This is a more common question than you might think, and the answer short answer is simply, “No”.

From a theoretical standpoint you have three options when it comes to handling a debt that has turned into a financial problem:

1. You have the option to file bankruptcy.
2. You have the option to work out a deal with your creditors to pay off your debts with them directly. This second option obviously works for very few people either because they don’t have enough money to work out arrangements with their creditors or their creditors are simply not willing to work with them.
3. You have the option to do nothing. This third option, however, also works for very few people. That’s because eventually one or more of your creditors are likely to sue you and get a judgment against you. A judgment is essentially a court order that allows the creditor to confiscate money or assets from you up to the dollar amount of the judgment. This judgment will also last for many years. So where you may not have anything for them to come and take now, that may not be the case years from now, if you are able to get yourself to a different place financially. Remember, at any point during the life of the judgment the creditor can, and will, take assets from you even though you may not have owned that asset at the time the judgment was issued. Therefore doing nothing is usually not a reasonable option, unless you’re very old, don’t have any assets, and are not likely to acquire anymore assets in the future.

In most states all, or virtually all, retirement account and pension plan funds are exempt from creditors, meaning you get to keep them. There are some limitations depending on where you live so you should always remember to ask your bankruptcy attorney this important question. In the states where we practice, our clients are able to protect all of their retirement savings. Additionally, in Chapter 13 bankruptcy, because your retirement accounts are exempt, they won’t affect how much you must repay unsecured creditors.
Plans subject to this exemption include the most common types of retirement accounts, such as:

• 401(k)s
• 403(b)s
• IRAs (Roth, SEP, and SIMPLE)
• Keoghs
• Profit-sharing plans
• Money purchase plans, and
• Defined-benefit plans.

Also, keep in mind that, although the funds in your retirement accounts may be exempt from creditors, retirement benefits that are paid to you as income are not exempt. For instance, for the purposes of Chapter 13 bankruptcy, this kind of retirement income is included in the calculation of your repayment plan and will help determine what portion of your unsecured debts you must repay.

Debt collection is a multi-step process: Creditors can contact you to collect on a debt, but keep in mind that they may not make any idle or illegal threats – such as throwing you in jail, reporting you to social services, or taking belongings that aren’t connected to the debt itself. They can sue you and obtain a judgment against you for the money owed. The impact of these judgments usually lasts for numerous years. During that period of time, creditors can attempt to levy your property. This usually involves garnishing your bank accounts or wages.

If a creditor has sent you a note or an exemption form because they are enforcing a judgment, this is a very serious situation – Call our office immediately!

As soon as your case is filed, the Bankruptcy Court issues what is called an automatic stay. The automatic stay forbids your creditors from contacting you or taking any further action against you to attempt to collect a debt. The federal courts impose strict penalties on creditors for willful violation of the automatic stay.

Absolutely not! North Carolina law sets up exemptions that will protect your assets from creditors. We will determine if you can keep everything you own under NC law before you file for bankruptcy protection. Most of our clients who are eligible for Chapter 7 bankruptcy are able to keep everything they own while completely wiping out their unsecured debt. If you cannot protect everything in a Chapter 7, you will still have the option to file for Chapter 13 bankruptcy to protect all of your assets.

This is completely false. One of the main purposes of filing a bankruptcy is for people to protect their assets, like their home, from their creditors. If you are current on your payments, you can protect your home’s equity from creditors and keep your home in a bankruptcy. At a minimum, North Carolina individuals can protect $35,000 worth of equity in their primary residence or $70,000 for married couples. If you are behind on your mortgage payments, there are options under Chapter 13 bankruptcy to catch up on your payments and keep your home, even if it has gone into foreclosure.

No, you can absolutely file individually! Whether you should or not depends on who is legally liable on the debts that you have. If you have individual debts, then filing individually may make the most sense for your family. If you have joint debts with your spouse, it may not be a good idea to file an individual bankruptcy. If only one joint debtor on a joint debt files bankruptcy, the other joint debtor who did not file bankruptcy is still liable for the debt. One nice feature of bankruptcy is that if you both do have to file, a couple who is legally married can file a joint case for no additional cost. That’s like getting two bankruptcies for the price of one!

