Frequently Asked Questions
General Bankruptcy Information
Q: What is bankruptcy?
A: The Bankruptcy Code is federal law. The Constitution authorizes Congress to establish laws governing bankruptcy. Bankruptcy is a method for individuals and married couples to get a "fresh start."
Q: Who can file for bankruptcy?
A: There are six different "chapters" of bankruptcy. Consumers most often use either Chapter 7 or Chapter 13. Other Chapters exist for other entities. For example, Chapter 11 is primarily designed for corporations and other entities to restructure. Chapter 12 is specifically for farmers and fishermen. Chapter 9 is for municipalities, and Chapter 15 is for international cases.
Q: How much does bankruptcy cost?
A: The fees will depend on the type of case filed. Your attorney will discuss the fee arrangement with you at your free consultation. In a Chapter 13, most of the fees are paid over time, through your Chapter 13 plan payment. No one case is the same, and your attorney will discuss flexible payment arrangements at your consultation.
Q: Will bankruptcy ruin my credit/life?
A: No. In fact, bankruptcy can and should be a very positive experience. One of the primary purposes of bankruptcy is to get a fresh start. Obtaining a fresh start will allow you to rebuild your credit. We are often thrilled to hear from previous clients who have rebuilt their credit history and are thriving after filing bankruptcy.
Q: Will my bankruptcy "go through”?
A: We are often asked this question. Filing bankruptcy is, essentially, a matter of right. If you have honestly disclosed your assets, liabilities, income, expenses, you need not fear being “kicked out” of bankruptcy. The bankruptcy code relies on your full disclosure of all assets and liabilities. If you have done what is expected of you—including full disclosure, providing necessary documents, appearing in court to prosecute your case, performing under your Chapter 13 plan, etc—you will get the relief you are seeking.
Q: Will I be able to buy a house or a car if I file for bankruptcy?
A: If you need to purchase a vehicle while you are in bankruptcy or shortly thereafter, you may be surprised to learn that there are many lenders and dealers—some local—who work specifically to assist individuals who have filed bankruptcy. Depending on whether you are in a Chapter 7 or a Chapter 13, we may need to file a motion for court approval of the transaction. If you are interested in financing a vehicle, reach out to us and we can refer you to a local dealer who is known to assist individuals in bankruptcy.
Q: Will my employer know that I filed bankruptcy?
A: Generally no, unless you tell them. One exception is if you sign up for payroll deduction in a Chapter 13, which is strictly voluntary. If you work in a detention center or otherwise have a security clearance, some employers actually encourage their employees to file bankruptcy. In fact, some employers are known to refuse to renew a security clearance if debts are not resolved by either payment or discharge in bankruptcy.
Q: How quickly will bankruptcy help me?
A: Very quickly. As soon as your case is filed, the automatic stay is instantly triggered. This immediately stops harassing phone calls and letters, and also stops other collection activity such as garnishments, repossessions, foreclosures, lawsuits, etc. At Sosna Law Offices, we are proud to offer emergency filings when necessary. If you have an immediate problem such as an approaching foreclosure sale date or a wage garnishment, we will do everything within our power to get your case filed as quickly as possible so that the action is stayed.
Q: Do I have to list all of my creditors when I file bankruptcy?
A: Yes, as a matter of general fairness, the bankruptcy code requires that you list all of your creditors. You may not leave any particular creditor out. Each creditor must receive notice of the bankruptcy filing. Again, the bankruptcy code relies on full disclosure of all assets and liabilities.
Q: When I file a bankruptcy, do I get to keep all of my property?
A: In nearly every case, the answer is yes. Whether you are filing a Chapter 7 or a Chapter 13, you must list all of your property in the petition. However, you are entitled to claim certain exemptions guaranteed by state and federal law. In most cases, all of your assets will be protected. Retaining a knowledgeable attorney to represent you through the course of your bankruptcy will ensure you have properly taken advantage of the exemptions available to you.
Q: Should I hire an attorney or can I represent myself?
