Notice: This information contains only general information and is not intended to be legally precise or comprehensive. If you have specific questions about bankruptcy then you should contact Sasser Law Firm or another attorney. The information contained on this page does not create an attorney-client relationship.
What if my question is not answered here?
What is bankruptcy?
Bankruptcy is a legal proceeding where a person or company who is having difficulty meeting financial obligations can obtain a fresh start. The right to file for bankruptcy is provided by federal law, and all bankruptcy proceedings are handled in federal bankruptcy court. Filing bankruptcy generally stops most creditors from seeking to collect debts. The goal of most debtors is to obtain a discharge order from the bankruptcy judge. The discharge order has the effect of releasing the debtor from many forms of debt that were incurred prior to the bankruptcy filing.
When should bankruptcy be considered?
What are some events that lead to many bankruptcy filings?
What are the different types of bankruptcy?
Why would a debtor choose to file chapter 13 over chapter 7?
How much is the debtor required to repay general, unsecured creditors in chapter 13?
It depends on the debtor's disposible income and how much the creditor would have received had the case been filed under chapter 7. It could range between 0%-106% based on the on those factors.
Is the debtor required to undergo a credit counseling program before a case is filed?
Debtors are normally required to undergo a credit briefing prior to filing for bankruptcy. This briefing generally takes no more than 90 minutes and can be conducted via the internet (For debtors filing their bankruptcy case through my office lacking access to a high speed internet connection, there is such a computer available for use at no additional cost). Additionally, all debtors must undergo a debtor education program prior to the entry of the debtor’s discharge.
Does the debtor have to appear in court after filing for bankruptcy?
All debtors are generally required to appear at a meeting of creditors (also known as a 341 meeting) 20-40 days after their petition is filed. At the meeting, a court appointed trustee will question the debtor in order to determine if the debtor was truthful on his petition and schedules. In chapter 7 cases the trustee will also be attempting to determine if liquidation of the debtor’s assets is appropriate, among other things. In chapter 13 cases the trustee is often concerned with whether the debtor’s plan of reorganization complies with the applicable provisions of the bankruptcy code. There are situations where it is necessary to appear before a bankruptcy judge.
What if I previously filed for bankruptcy?
If the prior case was filed more than 8 years ago, then it is not likely to have an impact on any new case. If the prior case was filed less than 8 years ago, then there may be relevance in terms of the availability of a discharge or a stay against creditor action.
Are spouses required to file for bankruptcy together?
No. Married persons are permitted to file jointly or individually.
What effect does bankruptcy have on a codebtor?
A non-filing codebtor remains liable to pay the debt. However, by filing a chapter 13 case a debtor can protect a non-filing codebtor from legal action if the debt is a consumer debt.
What are examples of debts that cannot be discharged in chapter 13 bankruptcy?
What are some examples of debts that cannot be discharged in a chapter 7 bankruptcy?
Why might a chapter 7 bankruptcy discharge be denied?
Will I have to pay income taxes on the canceled debt?
What are the North Carolina exemptions?
**If a debtor has lived in North Carolina for less than 2 years, then he/she may not be eligible to claim the North Carolina exemptions and may be required to claim the federal bankruptcy exemptions or the exemptions of some other state.**
How is a debtor able to retain non-exempt assets?
Should a debtor sell or cashout nonexempt assets and purchase exempt assets prior to a bankruptcy?
This is a form of exemption planning. Exemption planning is not prohibited per se but problems can arise.
Should a debtor seek to protect non-exempt property by transferring it to friends or relations prior to the bankruptcy?
What options exist with regards to secured property in a chapter 7 case?
What liens can be avoided in bankruptcy?
Can a federal tax lien be avoided in chapter 7?
An incorporated business is ceasing operations. Should it be bankrupted?
A corporation filing chapter 7 bankruptcy is entitled to retain no property and receives no discharge of debts. There is no requirement that an insolvent corporation file for bankruptcy and for that reason, state law dissolutions or simply walking away are common. Good reasons to file a corporation into chapter 7 might include:
Good reasons to avoid a corporate chapter 7 might include:
How can a credit report be obtained?
AnnualCreditReport.com allows individuals to obtain one free credit report every year from Experian, Transunion and Equifax.
What are some alternatives to bankruptcy?
Will a debtor’s family, friends or employer find out about the bankruptcy filing?
Although the bankruptcy case file is a public record that is accessible from the internet, usually only creditors will learn of the filing. Current employers and governmental agencies cannot legally discriminate against a debtor because of a bankruptcy filing. Employers may be notified if the debtor’s chapter 13 payments are made by payroll deduction.
