The decision to file bankruptcy is a very difficult one. If you are stuck with making such a decision, choosing the right legal representation for your bankruptcy case if very important. Robert E. Fuller, Jr., Attorney at Law, has over 33 years of experience in helping Eastern North Carolina residents get a fresh financial start.
We are a debt-relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. If you are troubled by credit card debt problems, bill collector’s calls, lawsuits or IRS tax problems, then you should talk to us. We provide a free consultation to analyze all options available to you, including Chapter 7 and Chapter 13.
FREQUENTLY ASKED QUESTIONS
My petition has been filed. What do I do next?
The court will mail to you, your creditors, and your attorney a Notice of Chapter 7 Bankruptcy Case or Notice of Chapter 13 Bankruptcy Case. Depending on which chapter you filed, this notice will also have your meeting of the creditors date and Deadline dates. The meeting of creditors, which you will also attend, is known as the 341 Meeting (because its required by Section 341 of the bankruptcy laws). You must attend the meeting with your attorney, and your creditors may also attend and ask you questions, if they wish. If you filed a Chapter 13, you are also required to attend a Debtor(s) Education Class, which is held on the same day as your 341 Meeting. The time for the class is scheduled before your 341 Meeting. It is VERY IMPORTANT that you arrive on time (early is better) for your Debtor(s) Education Class. If you are late, or if you fail to appear, you will not be able to attend your 341 Meeting. If that should happen, the Trustee will ask the court to dismiss you case for failure to appear. If some reason (emergency cases ONLY) you know you are not going to be able to make your class and meeting, you need to contact your attorney’s office immediately.
Also, very important to remember, if you filed a Chapter 13 and your first plan payment comes due before your 341 Meeting, make sure that you make your plan payment to the Trustee before the 341 Meeting. Failure to do so could result in the Trustee filing a motion to dismiss your case for failure to make payment.
What will the Trustee ask me at the 341 Meeting?
The Trustee will ask you if your petition and schedules (the papers you signed to start your case) are true and correct. To save time it is important for you to understand that this question is intended to include the following three questions:
Were your petition and bankruptcy schedules, which you signed and which were filed with the court true, correct, and accurate when you signed them?
Are they still true, correct, and accurate?
Has anything in them changed since the time you signed them, such as a job or salary change or change of address?
NOTE: Please advise your attorney BEFORE the 341 Meeting if there have been any changes
Will my attorney or my Trustee discuss my case with anyone other than myself?
NO! Your attorney and your Trustee will only discuss your case with you and your creditors or their attorneys. Therefore, you should not have someone else contact our office or your Trustee with questions you may have concerning your case. You will need to give us written permission to discuss your case with other family members (including a non-filing spouse), friends, employers, or anyone else.
What are the three primary classifications of debts?
Secured – property pledged as collateral such as a home, car or furniture. These debts can either be reaffirmed (keep property and continue making regular monthly payments per your contract, debt survives the bankruptcy and is not discharged); redeemed (pay off property at fair market value); surrendered (abandon property back to creditor and debt becomes unsecured and discharged through you bankruptcy); or lien could be avoided (such as a creditor that has a lien on household goods that are exempt through your bankruptcy, debt becomes unsecured and discharged through you bankruptcy).
Unsecured Priority – taxes, delinquent child support, court costs, attorney’s fees.
Note: Both secured and unsecured priority debts must be paid by you – they are not discharged through your bankruptcy.
Unsecured – debts with no collateral including most credit card debt, medical expenses, and signature loans. These debts are discharged through your bankruptcy.
What are specially classified debts?
Co-signers or guarantors – a debt you obtained with the help of another person. Note: You may want to reaffirm any such debt to protect your co-signer.
Back child support or alimony is an unsecured priority claim, which must be paid in full by you. They are not discharged through your bankruptcy.
What do my creditors have to do?
In a Chapter 7 filing, a secured creditor holding a lien on property will send your attorney a reaffirmation agreement for you to review. If you intend to keep the property you will need to sign the original reaffirmation agreement at your attorney’s office. Your attorney will forward the agreement to the creditor who will in turn file the agreement with the court.