A: While it is possible to proceed "pro se,” it’s generally not a good idea. There are many reasons why you should consider hiring an experienced, knowledgeable attorney to represent you in this important matter. Most firms, including Sosna Law Offices, offer a free, no-obligation consultation. Many debtors initially believe that they cannot afford an attorney, but are surprised at how affordable the attorney fees are. For instance, in Chapter 13 cases, most of the attorney fees are paid through the Chapter 13 plan over a period of three to five years. Statistics indicate a higher likelihood of success in cases where the debtor is represented by an attorney.
Q: When I file bankruptcy, do I have to go to court?
A: Approximately one month after your case is filed, the Court will set a "341 meeting." For many people, this is the first and last time that they will be required to visit the bankruptcy court. The 341 meeting is an occasion for the Trustee to ask you various questions. The Trustee will ask if you reviewed the petition, if the petition remains accurate, if you have filed all required tax returns, if you owe anyone child support, etc. In a Chapter 13, the Trustee will also determine whether your plan is feasible and pays the creditors who must be paid in your particular case. You will not be alone during this meeting; either Mr. Sosna or Mr. Huffstetler will be right by your side.
Q: Will my friends and family know that I filed bankruptcy?
A: Typically, the only people who will know that you filed bankruptcy (other than your creditors) are the ones you tell about it. Bankruptcy schedules and related documents are matters of public record and can be searched by individuals who have a PACER login. However, bankruptcy filings are not published in local newspapers.
Q: What chapter of bankruptcy should I file under? Chapter 7 or Chapter 13?
A: There are many factors, and no one case is the same. Scheduling a free consultation allows our attorneys at Sosna Law Offices to conduct a thorough and careful consideration of your personal circumstances. Only after a thorough consideration can we advise you as to which Chapter would best meet your needs. For example, Chapter 13 is typically advisable if you are behind on a mortgage or car payment and wish to keep the car/home. In some cases, you may not be eligible for Chapter 7 if your income is too high. If you have a lot of "non-exempt equity," a Chapter 7 may not be the best fit.
Q: If I file for bankruptcy, does my spouse also have to file?
A: No. Just because you are married does not mean that you both have to file bankruptcy. There may be reasons that it would be beneficial for both to file, but often times only one spouse chooses to file. This is a topic that we can discuss in greater detail at your consultation.
Q: Will my student loans be discharged if I file bankruptcy?
A: Generally, no. Student loans are only discharged if you file an "adversary proceeding" (basically, a separate lawsuit within the bankruptcy) and establish "undue hardship." This typically requires a showing of disability or other circumstances that render you unable to pay anything toward your student loans now or in the future. While it is possible to discharge student loans, it is rare. However, this is something that we can discuss with you in more detail at your free consultation.
Q: What types of debts will not be discharged?
A: There are various debts that are not discharged in a bankruptcy. These include child support and alimony payments, certain tax obligations, student loans, and other debts. If you have a question about whether a particular debt is dischargeable, please ask about it at your free consultation.
Q: What is a discharge?
A: A "discharge" is the order entered by the Court at the end of your case wiping out your obligation to pay certain debts, such as credit cards, medical bills, and many other types of debts.
Q: What is the automatic stay?
A: The automatic stay is an extremely powerful mechanism of the bankruptcy code, and protects you from collection and other activity. The automatic stay goes into effect immediately upon the filing of your case, except in very limited circumstances where you have filed greater than two cases within one year. Once you are protected by the automatic stay, you are protected from creditor calls and letters, repossessions, foreclosures, garnishments, lawsuits, etc.
Q: Can creditors bother me about filing for bankruptcy?
A: No! Once your case is filed, you are protected by the "automatic stay." This is a powerful mechanism within the bankruptcy code which prohibits creditors from calling you, writing you, coming to your home, filing lawsuits against you, or taking other collection activity against you.
Q: I have a judgment against me. Can bankruptcy help me?