Usually not. While a bankruptcy filing is technically public record, it is not easily available information for most people to find. Bankruptcy information is on a court database that is not searchable from websites like Google or Yahoo, and it is rarely reported in the newspaper unless it involves someone famous. If you are concerned about this, you can check your local newspaper to ensure that it does not report local bankruptcies before we file.

Yes, but how long you have to wait to re-file depends on the type of bankruptcy that you initially filed, if you received a discharge, and the type of bankruptcy you now wish to file. The time periods vary from two years to eight years.

No! This is why Chapter 13 bankruptcy is NOT a debt consolidation. We will determine your payment based on what you can afford to pay on a monthly basis. You will then pay this amount to the bankruptcy trustee and he or she will distribute that money to your creditors. At the end of your bankruptcy plan, any unpaid portion of your dischargeable unsecured debt (credit cards, medical bills, personal loans, etc.) is completely wiped out!

In most cases, you cannot eliminate student loans, certain tax debts, or court ordered domestic support payments. You also cannot eliminate some debts incurred within 60 to 90 days prior to the date of filing bankruptcy. You also cannot eliminate secured debts (such as mortgages or car loans) for personal and real property that you plan on keeping.

There are many unfounded claims being made by agencies that do not have the right to practice law. The Federal Trade Commission recently warned of these “credit repair” scams. The truth is, these companies depend on your creditors voluntarily agreeing to reduce your debt in exchange for a lump sum payment. Unlike legal debt relief, they cannot force your creditors to stop harassing you or even to participate in the deal. They cannot stop collection agency harassment or judgments against you. Only legal debt relief can accomplish this. Furthermore, they usually charge far more to reduce a few of your debts than any attorney charges to legally eliminate all of the same debts. If you are serious about dealing with your debt, please talk to an attorney before you consider one of these debt settlement programs. If you are participating in one of these plans, it isn’t too late – call our office today at 888-991-4644 for help in getting real debt relief!

Usually no. The only appearance most bankruptcy filers make is at an informal 341 Creditor’s Meeting where there is no bankruptcy judge. The bankruptcy trustee will ask you a few questions for the record about your personal information at this meeting. These questions usually take less than 5 minutes to complete.

If you file, the bankruptcy is allowed to remain on your credit report for up to 10 years – but from the time of your bankruptcy discharge, you will have a fresh start to rebuild your credit with no debt burden. The alternative is to go on with debts hovering over you that will take many more years to pay off, and will remain on your credit report for 7 years after that – usually an even worse situation! This is especially true with judgments which may be collected for 10 years after they are placed against you!

There is no doubt – your credit score will go down as a result of a bankruptcy filing, but a credit score is only one component lenders use in determining your credit worthiness. Remember, lenders will also look at your income and your debt burden. If you have missed payments, have accounts in collections, have judgments, or repossessions on your record, chances are your credit score is already very low. Bankruptcy may lower the score even more, but bankruptcy can also eliminate your debt burden completely, which will eventually help your credit to repair itself. At the very least it will stop the hemorrhaging and in a lender’s eyes, this can make you more credit worthy since your income is free from the burden of your old debt payments. Moreover, once you make a fresh start, you will be able to rebuild your credit over time.

To avoid getting into financial problems in the future, you must understand your flow of income and expenses. Some people call this making a budget. Others find the term budget too restrictive and use the term spending plan. Whatever you call it, spend at least two months writing down every expenditure. At each month’s end, compare your total expenses with your income. If you’re overspending, you have to cut back or find more income. As best you can, plan how you’ll spend your money each month ahead of time.

If you have trouble putting together you own budget, that’s ok! Consider getting free help from outside sources and websites like EveryDollarwww.everydollar.com. There are tons of interactive online budgeting programs and tools!

Certainly. Many people are actually able to obtain credit while their bankruptcy is pending. If you handle new credit wisely, you can begin to improve your credit score almost immediately

Once you succeed in getting a credit card, you might be hungry to apply for many more cards. Not so fast! Having too much credit may have contributed to your debt problems in the first place. Ideally, you should carry one or two credit cards. Banks want to see that you can handle more than one credit account at a time, but too many spells risk to them! Use of credit cards should be limited to only what you can pay in full each month. You don’t want to build up interest charges on these cards.