In a Chapter 13 filing, your creditors must file a “proof of claim” stating the amount you owe them and verifying that your debt to them is legitimate within 90 days of the 341 Meeting. Governmental entities, such as the IRS, have 180 days from the date your bankruptcy petition was filed. These deadlines are called claims bar dates, and any claims filed after the appropriate bar date may not be allowed without sound justification. In other words, if a creditor does not timely file a proof of claim, it most likely will not get paid and your obligation to pay that debt will be discharged, or legally forgiven, upon the successful completion of your plan.
Are there any debts that are not discharged?
Yes, there are some debts that cannot be discharged such as student loans, back child support and alimony, and money owed because of a DUI. Also, any and all pre-petition debt (debt that you had at the time of filing) that you did not disclose in your petition as well as any and all post-petition debt (debt you incurred after you filed) will not be discharged.
In a Chapter 7 filing, any such debts with balances will be your responsibility to pay. Valid liens, such as a lien on your car, home, furniture or jewelry that you have reaffirmed, will also remain after your bankruptcy and not be discharged.
In a Chapter 13 filing, any such debts with balances not fully repaid in the plan will be your responsibility to pay when you get out of bankruptcy. This is true even if the creditor failed to file a claim in your case. Valid liens, such as a lien on your car, will also remain after your bankruptcy unless they are paid in full through your plan. You and your attorney have the right to file claims for creditors for a short time after the creditor’ bar date has passed. After the bar date for non-governmental creditors, which is 90 days after your meeting of the creditors (3 months after your meeting with the trustee), you and your attorney will receive a list of claims filed from your Trustee. You should look at this list carefully. This list will show all creditors who have filed claims in your case, the amount of the creditor’s claim, and whether the claim is a secured claim (such as the claim of a creditor who has a lien on your car, your home, or your furniture), an unsecured priority claim (such as the IRS or N.C. Department of Revenue claims), or a general unsecured claim. Creditors that you continue paying directly often do not file claims and are shown as having a claim amount of $0.00 and classification of “Direct-Pay”. Since you are continuing to pay the amounts due that creditor directly after you file your case, you need not worry about such listings. If a creditor classified as “secured” who is supposed to be paid through your plan has not filed a claim (indicated by “$0.00 in the “amount” column), if an educational loan creditor or other creditor that would not be discharged unless the balance owed to it has not filed a claim, or if a claim has been filed by a creditor that you believe is incorrect for any reason, you should contact your attorney immediately to discuss whether you attorney should file a claim for the creditor or whether your attorney should file an objection to an incorrect claim. Even though some claims that cannot be discharged (such as educational loans) may not receive full payment during your plan, some of their claim will be paid if they have an allowed claim in your case. If you are uncertain whether any of these things need to be done in your case or think you may need advice on what to do, you should contact your attorney right away.
What are my payment obligations?
In a Chapter 7 filing, your attorney will discuss with you the payment arrangements for the remaining balance, if any, on attorney fees. If there are any fees remaining to be paid you will receive a statement from the attorney’s office around the 25th of each month. Payments should be made no later than the 10th of the following month.
In a Chapter 13 filing, your first plan payment is due to the Trustee on the 1st calendar day of the month after your case is filed. So, if your case was filed on June 25th, your first plan payment would be due July 1st. If your case was filed on July 1st, then your first plan payment would be due to the Trustee on August 1st.
