Law Offices of John T. Orcutt
North Carolina Bankruptcy

Travis Sasser
Cary, NC Bankruptcy Attorney

Kantrovitz & Associates
Boston, Massachusetts
 

1. What is Chapter 7 Bankruptcy?

In a Chapter 7 case, a debtor turns over their nonexempt property to a trustee of the court, who then converts the property to cash and pays off the debtor's creditors. In return, the debtor receives a Chapter 7 discharge.

2. Are there any debts not dischargeable under Chapter 7?

• Tax debts

• Debts that occurred under false pretenses or fraud

• Debts not listed on the debtor's Chapter 7 forms

• Debts for embezzlement or larceny

• Debts for alimony or child support

• Debts for intentional injury to the person or property of another

• Debts for certain fines or penalties

• Debts for educational benefits and student loans

• Debts for personal injury or death caused by the debtor's operation of a motor vehicle while intoxicated

• Debts that were listed in a previous bankruptcy case

3. Who is eligible to file under Chapter 7?

Any person who resides in, does business in, or has property in the United States may file under Chapter 7, except a person who has been involved in another bankruptcy case that was dismissed within the last 180 days.

4. What is Chapter 13 Bankruptcy?

In a Chapter 13 case, the debtor must submit to the court a plan for the repayment of all, or a portion of, his or her debts. The debtor must make regular payments to a trustee, who disburses the money to their creditors. Upon completion of the payments the debtor is released from liability for the remainder of his or her dischargeable debts.

5. When is Chapter 13 preferable to Chapter 7?

Chapter 13 is usually preferable for a person who:

1. wants to repay all or most of his or her unsecured debts and has finances to do so within a certain time frame.

2. has valuable nonexempt property or has valuable exempt property securing debts, both of which would be lost in a Chapter 7 case.

3. is not eligible for a discharge under Chapter 7.

4. has one or more substantial debts that are dischargeable under Chapter 13 but not under Chapter 7.

6. What types of debts are NOT dischargeable under Chapter 13?

1. Debts that were paid outside of the plan and not covered in the plan

2. Debts for alimony or child support

3. Debts for death or personal injury caused by the debtor’s operation of a motor vehicle while intoxicated

4. Debts for criminal fines

5. Debts for most student loans

6. Installment debts whose last payment is due after the completion of the plan

7. Debts incurred while the plan was in effect yet not paid under the plan

7. Will bankruptcy stop a wage garnishment or a judgment against me?

Bankruptcy will terminate garnishments earned after the filing of the bankruptcy.

8. Will my creditors stop harassing me?

By law, all actions against a debtor must cease once bankruptcy documents are filed.

9. Will my spouse be affected if I file bankruptcy?

Your spouse will not be affected by your bankruptcy if they are not responsible for your debt.

10. Is it possible that my friends will find out that I filed for bankruptcy?

It is not likely, but possible, because Chapter 7 filings are public records.

11. Will I ever be able to get credit again?

Yes. Chapter 7 or 13 Bankruptcy does stay on your credit report for 10 years, but it becomes less significant with each year that passes. The truth is that you are probably considered a better credit risk after the bankruptcy than before.

12. How much does it cost to file for bankruptcy?

On average, it will cost about $200 to file for bankruptcy. The costs for hiring an attorney vary, but many bankruptcy lawyers will give you a free initial consultation.

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