Your questions about bankruptcy answered in plain language
If you're in a financial mess, it can be hard to know what your options are and what steps you should take. And if you start trying to research your options, the information is often written in language that's complicated or just plain doesn't make sense. What makes this worse is that when you're dealing with money troubles, you're usually under stress and can't process convoluted information while you're trying to figure out which bills you can afford to pay.
To help you sort out some of the confusion surrounding bankruptcy, here are five important questions and the answers all in plain language to help you understand how it can help.
1. Does filing bankruptcy mean you'll lose everything?
No. Just the opposite. North Carolina bankruptcy laws allow you to keep many assets (these are called exemptions) including a few thousand dollars in the bank, money in your retirement account, your car and your home. If your car has a loan on it, you should be able to keep it as long as you don't have more than $3,000 worth of equity (equity is the value of your car minus how much you owe on the loan). Equity in your home is usually also protected. Bankruptcy isn't a punishment, it's a protection.
2. Does filing bankruptcy ruin your credit permanently?
No. Just the opposite. If you're behind on your bills, your credit is taking a beating every month. Filing a Chapter 7 bankruptcy (the type of bankruptcy that wipes out most unsecured debt) will ding your credit when you first file, but after a few months you can start rebuilding your credit and it will recover within a couple of years. If you continue paying your bills late, your credit will continue to worsen. Biting the bullet and filing will get you a clean slate and allow you to recover more quickly.
3. Does filing bankruptcy mean that my spouse will be harmed?
No. If most of your debts are in both of your names, filing together makes sense so that you are both relieved of the debt and can get a clean financial start together. If the past due bills and debts are only in one of your names, it's probably best to have just that one person file bankruptcy. If debt is in both names and only one files, creditors will try to collect from the other person. If you're not sure who owes what or how to decide, a reputable North Carolina bankruptcy attorney can help.
4. Does filing bankruptcy make you a bad person?
No. If you can't afford to pay your bills, you can't afford to – that doesn't make you bad. If you deliberately took on debt intending not to pay it, that's not good, but that's not what happens with most people. What we see is that most people have a major event in their life that they didn't cause and can't help – whether it's an accident, illness, divorce or job loss. This then leads to the money troubles. This doesn't make you a bad person, it means you're in a bad circumstance that bankruptcy can alleviate.
5. Does filing bankruptcy put you at risk for losing your job?
No. It is illegal for your employer to fire you for filing bankruptcy. Not only that but your employer shouldn't know that you've filed unless you tell them. Bankruptcy cases are “public records” but they are stored on a system that requires special access that only lawyers usually tap into, so your information should stay as private as you want. Unless you tell someone, most of the time no one will know. If your job relies on decent credit, bankruptcy can actually help you keep it.
To find out more about how a North Carolina bankruptcy can help you get a much-needed financial fresh start, contact the law offices of John T Orcutt for a free consultation today.