Filing for bankruptcy is a significant decision, and navigating the process can feel overwhelming. If you’re considering bankruptcy in Asheville, NC, working with an experienced attorney from Pitts Hay & Hugenschmidt can make a world of difference. Asking the right questions before filing can provide clarity, help you understand your options, and set you on the path to financial recovery. Below, we outline the top questions you should ask your bankruptcy attorney before filing.
1. Do I Qualify for Bankruptcy?
Bankruptcy eligibility depends on several factors, including income, debts, and financial circumstances. The two most common forms of bankruptcy for individuals are Chapter 7 and Chapter 13. Your attorney can evaluate your situation to determine if you meet the requirements for either:
- Chapter 7 (Liquidation Bankruptcy): This is typically available to those with low income who pass the means test, which compares your income to the median income in North Carolina.
- Chapter 13 (Reorganization Bankruptcy): This is designed for individuals with a steady income who can repay some debts through a structured repayment plan.
Your attorney will also assess whether bankruptcy is the right solution for you or if alternatives like debt consolidation or negotiation might be more appropriate.
2. What Are the Costs Involved in Filing for Bankruptcy?
Bankruptcy involves several costs, including court filing fees, attorney fees, and potential costs for mandatory credit counseling and financial management courses. Ask your attorney for a breakdown of these expenses. A transparent discussion will help you budget and avoid surprises.
At Pitts Hay & Hugenschmidt, we prioritize transparency, so you’ll know exactly what to expect. Understanding these costs upfront can help you determine if bankruptcy is financially feasible.
3. What Debts Can and Cannot Be Discharged?
Bankruptcy doesn’t eliminate all debts. While it can discharge certain unsecured debts like credit card balances, medical bills, and personal loans, others may remain:
- Non-dischargeable debts include:
- Student loans (except in cases of undue hardship)
- Child support and alimony
- Most tax debts
- Debts incurred through fraud or illegal activity
Understanding which debts will be affected helps set realistic expectations about the outcome of your bankruptcy case.
4. How Will Bankruptcy Affect My Credit?
Filing for bankruptcy can significantly impact your credit score, but it’s important to understand the details:
- Chapter 7 bankruptcy remains on your credit report for 10 years.
- Chapter 13 bankruptcy stays for 7 years.
Your attorney should explain how this impact diminishes over time and how you can rebuild your credit post-bankruptcy. Pitts Hay & Hugenschmidt can provide guidance on improving your financial health after filing, such as securing a secured credit card or monitoring your credit report.
5. What Property Will I Be Able to Keep?
North Carolina law provides exemptions that protect certain assets from liquidation during bankruptcy. Common exemptions include:
- Your primary residence (homestead exemption)
- A certain amount of equity in your car
- Household goods and personal belongings
- Retirement accounts like 401(k)s and IRAs
Discussing exemptions with your attorney ensures you understand what property is protected and what may be at risk. If you’re filing for Chapter 13, the risk of losing assets is lower since debts are repaid over time.
6. How Long Does the Bankruptcy Process Take?
The timeline for bankruptcy depends on the chapter you file:
- Chapter 7 bankruptcy typically takes 4-6 months from filing to discharge.
- Chapter 13 bankruptcy involves a 3-5 year repayment plan.
Your attorney will provide an estimated timeline based on your specific case. Knowing the duration of the process can help you plan for the future and set realistic expectations.
7. What Documents Do I Need to File?
Preparing for bankruptcy involves gathering a variety of financial documents, including:
- Tax returns for the past two years
- Pay stubs or proof of income for the past 6 months
- Bank statements
- A list of all debts and creditors
- Property deeds or car titles
- Monthly expense details
Your attorney can provide a checklist tailored to your case. Proper documentation ensures a smoother filing process and reduces delays.
8. Will I Have to Go to Court?
While most bankruptcy cases don’t involve courtroom trials, you will likely need to attend a Meeting of Creditors (341 Meeting). This meeting is an opportunity for creditors and the trustee overseeing your case to ask questions. Your attorney will prepare you for this meeting and represent your interests.
If complications arise, such as disputes over exemptions or creditor challenges, court appearances may be required. An experienced attorney like those at Pitts Hay & Hugenschmidt will guide you through any legal proceedings.
9. What Happens to My Home and Car?
For many people, preserving their home and car is a top priority. Your attorney can explain:
- How the homestead exemption may protect your home.
- How much equity you can retain in your car under North Carolina exemptions.
- Whether you can reaffirm your car loan or mortgage to keep these assets in Chapter 7.
For Chapter 13 filers, your repayment plan may allow you to catch up on missed payments and retain ownership.
10. How Do I Handle Co-Signed Loans?
If you have loans with a co-signer, bankruptcy can impact them. For example:
- In Chapter 7, your discharge does not eliminate the co-signer’s obligation.
- In Chapter 13, co-signed debts may be partially or fully addressed through your repayment plan.
Your attorney will discuss strategies to minimize the impact on co-signers, such as negotiating with creditors or reaffirming the debt.
11. Are There Alternatives to Bankruptcy?
While bankruptcy is a powerful tool, it’s not always the only solution. Alternatives to consider include:
- Debt settlement or negotiation
- Credit counseling and budgeting assistance
- Loan modification or refinancing
An honest attorney will explore these options with you and recommend the best course of action based on your unique situation.
12. How Will Bankruptcy Affect My Spouse?
In North Carolina, whether your spouse is affected by your bankruptcy depends on several factors:
- If debts are solely in your name, your spouse’s credit may not be impacted.
- If you have joint debts, both you and your spouse may be held responsible.
Discussing these nuances with your attorney can help protect your spouse’s financial health.
13. What Are My Responsibilities After Filing?
Bankruptcy doesn’t end once your case is closed. You’ll need to complete:
- A financial management course to receive your discharge.
- Any obligations under a Chapter 13 repayment plan.
Additionally, rebuilding your credit and avoiding financial pitfalls are essential steps. Your attorney can offer resources and advice for a strong financial recovery.
14. What Challenges Could Arise in My Case?
Every bankruptcy case has unique challenges, such as:
- Disputes over property exemptions
- Creditor objections
- Errors in documentation
An experienced attorney can anticipate potential issues and develop strategies to address them. At Pitts Hay & Hugenschmidt, we work proactively to mitigate risks and ensure a smooth process.
15. Why Should I Choose Pitts Hay & Hugenschmidt?
Finally, it’s important to ask why the attorney or law firm is the right fit for your case. At Pitts Hay & Hugenschmidt, we pride ourselves on:
- Extensive experience in bankruptcy law
- Personalized attention to each client
- A compassionate and judgment-free approach
Our team is committed to guiding Asheville residents through bankruptcy with confidence and care.
Conclusion
Filing for bankruptcy is a complex process, but the right attorney can make it much easier. By asking these critical questions, you’ll gain the knowledge and confidence needed to move forward. At Pitts Hay & Hugenschmidt, we are here to answer all your questions, explain your options, and support you every step of the way.
If you’re ready to take the next step, contact us today to schedule a consultation. Together, we can create a plan for a brighter financial future.
