Common Bankruptcy Misconceptions | Eastern North Carolina Bankruptcy Attorneys
The following are common bankruptcy misconceptions that your bankruptcy attorney hears everyday.
“I cannot keep my house.”
In most cases you can keep your house. If you are behind on your payments, then Chapter 13 can help you stop foreclosure and catch up on the payments. If you are current on your payments and file a Chapter 7, you keep paying for your house the same way you have been paying. You do not get to keep your house or the excess equity “for free.” In deciding whether to keep your house we will need to know the current value, the amount owed and the current status of your payments. In North Carolina, you are entitled to keep all exempt equity in your home. A single person is entitled to $35,000 in equity. A married couple filing jointly may claim an exemption up to $70,000.
“I cannot keep my car or truck.”
In most cases you can keep your car. If you are behind on your car payment, then a Chapter 13 can help you stop a repossession and catch up the payments. If you are current on your payments, you may continue the same payment schedule. In North Carolina, the vehicle exemption is $3,500 for each person filing. To determine the equity in your vehicle you may go to NADA.com and look up the clean retail value (this value will be way higher than you think your car is worth)! Subtract the amount you owe on your car. The remaining amount is the equity. If the equity exceeds $3,500.00, do not panic. This will not stop you from filing or make you lose your vehicle, but it will impact our bankruptcy planning.
“If I file a Chapter 13, all my creditors will get paid back.”
All of your creditors will be listed on your petition but not necessarily treated the same. Secured creditors such as mortgage companies and car lenders must be paid if you intend to keep the house or car. Unsecured creditors like credit card companies may not receive any payments. Each case is different. We will analyze and discuss your situation with you.
“I can never get credit again.”
Your bankruptcy filing will appear on your credit report for 7 to 10 years. However this is only one of many factors future lenders will consider. Lenders will consider how you have paid the trustee, any secured loans you retained, any new credit you have obtained, how much your income is and many other factors. Frequently people are able to refinance homes, or purchase homes and vehicles within 2 years of filing for bankruptcy. After you file your bankruptcy petition, you will receive instruction on rebuilding your credit.
“I make too much money to file bankruptcy.”
Income is one of many factors that we use to determine your bankruptcy options. It cannot prevent filing. It will influence how we file or whether there are other alternatives better suited to your needs.
“My spouse’s name (or ex-spouse’s name) is on the loans so I cannot file.” One spouse may file without the other spouse. In some cases the non-filing spouse benefits, in some cases the non-filing spouse is not impacted at all. These are individual circumstances that we will discuss.
“All my friends, neighbors and co-workers will know that I filed for bankruptcy.”
Bankruptcy court is part of the Federal Court system, not the state court system. Typically bankruptcy cases are not published in the newspaper like state court lawsuits or foreclosures. If someone wishes to go look at the filings they can, but this is rarely done unless you are a public person or business of interest. The 341 meeting that you must attend is not at the county courthouse. Unless your neighbor has a bankruptcy-related issue, it is highly unlikely you will see them at one of these locations.
“I have more bankruptcy questions.”
If you still have additional bankruptcy questions that are not addressed, please contact us directly for a personal bankruptcy and debt relief consultation!