Creditors may also frown on applicants who have a lot of open credit. So keeping many cards may mean that you’ll be turned down in the future for other credit – perhaps credit you really need. And if your credit applications are turned down, your file will contain inquiries from the companies that rejected you. Your credit file will look like you were desperately trying to get credit, something lenders never like to see.

The Federal Fair Credit Reporting Act (FCRA), amended by the Fair and Accurate Credit Transaction Act (FACTA), allows consumers to get a free copy of their credit report yearly from each of the three major credit reporting companies. Free annual credit reports are now available in every state.

To order your free report, go to www.annualcreditreport.com. You can order your report directly or download a form to mail in your request. Please note that the World Privacy Form recommends that consumers may be better served by ordering their credit reports by phone or mail rather than online (see www.worldprivacyforum.org/calldontclick.html for more details).

Also, you are entitled to one additional free copy of your credit report each year under the following unique circumstances:

• You have been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit.
• You are unemployed and looking for work.
• You receive public assistance.
• You believe your file contains errors due to fraud or you are (or you think you are) a victim of identity theft.
• You have been denied employment (or another adverse employment decision has been made) based in whole or in part on information contained in the report.
• Your report has been revised based upon an investigation you requested.

The three major credit reporting companies are Equifax, TransUnion, and Experian. It’s best to order a report from all three companies. If you do not qualify for a free report (for example: you have already ordered your free report for the year), there may be a small charge. The amount will vary from state to state because it is mandated by state law ($9.50 in many states currently). To order directly from one of these credit bureaus call, e-mail or visit the company’s website.

When you request your credit report, you’ll need to provide the following information:

• Your full name (including generations such as Jr., Sr., III)
• Your date of birth
• Your Social Security Number
• Your spouse’s name (if applicable)
• Your telephone number

Your current address and addresses for the previous five years

This is traditionally referred to as “straight liquidation” bankruptcy. This constitutes a complete discharge of your unsecured debt and is most useful if you own a limited amount of assets and you are primarily only interested in getting rid of unsecured debts such as credit cards and medical expenses.

This type of bankruptcy is typically used by businesses to pay off a portion of their debts while still continuing their normal operations. The goal is mutual benefit for both the creditor and debtor because the creditor will be repaid more of the debt owed to them than if the business closed.

Usually referred to as “wage earner” bankruptcy, this type of bankruptcy has become very popular over the years because of the way it deals more comprehensively with people’s financial problems. Like all bankruptcies, Chapter 13 cases can get rid of unsecured debt. What makes Chapter 13 cases unique is that they can also be used for such things as stopping foreclosure, lowering car payments, delaying student loan payments, and assisting with paying off back taxes or child support payments.

Landlords have the possibility of being able to maintain evictions when a tenant has declared bankruptcy and stops paying rent. However, in many cases Chapter 13 bankruptcies can be used to assist a tenant in catching up on back payments and remaining in the leased property.

There has been a great deal of discussion in the media and among concerned debtors about changes in Federal Bankruptcy Law over the years. Contrary to what you may have heard, most people who still qualify today. Call our offices to learn more.

One of the most powerful aspects of filing for bankruptcy relief is that it automatically stays, or stops, all debt collection actions immediately. This feature gives you much-needed time and space to get your finances back in order.

Filing a bankruptcy petition stops all mortgage foreclosure actions currently underway, as well as preventing them from beginning in the future. Chapter 13 bankruptcy cases also allow you to force your mortgage lender to give you up to five years to catch up on your back mortgage payments.

Businesses face a number of legal and financial issues that must be carefully considered when filing for bankruptcy relief. Working with financial experts, Attorney Christian B. Felden prepares all necessary paperwork in representing businesses filing for bankruptcy. We also work with trustees and creditors in developing debt reorganization plans that allow your company to maintain day-to-day normal business operations.

We advise and represent parties involved with adversary proceedings. We have a great deal of experience filing adversary proceedings and defending those who may have received a preferential payment or an alleged fraudulent conveyance.

Here are a few links to other sites we have found to be extremely helpful. It is important to note that these sites are all individually run, and are in no way affiliated with Felden and Felden, P.A

North Carolina Bankruptcy Court Website
Eastern District of North Carolina http://www.nceb.uscourts.gov

North Carolina Chapter 13 trustee payment information: www.bledsoe13.com or www.ralch13.com