Yes. You cannot pick and choose which of your creditors to list. Bankruptcy is set up to work as an orderly procedure so that, in an asset Chapter 7 case, one unsecured creditor does not receive more than the other. All your creditors, who have already extended credit to you, are entitled to receive notice of your bankruptcy filing, even those credit cards with a zero balance. In a Chapter 13 case, the creditors are paid according to the plan you propose based on your disposable income remaining after your expenses are deducted. Each creditor files a Proof of Claim showing the amount you owe them. The unsecured creditors will receive a percentage of the total amount owed to them.
2. Must I stop using my credit cards even if I have some credit left?
Yes. The accounts will be closed when you file the bankruptcy. If you have an unincorporated business, you must also list those credit cards. If you have an incorporated business and you have personally guaranteed its debts, you must list those debts in your individual bankruptcy filing.
3. Must I return the large items I purchased on credit?
Credit cards are usually unsecured, meaning that you can keep the items purchased while discharging the debt in bankruptcy. However, if the seller had you sign a security agreement at the time of purchase, you must pay for the item in one lump sum, refinance the item through a different lender and pay off the original creditor, reaffirm the debt with the original lender, or surrender the item.
4. Must I give up my vehicle if I file bankruptcy?
Usually not. North Carolina has generous exemptions that were recently raised to higher amounts in January 2006 and most vehicles are protected. If you still owe on your vehicle, you might have to sign a reaffirmation, redeem it or surrender it. Your attorney can advise you. If not current on your vehicle payments at the time of filing, it is possible that a Chapter 13 may be of benefit to you to ease this situation.
5. May I keep my home if I file bankruptcy?
Usually you can, but it depends on a number of things: how you hold title to the home if you are married, whether responsibility for your marital debts is allocated separately between you and your spouse, what kind of debts you have, whether you are current on the house payments, the amount of equity in the home, how far a foreclosure has progressed if one is under way, and whether you qualify for filing a Chapter 13.
6. May I surrender my home in a Chapter 7?
Yes, you may. Any deficiency judgment from the foreclosure sale will be discharged in the bankruptcy. You may remain in the home until the Sheriff’s Sale, after which it is safest for you and all your things to be out of the home. You will receive notices of the date of the sale. The time for this varies by lender.
7. Will I be able to get student loans after I file?
Yes, you will. There is a Bankruptcy Code Section which prohibits discrimination against you for having filed bankruptcy. You cannot be denied a professional license for having filed bankruptcy either.
8. My grandmother left me her exquisite sterling silver tea service valued at $10,000. Must I list that as an asset or may I just have my sister keep it for me while I go through the bankruptcy?
Yes, you must list everything you own as well as anything you gave to relatives for no remuneration in the recent past. Failure to do so can lead to severe consequences under the federal law, including steep fines and prison time, on each count. Be open and honest with your attorney. It is her job to try to find a way for you to either exempt your property to protect it from the trustee, or to file a Chapter 13 to pay the excess value of your exempt property into the plan for the trustee to distribute to your creditors.
9. I have been with my credit union for years and they’ve always ”been there” for me. I’d like to pay back that $2,500.00 loan I got from them before I file. Is that a problem?
Yes, a big problem! The trustee will get back that $2,500.00 from the credit union and will distribute it to all your unsecured creditors in an orderly procedure so that no one creditor receives more than the other. Remember what I said about that in Question # 1 ?
10. How much is the filing fee?
$299.00 for Chapter 7 and $274.00 for Chapter 13, as of April 8, 2006, when the current filing fees were increased to these amounts.
11. How much is the attorney fee?
When you come in for your initial consultation, we will discuss the attorney fee for Chapter 7 and for Chapter 13, if it appears that you qualify for filing. There is a payment plan for both which will be explained to you as we go over the contract retaining my services.
12. What is this I’ve heard about a consumer credit counseling course I have to attend before I can file bankruptcy?
Yes, it’s true. Both you and your spouse must take the course prior to filing. This is a new requirement. It lasts about an hour and a half and can be taken over the internet. Upon your completion of the course, I will be sent the certificate from the course director to file along with your petition. You will also have to take a Debtor Education Course within 45 days after the Creditors’ Meeting and I will have to also file the certificate for that with the court in order for you to receive your discharge.