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Shuford Hunter, PLLC answers your bankruptcy and debtor-creditor questions.

Deep experience, proven results

Whether debtor or creditor, you can rely on Shuford Hunter, PLLC to advocate your rights. Contact us today and speak with one of our qualified attorneys.

11 U.S.C. §528 (a)(4) Notice. We are a federally-designated debt relief agency. We help people file for bankruptcy relief under the federal Bankruptcy Code.

What is bankruptcy?

Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least, until your debts are sorted out according to the law.
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What can bankrutpcy do for me?

Bankruptcy may make it possible for you to:

  • Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
  • In Chapter 13, stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without repayment.)
  • In Chapter 13, prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
  • Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
  • Restore or prevent termination of utility service.

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What different types of bankruptcy should I consider?

Although there are five types of bankruptcy cases provided under the law, most people filing bankruptcy will want to file either Chapter 7 or Chapter 13. There also is a Chapter 11 for corporations, a Chapter 9 for municipalities, and a Chapter 12 for family farmers.

Chapter 7 is known as a “straight” bankruptcy or “liquidation.” It requires a debtor to give up any property that exceeds certain limits called “exemptions,” so that the property can be sold to pay creditors. However, most clients find that their property does not exceed the exemptions limitation. In addition, there is a “means test” that a person will have to pass in order to qualify for Chapter 7.

Chapter 13 is called “debt adjustment,” “reorganization,” or “wage earner plan.” It requires a debtor to file a plan to pay debts (or parts of debts) from current income.

Either Chapter 7 or Chapter 13 may be filed individually or by a married couple filing jointly.

Shuford Hunter PLLC bankruptcy lawyers familiar with North Carolina law can review the list with you to give you a full understanding of the debts covered and not covered.

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What will happen to my home and car if I file bankruptcy?

In most cases, you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in Chapter 13.

However, some of your creditors may have a “security interest” in your home, automobile, or other personal property. This means that you have that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make most of these security interests go away. If you don’t make the payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.

There are several ways to keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full, by signing a “reaffirmation agreement,” under which you agree to remain legally liable for the debt notwithstanding your bankruptcy filing. Or you can pay the creditor the amount that the property you want to keep is worth (this is called a “redemption.”) If you put up household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

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Can I own anything after bankruptcy?

Yes! Many people believe that they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement or life insurance benefits within 180 days after filing for bankruptcy, the money or property may have to be paid to your creditors.

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Will bankruptcy wipe out all my debts?

Yes, with some exceptions. Bankruptcy will not normally wipe out—

  • Money owed for child support, alimony, a “domestic support obligation”
  • Fines, most taxes, student loans, and damages incurred because of drunk driving
  • Debts not listed on your bankruptcy petition
  • Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan
  • Debts resulting from “willful and malicious” harm
  • Debts resulting from embezzlement
  • Mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor)

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Will I have to go to court?

In most bankruptcy cases, you only have to go to a proceeding called a “meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come. It is very unusual for a creditor to actually show up. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation.

Sometimes, if complications arise, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time of the hearing from the court as well as a letter from our firm.

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Will bankruptcy affect my credit?

There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse.

The fact that you have filed a bankruptcy can appear on your credit report for ten years under the federal Fair Credit Reporting Act. In a Chapter 13 proceeding, your bankruptcy usually only appears on your credit report for seven years.

But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit. Creditors know that you can only receive one Chapter 7 discharge once every eight years. If you have a steady job and you keep making your house and car payments on time, your chances of obtaining credit might, in fact, be better after filing bankruptcy than before the bankruptcy.

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What happens in an out-of-court workout?

Your first step in a workout is to meet with your creditors. If your company has significant secured debt, negotiations often commence with the secured lenders. Next, negotiations take place with unsecured creditors as a way to convince them that a workout is their best opportunity for payment. At these meetings, you discuss the issues that created your company’s financial problems, its current revenues and debt structure, and your future initiatives to reorganize.

Following the creditor meetings, you and your attorney propose a workout agreement that typically includes:

  • A payment plan
  • Collection activity moratorium and forbearance by secured lenders
  • Creditor rights relating to your operations
  • Creditor protection that you, the debtor, will fulfill the obligations of the agreement

Counsel for all key parties negotiate extensively until they reach an agreement. Creditors are usually given a short time period to accept your plan. However, not all creditors may agree to your proposed workout and are free to pursue their own actions if they choose to do so.

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