Bankruptcy / Loan Workouts

Consumer
Business

Consumer

Do the recent changes in the bankruptcy law make it impossible to file bankruptcy?
No. Chapter 7 relief is still available to the vast majority of North Carolinians. It is more complicated, and generally takes more time to document everything and get the case right before it is filed. An experienced attorney and staff, which we have at Hatch, Little, and Bunn, can determine your eligibility and assist you in obtaining the relief from debt to which you are still entitled under the law.

Will filing for bankruptcy stop bill collectors from calling?
Yes. Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. Creditors must also stop calling if you tell them that you filed the bankruptcy petition, and give them the docket number for your case. Your attorney will contact the creditor immediately upon filing the bankruptcy petition when this is necessary, especially if a lawsuit or foreclosure is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, they may be liable for court sanctions and attorney fees for this conduct.

What should I do to prepare for filing bankruptcy?

• First, you should contact with an attorney at Hatch, Little & Bunn, LLP. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or in some cases even avoid filing for bankruptcy.
  
• If you intend to file bankruptcy, you should stop using your credit cards immediately.
• Do not transfer your assets to friends, family and business associates to hide the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
  
• Do not destroy any business or financial records.
• Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. Your attorney can advise you on how to decide what debts should and should not be paid while you prepare to file a bankruptcy petition.
  

Will I have to go to court?
About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the court to oversee bankruptcy cases. At the First Meeting of Creditors the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions, although in most cases creditors do not attend the First Meeting of Creditors. After the initial meeting, you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action you may have to appear in court with your attorney.

What happens to my personal property, real property and other assets?
Once the bankruptcy is filed, all of your property at the time of the filing, plus anything you receive from life insurance, inheritance, or domestic property settlement, becomes the property of the bankruptcy estate. You are required to file a schedule with the court listing all of your assets. However, certain property is either "excluded" from the bankruptcy estate or "exempt," and you will be able to keep all of that property. Often, all of your assets can be protected and you will be able to keep them. An experienced attorney at Hatch, Little & Bunn, LLP will review your situation with you to determine whether your property can be kept.

Do I need an attorney to file bankruptcy?
Individuals may file a bankruptcy petition without an attorney. This is called appearing "pro-se." However, the bankruptcy code is very complex and filing a bankruptcy petition requires a thorough knowledge of both the bankruptcy code and other Federal and State laws. In addition, bankruptcy practice differs from court to court. Experienced bankruptcy attorneys are familiar with the local rules, both written and unwritten, so it is in your best interest to consult an attorney at Hatch, Little & Bunn, LLP.

Will the fact that I filed bankruptcy appear on credit reports?
The bankruptcy will be listed in credit reports for a period of up to 10 years. However, the fact that you filed bankruptcy is outweighed by the fact that your discharged debts no longer count against you. Most people can obtain credit under normal terms within two years of resolving their debts in bankruptcy.

What are some alternatives to bankruptcy?
Sometimes payment plans can be negotiated with creditors. Obtaining loan extensions, compromises and workout agreements require negotiation skills and the experience of an attorney. It is in your best interest to contact an attorney at Hatch, Little & Bunn, LLP. These alternatives may alert your creditors to the existence of nonexempt property that the creditor could reach and can involve considerable expense. You also have the option of doing nothing. In any event, you should seek professional advice in dealing with most of these alternatives.

Business

What type of bankruptcy should my company file?
A financially troubled company can file a Chapter 11 to reorganize its business and try to become profitable again. In a Chapter 7 bankruptcy, the company stops all operations and goes completely out of business. It is advisable to contact the board certified business bankruptcy attorney at Hatch, Little & Bunn, LLP to discuss your options.

What will happen to my corporation if I file a personal bankruptcy?
Since a corporation is a legal entity different and distinct from its shareholders, the bankruptcy of a shareholder may not affect the corporation. The bankrupt shareholder's shares in the corporation, however, are an asset of his bankruptcy estate and are exempt only if they have little or no market value.

What is a Chapter 11 reorganization plan?
Your company will negotiate a reorganization plan to relieve it from repaying part of its debt so that it can try to get back on its feet. The company, with its attorneys, usually prepares a disclosure statement and reorganization plan and files it with the court. While operating in Chapter 11, the company must report its monthly cash flow and progress towards reorganization. Upon approval by most or all of the creditors, the Bankruptcy Court confirms the plan, and the company carries out the plan by distributing the securities and other payments called for by the plan.

Are employee's retirement plans protected from business bankruptcy?
Retirement plans that are ERISA-qualified are protected under current laws in all jurisdictions and are not included as property of the bankruptcy estate. In addition, the law requires your employer to keep your retirement money separate from the employer's own funds. If, however, you notice your employer's business failing, it may be worth your effort to ask questions about your retirement money.

Can the owners of a business that files a Chapter 7 bankruptcy start another business afterwards?
Yes. However, using the same company name as the bankrupt business may cause confusion, adversely affecting the new business by having it unfairly listed in credit reports. You should contact a corporate bankruptcy attorney before starting a new business.

Do I need a lawyer to assist my company with bankruptcy?
It is always in your best interest to seek the advice and expertise of an experienced bankruptcy lawyer to handle your company's bankruptcy needs. Corporations must have an attorney to file a bankruptcy case. An attorney can assist with deciding which chapter to file and can also assist in filing the bankruptcy and creating a reorganization plan. Contact Hatch, Little & Bunn, LLP today.

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