At Robert P. Laney Law Firm we represent both debtors and creditors. There are many provisions of the Bankruptcy Code that may affect your situation. This page contains only general principles of law and is not a substitute for legal advice.
Bankruptcy is often the best solution for financial problems. However, there are several alternatives, including a creditor workout, remaining judgment proof, or business dissolution. During an initial consultation, we explore these alternatives and determine which may best solve your issues.
Bankruptcy law allows Debtors to exempt (keep) real and personal property if the equity is less than a maximum value set by NC Statutes. In most cases, the maximum value is sufficient for you to keep your residence, your appliances, furniture, and household goods, your vehicles, and your clothing and personal property.
You can sometimes keep your non-exempt property by giving to the Trustee money equal to the value of the non-exempt property.
Filing for bankruptcy
The filing of a bankruptcy petition is designed to result in a discharge of most of the debts you listed in your bankruptcy schedules. A discharge is a court order that says you do not have to repay some or all of your debts. There are some exceptions. Debts which may not be discharged include, for example, recent taxes, child support, alimony, and student loans; court-ordered fines and restitution; debts obtained through fraud or deception; debts which are not listed in your bankruptcy schedules; and personal injury debts. Your discharge may be denied entirely if you, for example, destroy, conceal or falsify records; or make a false oath. There are certain limitations within the bankruptcy law concerning the number of times you may file bankruptcy, which can be discussed with your attorney.
What are the potential effects of a discharge?
The fact that you filed bankruptcy can appear on your credit report for a number of years. Thus, filing a bankruptcy petition may affect your ability to obtain credit in the future. However, filing bankruptcy does not by itself prevent future credit. To the contrary, it may help your credit rehabilitation by discharging some of your debts. You should be able to reestablish several forms of credit after your bankruptcy closes, usually within a few years.
What are the effects of reaffirming at debt?
After you file your bankruptcy petition, a secured creditor may ask you to reaffirm its debt, or you may seek to do so on your own. Reaffirming a debt means that you sign and file with the Court a legally enforceable document which states that you promise to repay all or a portion of the debt that may otherwise have been discharged in your bankruptcy case. Reaffirmation agreements must generally be filed with the Court within 60 days after the first meeting of creditors.
Reaffirmation agreements are voluntary; they are not required. You can repay any debt instead of signing a reaffirmation agreement, but you may need to reaffirm a debt when property that you wish to retain is collateral for that debt or your payments are in arrears.
If you decide to sign a reaffirmation agreement, you may cancel it at any time before the Court issues an order of discharge, or within 60 days after you filed the reaffirmation agreement, whichever is later.
If you reaffirm a debt and fail to make payments as required in the agreement, the creditor can take action against you to recover any property that was given as security for the loan, and you may remain personally liable for any deficiency.
You have a choice in deciding what chapter of the Bankruptcy Code will best suit your needs. Even if you have already filed for relief under one chapter, you may be eligible to convert your case to a different chapter.
- Chapter 7 is the liquidation case of the Bankruptcy Code. Here, a trustee is appointed to collect and sell, if economically feasible, some property you own that is not exempt from these actions. You do not pay back your dischargeable debts, but you may lose your non-exempt property.
- Chapter 11 is the reorganization chapter most commonly used by businesses or individuals with large assets and large debts. The debtor is given several months of breathing room. Then our office devises a repayment plan, usually at amounts and interest rates which are less than originally owed. Creditors vote on whether to accept or reject a plan, which also must be approved by the Court. While the debtor normally remains in control of the assets, the Court can order the appointment of a trustee to take possession and control of the business.
- Chapter 12 offers bankruptcy relief to those who qualify as family farmers and operates much like a Chapter 11. Debtors must propose a plan to repay their creditors over a three-to-five-year period, and it must be approved by the Court. Plan payments are made through a Chapter 12 trustee, who also monitors the debtor's farming operations during the plan.
- Chapter 13 permits individuals or married couples to usually keep more of their property than a Chapter 7 by repaying creditors out of their future income. Each Chapter 13 debtor has a plan approved by the Bankruptcy Court. The debtors must pay the Chapter 13 trustee the amount set forth in their plan. Debtors receive a discharge after they complete their Chapter 13 repayment plan, usually 3 to 5 years. Chapter 13 is only available to individuals with a steady income whose debts do not exceed certain dollar amounts specified in the Bankruptcy Code.
Things to avoid when preparing to file debtor bankruptcy:
- Do not use your credit cards once you decide to file bankruptcy. If you make any large purchases or withdraw cash advances prior to bankruptcy, then your bankruptcy may not cancel these debts.
- Do not make a payment to any creditor or repay friends or family members prior to filing your bankruptcy of more than $600 unless it is a normal monthly household payment or for a secured debt (such as your house or vehicle) that you intend to keep. Payment for items that you want to keep and could be repossessed or foreclosed on if you don't pay.
- Do not sell or transfer any property (real property, vehicles, etc.) to friends or family members in an attempt to save it from the bankruptcy court. The trustee will do a thorough check into your financial history and can undo any fraudulent transfers that occurred within several years of your filing date.
- Notify your attorney immediately if you receive repossession or foreclosure documents, a wage garnishment, a Summons and Complaint, or any other legal or financial activity.
Filing a debtor bankruptcy action may give you these protections:
- Stopping creditor collection actions
- Stopping foreclosures and repossessions
- Protection of your property
- Tax relief
- Business reorganization
- Discharge of debts
Bankruptcy allows debtors to retain much or all of their exempt property. You will be advised in detail what you can keep as a debtor.
The vast majority of debtor bankruptcy actions are successful. If so, you will then receive a discharge, or cancelation of many of your debts.
A bankruptcy action can appear on your credit report for up to 10 years. However, filing bankruptcy does not by itself prevent future credit. On the contrary, it may help your credit rehabilitation by discharging many of your debts. You should be able to reestablish several forms of credit after your bankruptcy closes, usually within a few years.
Please contact our firm or call us at 336-838-1674 to set up a time to assess your current circumstances, and what options are available for you.
Filing a creditor bankruptcy action may give you these protections:
- Payment of your bill
- Return of your collateral or secured asset
- Put you in a payment receipt plan
Bankruptcy allows debtors to retain much or all of their exempt property. You will be advised in detail what you can recover as a creditor. Contact us to schedule a consultation to discuss what viable options you have for your situation.