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If you’re considering bankruptcy, no doubt you have a ton of questions starting with “Is bankruptcy the best option for me?” The answer to that depends largely on your financial circumstances. Here at the law offices of John T. Orcutt, we never mind answering your questions. To get you started, here are seven bankruptcy FAQs and our answers.
#1 Is Getting Approved for a Bankruptcy Automatic?
Because there are two different kinds of bankruptcy – chapter 7 and chapter 13 – so long as you have more debts than your income allows you to service, you will likely qualify for one or the other. If you’re honest with the court, don’t try to hide assets, don’t try to give assets to friends or family to hide or lie about your income or debts, getting relief through the bankruptcy court is pretty straight forward. No matter your situation, we’ve likely helped clients in circumstances like yours.
#2 Can I Take Care of Everything in Your Office or Do I Have to Go to Court?
You will have to go to court but it’s nothing to be nervous about. It’s not like a high stress TV lawyer show. You will have to attend a 341 Meeting of Creditors and a hearing with the Trustee. Often, creditors don’t bother to send a representative and the Trustee hearing is rapid fire. You’ll usually be asked a few yes or no questions and then you’re done. It’s nothing to worry about – it’s over quickly and is just a matter of form to have your bankruptcy rubber stamped for approval.
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#3 Can I Keep My Car If I File Bankruptcy?
The answer is probably. It depends on the amount of equity you have in the vehicle. As long as you’re not rolling in a Bentley that you own free and clear, you should be able to keep your car. If you are still making payments, your lender will have to sign off on a revamped loan that includes your bankruptcy filing. If you own it outright, as long as it’s not a high dollar car, you should be able to keep it. If you are behind on payments, it's up to your lender. Your average vehicles aren’t usually dragged in to a bankruptcy case.
#4 Can I Keep My House If I File Bankruptcy?
The answer is maybe. If you are behind on your house payments, don’t have a lot of equity and are facing foreclosure, a chapter 13 may offer you a respite to try and get control of your debt and get caught up on payments. If you are way behind and foreclosure is looming, foreclosure may be inevitable and a chapter 7 or 13 will only delay this event. If you have kept current on your payments and have some equity – but not more than the state exemption allows – your Trustee will likely leave it alone.
#5 Can I File Without My Spouse?
Yes. But you may not want to. Your attorney will best be able to guide you on whether you should file with your spouse or go it alone. If most (or all) of the debt is in just your name, filing without your spouse may be wise. If the majority of your debts are joint, filing individually will only shift the focus of debt collectors from you to your spouse and that’s not a huge help. Filing together costs less – you can do it for just one filing fee and get started rebuilding your credit together.
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#6 Will I Be Able to Get Credit Again After a Bankruptcy?
Yes, but your first offers won’t be the best ones. If you have a steady income, many lenders will see your fresh start as an opportunity for them to take advantage. Your first credit card and loan offers will no doubt be at high interest rates hoping that you’re so desperate for a new credit opportunity that you jump at these offers. Take your time, build up some savings, buy with cash for a while and then be selective about accepting credit and use it wisely so you don’t get in over your head again.
#7 Which of My Debts Can Be Wiped Out in Bankruptcy?
Most unsecured debts are wiped out in bankruptcy. This means those that are not tethered to an asset. A car loan or mortgage are secured debts and the debt won’t be wiped out in a chapter 7 or 13. Debts that will not be wiped out in bankruptcy include alimony, child support, legal fines or fees associated with drunk driving or debts caused by your responsibility for a personal injury to someone else. Student loans and income taxes may be dischargeable depending on your individual circumstances.
We hope the answers to these FAQs have given you some insight into what bankruptcy can do for you. Even so, you probably still have many more questions and we are happy to answer them in a free consultation with one of the qualified attorneys from the law offices of John T. Orcutt. For reputable North Carolina bankruptcy advice you can trust, contact us today – no question about it!