait until your credit improves. 

  • What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

    • Chapter 7 is typically used to eliminate unsecured debts like credit cards, personal loans, medical bills, etc.
    • Chapter 7 can be used if you do not have enough money to repay your debts.
    • Chapter 13 is typically used to save homes, cars or other secured debts from being repossessed or foreclosed.
    • Chapter 7 is much quicker, typically taking about 4 months from filing to Discharge.
    • Chapter 13 typically takes between 3 to 5 years from filing to Discharge.
    • Chapter 13 requires a payment plan,
    • Chapter 13 is commonly used to catch up on past due payments on a mortgage or car.  
    • Most of our Chapter 13 clients can discharge unsecured debts in their Chapter 13 Bankruptcy. 

  • Can anyone file for Chapter 7 bankruptcy?

    • No, some people make too much money or have assets that cannot be protected by exemptions.
    • Two different people making the same amount of money, and one may qualify to file Ch. 7 and the other may not.  Why? Expenses.  For example, one may have 2 minor children, and the other client is single.  There is a Means Test used to determine if you qualify.  Don’t worry, my office will enter your household data into the Means Test as required.   

  • Will I have to pay all my debts in full if I file Chapter 13 bankruptcy?

    • No, most of my Chapter 13 bankruptcy clients only pay a percentage of their unsecured debts.
    • And if you qualify, you may be able to pay less than the full balance on your car.

  • How much will I have to pay back in a Chapter 13 Bankruptcy?

    • If you are behind on a mortgage or car note, you will need to pay that amount over the course of the Chapter 13 which is between 3 to 5 years.  
    • If you have unsecured debts like credit cards or personal loans you will pay a percentage based on your equity, income, expenses and what you can afford.  Some of my Chapter 13 clients pay less than a nickel on the dollar (aka less than 5%)

  • Can tax debts be discharged in Bankruptcy?

    • Yes, certain tax debts, but they must meet certain criteria.
    • IRS and State income taxes may be dischargeable. 

  • Can student loans be discharged in Bankruptcy?

    • Yes, but it is very, very rare and the threshold is extremely high.

  • Are there certain debts that cannot be discharged in Bankruptcy?

    • Yes, certain debts like child support, most student loans, and some taxes are non-dischargeable.

  • If I file, is my spouse required to file also?

    • No.  However, if you have joint debts, the non-filing spouse would still be responsible for those debts.

  • If I file bankruptcy, will it affect my wife’s credit?

    • No, unless there are joint debts, your spouse’s credit and debt is not affected by you filing. 

  • Can one spouse file Bankruptcy to stop a foreclosure if both are on the Deed and/or Deed of Trust?

    • Yes, one spouse can file to stop a foreclosure.  But there may be good reasons for both to file Chapter 13 together, like eliminating joint debt.

  • Does filing Bankruptcy stop the collection calls?

    • Yes, filing Bankruptcy creates an automatic stay, halting all collection activities.

  • Does filing Bankruptcy stop a lawsuit from going forward?

    • Yes, the automatic stay will stop it and require the moving party to take further action to try and continue.

  • Will a Bankruptcy stop garnishments?

    • Yes, the automatic stay will stop it and require the moving party to take further action to try and continue.

  • Can I file Bankruptcy to address my business debt?

    • Yes, often small business owners personally sign for the debts of the business.  
    • Depending on the circumstances Personal Bankruptcy may be all that is needed and other times Business Bankruptcy, and sometimes both.   

  • Can I file Bankruptcy again if I have filed before?

    • Yes, If you filed Chapter 7 you must wait 8 years to file another Chapter 7 and 4 years to file Chapter 13.
    • If you filed Chapter 13 you must wait 2 years to file another Chapter 13 and 6 years to file Chapter 7.
    • Please call an experienced Bankruptcy Attorney before deciding you cannot file again.  It is easy to misinterpret when you are eligible to file again.  Our office will be happy to help to determine when you can file again.  

  • Is Bankruptcy always the best option?

    • Bankruptcy is not always the best option.
    • But a free consultation with an experienced Bankruptcy Attorney is one of the best ways to find out.  

  • What are some of the alternatives to Bankruptcy?

    • Debt Consolidation, Debt Relief or Debt Settlement
    • I advise people all the time that Bankruptcy is not for them, but I will never advise someone to stop paying their debts and send their money out of state for someone to negotiate their debt later.

Call 910-484-8198 for help.