Your Trustee will make payments to your creditors as provided in the plan. You can elect to make your plan payments yourself directly to the Trustee. However, plan payments are usually made through payroll deduction and your employer would send the money deducted from your paycheck directly to your Trustee. If you do elect to have your payments payroll deducted, you will need to provide the Trustee with your employer’s payroll address. The Trustee will then send a letter to your employer directing them on how much to take out of your paycheck each month. When deductions begin, they should be reflected on your payroll stub to ensure that your payment is being deducted each time you get paid. Keeping your paycheck stubs will enable you to prove what has been deducted from your pay should a question arise. The amount taken out of each paycheck will depend on the amount of your monthly plan payment and how often you are paid each month. For the following example, let’s assume your monthly Chapter 13 plan payment is $350.00. If you are paid twice every month (24 pay periods per year), say, on the 15th and the 30th, $175.00 will be deducted for each check (0.05 x monthly plan payment). If you are paid once every two weeks (26 pay periods per year), $161.54 will be taken out of each paycheck (0.4615 x monthly plan payment). If you are paid every week, $80.77 would be deducted each month (0.23077 x monthly plan payment). Your employer should send amounts deducted to the Trustee at least once a month. It is very important to remember that until the plan payments have been taken out of your paycheck by payroll deduction for a full month, you must continue to make plan payments to the Trustee by the 1st day of each month. Some exceptions are Debtors who are self employed, whose income is from pension or retirement benefits, who are in the military, or whose company is so small that payroll deduction would be a burden for the employer. If you fall in this category, your plan payments will have to be made directly by you to the Trustee, then the Trustee will make payments to the creditors as provided in the plan.
The Trustee does not accept any payments in cash. Payments may be made by personal check, money order, cashier’s check or bank check. If you bounce a personal check to your Trustee, you will lose the right to pay plan payments by personal check. It is VERY IMPORTANT that you always put your case number on your payment to ensure that your payment gets proper credit. In a Chapter 7 filing, direct payments made by you, for debts that have been reaffirmed. Direct payments are the ones you must make, including your regular expenses. Your current mortgage payment as well as any debt you reaffirmed (car, furniture, jewelry, etc.) is your responsibility. Make sure you always put your account number on your payments to ensure proper credit of your payment. You will need to remain in contact with your creditor should a problem arise. They may not send you any statements or coupons while you are in bankruptcy. Therefore, you need to keep the most recent statement with your important papers so you will know where to mail your payment, your account number, amount of payment and due date as well as a telephone number should you need to contact the creditor.
In a Chapter 13 filing, direct payments made by you, outside of your Chapter 13 Plan. Direct payments are the ones you must make, including your regular expenses. Your current mortgage payment is your responsibility if it is not included in your plan. Almost all debtors who have a mortgage payment provide that all payments, if any, that were delinquent at the time you filed your petition (known as pre-petition arrearage) would be make through the Chapter 13 Plan and that all payments that come due immediately following the filing of the Chapter 13 Plan (known as post-petition payments) would be made directly to the creditors by the Debtor. This also applies to any other loans that you are paying outside of your plan. So, if you are to pay post-petition payments directly to your mortgage company or loan company and you filed your case on July 30th, and if your payment is due on the 1st day of each month, you should make the payment due August 1st and each payment thereafter. In other words, make sure you make the payment that next comes due immediately following the filing of your petition. Also, make sure you always put your account number on your payments to ensure proper credit of your payment. Since these payments are made outside of your bankruptcy, you will need to remain in contact with your creditor should a problem arise. They may not send you any statements or coupons while you are in bankruptcy. Therefore, you need to keep the most recent statement with your important papers so you will know where to mail your payment, your account number, amount of payment and due date as well as a telephone number should you need to contact the creditor.
Summary Note: It is your responsibility to make sure that all of your post-petition direct payments with creditors as well as your Chapter 13 Plan payments to the Trustee are made in a timely manner.
In a Chapter 13 filing, can I waive a payment if an emergency situation arises?
Yes. Take action to resolve problems as soon as you are aware of them. If you have unexpected emergency expenses and don’t have the money to make your plan payment, call your attorney.
The Trustee may grant you up to 3 payment waivers during your plan, but none are granted during the first 6 months, and granting of a waiver is not automatic. Also, you cannot use 2 waivers back to back unless in extreme emergency cases. Any other waivers must be sought by filing a motion with the court. Payment waivers will not be granted unless your plan payments are current or unless the waiver brings the plan current. A payment waiver moves a payment to the end of the plan, so any waived payment must eventually be paid. Waivers must be requested in writing. Therefore, you need to contact your attorney and explain why you need the waiver so he can file the request for you. DO NOT simply miss a payment. Should you simply not make a payment the Trustee will assume that your plan is delinquent.