A: If a creditor has obtained a judgment against you, it may be possible to file bankruptcy and "avoid" the judgment and discharge it in your bankruptcy. In North Carolina, judgments docketed in counties where you own real property become liens against that property. Bankruptcy law permits you to file a motion to “avoid” (i.e. wipe out) liens that impair your exemptions. If you have a judgment against you, please let your attorney know on the date of your consultation. In many cases, these are completely avoidable in bankruptcy.
Q: My home is in foreclosure. Can bankruptcy stop foreclosure?
A: Yes. However, you only have a limited amount of time and you must act quickly. If your home is in foreclosure, you should contact us immediately to schedule a free consultation so that we may evaluate your case and advise you on how to proceed.
Q: Will I meet with an attorney, and will I be able to reach my attorney throughout my case in order to get my questions answered?
A: Yes! This is always an important question to ask at any consultation. At Sosna Law Offices, we value every client and your case is important to us. Your attorney will be available to answer questions throughout your case.
Q: Am I eligible to file a Chapter 7 bankruptcy?
A: In 2005, with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), Congress overhauled the Bankruptcy Code and introduced many changes . Among these changes was the implementation of the "means test.” In order to determine if you qualify for Chapter 7, we must average your gross income received in the six months prior to the prospective filing date of your case. The average—your “current monthly income”—is then annualized and compared to the median income in North Carolina for your household size. If you are under-median, then you have passed the means test and we can proceed with Chapter 7. If you are over-median, you may still qualify for Chapter 7 but most often a Chapter 13 will be required.
Q: Who is the Trustee?
A: A Trustee is the individual appointed to administer your Chapter 7 or Chapter 13 case. In a Chapter 7 case, the Trustee will be primarily concerned with determining whether you have any non-exempt assets that could be liquidated to pay your creditors. In a Chapter 13 case, the Trustee’s primary duty is to receive monthly Chapter 13 payments you submit and then distribute those funds to each of your creditors who are to be paid through your plan.
Q: Who is the Bankruptcy Administrator?
A: The Bankruptcy Administrator is a non-judicial, independent party tasked with oversight and supervision of the bankruptcy system.
Q. How long will my case last?
A: In a Chapter 7, your case will usually last approximately three to four months from start to finish. In a Chapter 13, your case will last three to five years, depending on the term of your Chapter 13 plan.
Q. How much debt should I have to consider filing bankruptcy?
A: This answer will vary significantly by household, and no one answer is correct for everyone. If you are struggling to make ends meet each month, you should schedule a free, no-obligation consultation to see if bankruptcy is right for you.
Q. How do I schedule my free consultation?
A: Click here, or call (252) 937-3027.
Filing Your Case
Q: After my consultation, what is the next step?
A: At your consultation, we will provide you with a detailed packet of information and checklist of items we will need in order to complete the petition. Once you have completed the packet and provided the requested documents, the next step is to return that information to our office.
Q: How soon can my petition be filed?
A: When there is an emergency, such as an imminent foreclosure sale date or a wage garnishment, we can usually have your case filed within 24 to 48 hours of you providing us all of the required information. In all cases, however, we strive to have your case filed within a week of our office being retained.
Q: When will my 341 meeting take place?
A: Your 341 meeting will be scheduled for approximately one month after your case is filed, give or take a week. We do not have any control over when your meeting is scheduled. You must attend this meeting, unless you have medical documentation of a disability that precludes you from attending. You will receive a notice from the Court and also from our office advising you of the date and location for the meeting. In most cases, this is the first and last time you will have to visit the bankruptcy courthouse.
Q: Where will my 341 meeting take place?
A: We represent clients in the following counties: Nash County, Edgecombe County, Wilson County, Halifax County, Martin County, Bertie County, Hertford County, Northampton County, Gates County, Chowan County, Franklin County, Warren County, Greene County, Pitt County, Washington County, and Beaufort County. If you reside in Nash, Franklin, or Warren County, your meeting will take place in Raleigh. If you reside any of the other counties we service, your meeting will take place in Greenville (with the exception of Beaufort County; if you reside in Beaufort County your meeting will take place in New Bern).