How should a debtor prepare for bankruptcy?
Is a debtor required to list all creditors and assets on the bankruptcy schedules?
Is the debtor permitted to voluntarily pay debts owed to friends or family members after a chapter 7 is filed?
How long does the process take?
A chapter 7 no-asset case where no adversary proceedings are filed generally takes about 100 days.
A chapter 13 case normally takes 3-5 years.
What if my question is not answered here?
What is the automatic stay?
When a bankruptcy case is filed, a stay is automatically entered that prevents many types of collection activities against a debtor or a debtor’s property. Common examples of actions that creditors are often not allowed to take include:
What is the effect of an estranged spouse or ex-spouse filing a bankruptcy case?
How can court documents be reviewed or case information otherwise be obtained?
If the bankruptcy case was filed in the Raleigh Division of the Eastern District of North Carolina, case information can be accessed through the Voice Case Information System at 919.856.4618 or 888.847.9138. All documents are available for viewing at the clerk’s office or on the internet. The physical address for the Raleigh Division of the Eastern District of North Carolina is:
300 Fayetteville Street
Century Station, Raleigh, NC 27602.
The URL is http://www.nceb.uscourts.gov.
Is a creditor not listed on the debtor’s bankruptcy petition still bound by the automatic stay or discharge order?
Generally speaking, even informal notice will require a creditor to act in accordance with the bankruptcy code. If the case is a no-asset case, a discharge order will likely bind an unscheduled creditor unless there is some other basis for objecting to the dischargeability of the debt.
How long until a creditor’s claim is paid?
It depends on the case. It could take years.
How much will be paid on a creditor’s claim?
It depends on the case. It could be zero, paid in full or somewhere in between.
What actions can a creditor take if the debtor’s case has been dismissed?
A creditor can proceed with all available remedies against the debtor and/or his assets. Dismissal should not be confused with discharge. If the debtor is granted a discharge, most creditors are enjoined from seeking to collect on debts.
What are common reasons for which a creditor might contest a debtor’s chapter 7 discharge?
How could a creditor contest the discharge of a particular debt in chapter 7?
Common reasons would include that the debt was incurred through fraud, willful and malicious injury or defalcation of fiduciary duty. The complaint objecting to dischargeability must be filed within 60 days of the date originally set for the 341 hearing.
How could a creditor contest the discharge of a particular debt in chapter 13?
Common reasons would include that the debt was incurred through fraud, a willful or malicious injury by the debtor that caused personal injury to an individual or the death of an individual or defalcation of fiduciary duty. The complaint objecting to dischargeability must be filed within 60 days of the date originally set for the 341 hearing.
If a creditor has obtained a judgment against the debtor prior to his filing, does that mean the judgment will survive the bankruptcy?
A judgment may be discharged in bankruptcy if no timely objection is filed. If the judgment creditor holds lien rights against the debtor’s assets, then those lien rights may survive the bankruptcy discharge if not avoided.
May a creditor pursue its claim against the non-filing codebtor?
If the case is a chapter 7 then the codebtor may be pursued.
If the case is a chapter 13, a codebtor who owes consumer debt may not be pursued without obtaining relief from the bankruptcy court.
Can an entity be forced into a bankruptcy case if a creditor is owed money by an entity and believes the entity to be disposing of assets improperly?
Under certain limited circumstances, an involuntary bankruptcy case can be filed.
What is chapter 11?
A bankruptcy usually involving an incorporated or registered business that is either seeking to reorganize or effectuate an orderly liquidation.
What is a debtor in possession?
The official title of the debtor after having filed a chapter 11 proceeding. The debtor in possession enjoys important powers and protections but is also burdened by significant duties and benefits.
What are common reasons that an entity would file a chapter 11?
What is the effect of chapter 11 on the owners of the entity?
When a chapter 11 is filed, the entity and/or its assets are in play. It is possible that the interest of the pre-bankruptcy owners will be extinguished in chapter 11.
Does chapter 11 provide protections to third parties such as corporate insiders?
What are alternatives to chapter 11?
What are considerations to take into account when evaluating whether or not to file chapter 11?
How long does a chapter 11 take?
It can range from a few months to several years depending on the case.
What is a chapter 11 plan of reorganization?
The plan of reorganization sets forth how the debtor will emerge from bankruptcy. Included in the many items found in a chapter 11 plan will be identification of the proposed ownership structure and the creditor repayment scheme.
How is a chapter 11 plan confirmed by the court?
Creditors vote on whether to approve a plan that is commonly (but not always) proposed by the debtor. A plan may be confirmed over the objections of some classes of creditors in certain instances.
What if my question is not answered here?
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