Does filing bankruptcy always protect my property from repossession?
Upon filing your bankruptcy petition, your creditors were advised of an “automatic stay” that prohibited them from pursuing any repossession or foreclosure actions without court permission. To get that permission, the creditor must first file a “Motion for Relief from the Automatic Stay” with the court. If one is filed, a copy must be mailed to you. If you receive a copy of such a motion, contact your attorney at once. A written response must be submitted in an attempt to prevent the property loss through repossession or foreclosure. Your attorney will prepare and file the response with the court on your behalf. However, you MUST contact your attorney’s office to discuss the matter and how it will be settled or a response cannot be filed. If there is no response filed with the court, an “Order Lifting Stay” may be entered by default and without a hearing, resulting in the loss of your property.
Is credit use permitted or can I incur debt while in bankruptcy?
You should avoid using credit or incurring any new debt while in bankruptcy. This includes family members supported by the debtor. If you wish to incur any new debt in excess of $7,000.00 while in bankruptcy (such as to purchase a car or a house), your attorney must file a motion requesting permission to incur debt, and you must first get a court order allowing you to incur the debt. You will need to contact your attorney and give him the following information: why do you need to incur debt; (what is the loan for: i.e. car, house, etc.); the total amount of debt you need to incur; what your monthly payments on the loan will be; the interest rate on the loan; and the term of the loan (how long will the loan be: i.e. 36 months, 48 months, etc.) If you incur debt without getting court approval, your case could be dismissed. Note: Any debt incurred after you filed will be your responsibility to pay and will not be discharged.
Can I sell property while in bankruptcy?
Your attorney must also file a motion and you must get a court order before selling or disposing of any property while in bankruptcy. Again, if you fail to do so, your case could be dismissed.
SUMMARY NOTE FOR THE PURCHASE OR SALE OF PROPERTY: If you want to buy or sell any property for $7,500.00 or more, your attorney must file an application with the court and get an order entered allowing the purchase or sale prior to the purchase or sale. This can take up to 30 days. Plan ahead and call your attorney well ahead of time. DO NOT schedule a loan closing for the purchase or sale of real estate until you have an order from the court allowing you to go through with the closing.
If I have an automobile accident or damage to my home while in bankruptcy and there is an insurance settlement, can I cash the insurance check and use the money for repairs or personal use?
Before you can cash an insurance settlement check, your attorney needs to file a motion with the court and you must get a court order before using the money to repair the damages or use it for personal use. Contact your attorney’s office with the insurance settlement amount and have the insurance company forward the insurance check to your attorney’s office to hold in your file until an order has been entered by the court.
In a Chapter 7 filing, when will I get my discharge notice from the Court?
All creditors are notified at the time of your filing that they have a certain amount of time in which to file a complaint objecting to your discharge or to determine the discharge ability of certain debts. This deadline is called the “bar date”. It is 90 days after the first date set for your 341 Meeting of the creditors. If no one objects to the discharge, then normally within 10 days after the bar date the Trustee will file your discharge and a final decree with court and you will receive a copy of each by mail. Keep a copy of each with your important papers. You may also wish to provide a copy to your credit bureau.
In a Chapter 13 filing, when will I get my discharge notice from the Court?
Once you have made the last payment due under your plan, as confirmed, your case will be audited by the Trustee to ensure that you have paid all amounts necessary and have done all things necessary to receive your discharge from Chapter 13. Sometimes your plan may need to be extended to ensure that all of these amounts are paid due to your having made payments after the day they were due during your plan, allowance of claims you did not anticipate, etc. Once your plan has been audited, you will receive a final report and a discharge (this usually takes 60 –90 days). Keep a copy of each with your important papers. You may also wish to provide a copy to your credit bureau.
In a Chapter 13 filing, what is the difference between the discharge and dismissal of my case?
A discharge occurs when a plan is successfully completed by a debtor who has either repaid 100% of all debts listed in a plan or repaid all secured and priority debts and as much as financially possible on unsecured debts. In the latter case, any remaining balances are discharged or legally forgiven.
