Considering Chapter 13 in NC ... please help

Hi Violet -

Welcome to the site! You've come to the right place for help.

Let me preface everything by saying only a Bankruptcy Attorney can give you definitive answers on all your questions - every bankruptcy situation is different - yours involves debt and two houses, along with your other assets - so an attorney would need to handle your more detailed inquiries about those issues.

Chapter 13 Bankruptcy is referred to as the "wage earner plan" - and for good reason. If you have a job and can afford to repay at least some of your debts, you will be filing Chapter 13 - not Chapter 7.

Your attorney will need to perform a "means test" on your income to determine exactly where you fall regarding the average income for your area. This means test will also determine your "disposable income", which will be applied to your debt repayment plan (the Chapter 13 plan).

You shouldn't have to stop paying your bills in order to pay the attorney - most attorneys are offering the option of having your attorney fees included in the Chapter 13 plan due to the expense of this filing since the bankruptcy laws changed a few years ago. The attorney's fees can range from $1500 to $3000 - that's why they include them in the plan. However, you need to be aware that the attorney's fees will be paid out of the plan FIRST - before any of your debts are paid. The only up-front money you should need to come up with would be the filing fees (around $200 or so) for the court and possibly the first payment on your plan. Most plan payments are arranged to come out of your paycheck via garnishment and go directly to the trustee for your debt repayment.

As to the credit cards, it will be up to you whether you keep them or not - but your attorney will tell you that when you sign the paperwork and commit to the repayment plan, anything not included in the plan when you file will have to be paid outside the plan. If you decide to add those items to your plan at a later date, most attorneys will charge you a fee to do so. You may find that your plan payment makes it difficult to maintain other payments outside the plan.

You will not be asked to sell your clothes or jewelry - unless you have a huge amount of furs and diamonds! The bankruptcy attorney can explain your state's exemptions for personal property and real estate. You will, however, be asked to declare ALL of your assets, including clothes, jewelry, boats, vacation homes, cars, recreational vehicles, etc.

Bankruptcy is not the answer for everyone, and only a Bankruptcy Attorney can give you more in-depth answers to all of your questions, as the exemptions for your assets vary from state to state. Most attorneys offer a free initial consultation, and would be able to answer all your questions at that time.

Let us know if you have any more questions - we're here to help! :D

Thank you for the thorough answer, Sue. Hopefully I can speak with an attorney soon. I have to stop paying my big credit card payments starting as early as this month because my husband is out of work and we literally have no money for food and gas ... I've never missed a payment or been late and feel very uncomfortable doing this but have no other option.

If anyone has any other suggestions, please feel free to share - I am at a loss how to handle this until I get an attorney ....