Frequently Asked Bankruptcy Questions

A: There are four different types:

• (1) Chapter 7: a liquidation Bankruptcy enabling you to discharge unsecured debts quickly.
• (2) Chapter 13: a repayment program which lasts from 36 to 60 months in which you make payments. Depending on your situation, you will repay your creditors between 1% and 100% during the 36 to 60 month period. One of the biggest advantages of Chapter 13 is the ability reduced the debts of secured creditors and reduce their interest rates.
• (3) Chapter 11: a reorganization Bankruptcy for wealthy individuals and businesses.
• (4) Chapter 12: a reorganization plan like Chapter 13 for family farmers.

A: It depends on your individual case and the type of Bankruptcy you file. I will discuss this with you during your consultation.

A: No. Under current income tax laws, discharged debt is not taxable.

A: North Carolina allows each person to have $3,500 in equity in a vehicle. So if you have a vehicle worth $10,000 and you owe $8,000 on the vehicle and you have another vehicle worth $10,000 and you owe $11,000 on, you would only need to use $2,000 of you auto exemption to keep both your vehicles.  If you have more than $3,500 in equity, you may be able to use your $5,000 wildcard exemption.

A: North Carolina allows each person $35,000 in equity in their home.  If your home is worth $150,000 and you owe $125,000, then you would only have to use $25,000 of your homestead exemption to keep your home.

A: If you are disabled you may be able to discharge your student loans in Bankruptcy.  Typically, they are not discharged.

A:  In most cases filing Bankruptcy helps your credit score.  By subjecting your negative credit accounts to the Bankruptcy process, you can improve your score quickly.  Bankruptcy stays on your credit report for ten years.