Note: There are some debts that cannot be discharged, including student loans, back child support or alimony, and money owed because of a DUI. Any such debts with balances not fully repaid in the plan will be your responsibility to pay. Also, any and all pre-petition debt (debt that you had at the time of filing) that you did not disclose in your petition as well as any and all post-petition debt (debt you incurred after you filed) will not be discharged.
A dismissal can be voluntary initiated by you or involuntary initiated by the Trustee or a creditor when there are unresolved problems with the case, such as delinquent plan payments. If a case is dismissed, all the protection by bankruptcy is lost, and creditors are free to resume collection or repossession actions against you, your property, and/or any co-signers you may have. Interest, penalties, and attorney fee may be added to the debt.
Why would my case be dismissed?
The following is a list of reasons your case could be dismissed. However, please note that this is not the extensive list. There may be other reasons why your case could be dismissed.
Obtaining credit / incurring debt of $7,000.00 or more without first getting the courts permission could result in your case being dismissed.
Selling property without first getting the courts permission could result in your case being dismissed.
Using insurance settlement proceeds without first getting the court's permission could result in your case being dismissed.
If the court and Trustee does not have a current address, your case could be dismissed. It is VERY IMPORTANT that you contact your attorney with any change in your mailing address. Once you have notified your attorney of a change, he will notify your Trustee and the court. If your attorney does not have a current address and current telephone number where you can be reached, then it is possible that important and time sensitive documents would not reach you. Should that happen, it is possible that you could lose your property or your case could be dismissed.
In a Chapter 13 filing, failure to make Chapter 13 plan payments could mean your case being dismissed. If you are making your payments direct, the payments must paid to the Trustee by the 1st day of each month, no later than the 1st Thursday of the month. If your payments are being payroll deducted, it is very important that you look at all your paycheck stubs to make sure the payments are being deducted. Also, make sure that your employer is in fact sending the payments to the Trustee once they have been deducted. Payments remain your responsibility at all times. Until you see the deduction coming out of your paycheck, you must make your payments to the Trustee by the due date. Keeping your paycheck stubs with your important papers will enable you to prove what has been deducted from your pay should a question arise. If you become entitled to property within 180 days (6 months) of the date you filed your case as a result of someone’s death (whether you’ve received the property or not) you must immediately advise your attorney. Failure to do so could result in your case being dismissed. Summary Note: It is very important that you have 1) listed all of your creditors in your petition; 2) listed all of your property in your petition, both real and personal; 3) have been completely honest in all of your answers; 4) make all of your payments when they come due, both the plan payment and payments you are making direst; and 5) informed your attorney of any and all situations that may arise during the course of your plan.
When will I receive the title(s) to my vehicles?
Once the creditor has been paid in full the creditor will release your title(s). The creditor should send the title(s) directly to you. If you have not received your title(s) within 30 days of paying your account in full, you can contact the creditor direct and ask them to release the title(s) to you. If you cannot get the title(s) by contacting the creditor yourself, then contact your attorney and ask him to request the title(s) from the creditor.
Do I have to maintain full insurance on my property?
Yes. You must keep insurance on any property on which a creditor has a lien. This includes collision and comprehensive insurance on vehicles and fire or hazard insurance on real estate and mobile homes on which a creditor has a lien. If you do not maintain adequate insurance, you may be required to turn over possession of the property to the creditor who holds a lien against the property. The creditor must have a copy of your insurance policy that states there is full coverage and that they are listed as the loss payee. You will find this information on the declaration page of your insurance policy.
What effect will my bankruptcy have on my IRS obligations?
It is a requirement of the court that you file your tax returns each year in a timely manner. Your returns will be handled by the IRS’s Special Procedures Staff, which could delay any refund that is owed to you.
How will my bankruptcy affect my credit rating?
Because bankruptcy is a matter of public record, it automatically appears on your credit report. The Chapter 7 information will remain on your record for 10 years from the date of filing. Future credit grantors will judge your credit worthiness in different ways.
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