The Spagnola Law FIrm in Greensboro, North Carolina, represents clients throughout the Piedmont Triad area, also including Gibsonville, High Point, Jamestown, Oak Ridge, Pleasant Garden, Sedalia, Winston-Salem, Asheboro, Liberty, Whitsett, Kernersville, Reidsville, Eden and Randleman in Guilford County, Rockingham County, Randolph County and Alamance County.
Q. Who is eligible to file bankruptcy?A. A person who has not received a prior discharge in a bankruptcy case that was FILED within the past eight years is eligible to file a Chapter 7 bankruptcy. However, it is possible that a person may be disqualified from a Chapter 7 if their income is above the median for their area and they have the ability to pay creditors some amount of money.A person may file a Chapter 13 bankruptcy even if they have received a prior discharge, but they may not receive a final discharge of debts after completion of their Chapter 13 plan.Q. What is the difference between a Chapter 7 and a Chapter 13?A. Chapter 7 is called "straight bankruptcy" or a "liquidation bankruptcy." It is appropriate when a debtor does not have the ability to pay any unsecured creditors (such as credit cards) or secured debt in some cases. Under Chapter 7, all non-exempt property of the debtor can be sold to pay creditors but any remaining debt will be discharged.Chapter 13 is a "wage earner bankruptcy." It is appropriate when a debtor has the ability to pay some debts, but maybe not all of them, or when the debtor is facing a foreclosure or repossession and would like to keep the property. It is designed to set up a payment schedule that allows creditors to be paid some money over time and allow the debtor to retain property that might not otherwise be exempt under a Chapter 7.Q. How does Chapter 13 work?A. In order to file a Chapter 13, a debtor must earn enough money to make the minimal required payments of a Chapter 13 plan. The payment plan is based on three factors: ability to pay, the liquidation value of non-exempt property and the amount of debt that is owed. Your attorney will propose a plan to the Chapter 13 trustee based on these factors. The trustee may make a counter-proposal. If there is no disagreement, then the plan will be submitted to the court for approval. All payments are then made to the Trustee who will disburse payments to creditors according to priority. A Chapter Plan will be between three-five years and at the completion of the plan any pre-petition unsecured debts that remain will be discharged even if they are not paid in full.One benefit of Chapter 13 is that you can spread out payments over a longer period of time thereby reducing your monthly obligation, and in some cases you may be able to "cram down" the value of an automobile so that you only make payments based on the current market value of the car as opposed to what your actual remaining balance is.Q. Will I lose my property in bankruptcy?A. In most cases, the answer is no. You are allowed to exempt (retain) property up to a certain amount of value depending on the type of property. More often than not in a Chapter 7 bankruptcy, all property can be exempted. A person who is eligible and files a Chapter 7 may retain secured property so long as the payment is current at the time of filing and remains current. Otherwise, the creditor may request that the court allow them to proceed with collection efforts.In a Chapter 13, any non-exempt property can be retained so long as the non-exempt value of the property is factored into your payment plan.Q. Are there debts that cannot be discharged in bankruptcy?A. Yes. Debts owed for sales and usage taxes, debts procured by fraud, income tax debts less than three years old, child support and alimony obligations, and most student loans cannot be discharged. Also, a property settlement debt that is incident to a divorce or separation may not be discharged in a Chapter 7, although it may be discharged in a Chapter 13. You are also required to complete a financial management course after you file bankruptcy but before you receive a discharge. This can usually be done online for a small fee or through the Chapter 13 office if you have filed under Chapter 13. This is mandatory.Q. What does bankruptcy do to my credit?A. A bankruptcy discharge will remain on your credit report for 10 years, and it will substantially decrease your credit score. However, most people are able to obtain credit shortly after filing bankruptcy although they will likely pay a higher interest rate. There are strategies for rebuilding your credit following a bankruptcy that can be discussed.Q. Can I protect my car or other property by giving them to a family member before bankruptcy?A. No. Any transaction you make to an "insider" within one year of filing your bankruptcy is subject to being voided unless you can show that the transaction was legitimate and in the ordinary course of business. Otherwise, there is a presumption that any such transaction is fraudulent.Q. Are there any other requirements to file bankruptcy?A. There are residency requirements and other factors that determine where you file bankruptcy. Also, you MUST COMPLETE A CREDIT COUNSELING COURSE prior to filing bankruptcy from an approved credit counseling provider. At our firm we recommend that our clients complete this course online through Hummingbird.org. This usually takes about one hour, and we collect the fees from you to pay them if you choose to use them. We recommend them because it is easy to do and because they have the lowest prices.Q. Will filing bankruptcy stop creditors from contacting me or harassing me?A. Yes. Upon notification that a debtor has filed bankruptcy, federal law prohibits creditors from contacting the debtor. Also, any wage garnishments (except for domestic support obligations) can be stopped.Q. I am married or separated. Am I required to file with my spouse?A. No, you can file as an individual. However, your spouse's income and any joint assets can be factors in your qualifications and exemptions.Q. How much does filing bankruptcy cost?A. There is a filing fee of $306 to file a Chapter 7. Our firm charges $1,200 for a typical Chapter 7 bankruptcy. This fee covers preparing your petition, meeting with you to review it, filing it and attending one creditors meeting. In most Chapter 7 filings, these are the only steps necessary for us to perform for you prior to you receiving a discharge. However, there may be additional fees if it becomes necessary to file any motions in your case, appear in court, litigate any matters, or otherwise spend significant time beyond what is normal in your case. We also obtain a credit report that costs $30 for an individual or $50 for a couple. The credit counseling fee if Hummingbird is used is $34, and the financial management course required prior to discharge is $8.The filing fee for a Chapter 13 is $281. Our firm charges $3,700 for a typical Chapter 13 bankruptcy. We do not require that the attorney fees be paid in full upfront. Instead, we require a deposit of $1,500 and the remaining balance owed to us will be factored into your Chapter 13 repayment plan. This fee covers developing a payment plan, preparing your petition, meeting with you to review it, filing it and attending one creditors' meeting. Because a Chapter 13 plan is a three- to five-year commitment, our representation is ongoing until the plan is completed or dismissed. As in Chapter 7 cases, there may be additional fees if it becomes necessary to file any motions in your case, appear in court, litigate any matters, or otherwise spend significant time beyond what is normal in your case. We also obtain a credit report that costs $30 for an individual or $50 for a couple. Call The Spagnola Law Firm today or inquire online to schedule a consultation.