When I am in a bankruptcy consultation, here are the top 5 questions that clients typically ask:
- I’ve been sued in civil court. If I “lose the case, will I go to jail?” The answer to this question is no. In North Carolina, you cannot go to jail for owing money. If you “lose the case” a judgment will be entered against you. If that happens, the person who filed the lawsuit will try to execute on that judgment if possible. (Executing on the judgment means finding a way to pay off the judgment).
- Will my wages be garnished for lawsuit judgments or debt that I owe? The answer to this question is generally no. In North Carolina, your wages can’t be garnished unless you owe tax debt, government debt or child support debt.
- If I file for bankruptcy, will I lose my house or my car? The answer to that question is also generally no. In North Carolina we have something called equity exemptions that are designed to protect some things that you own so you can still live reasonably, even if you are filing for bankruptcy or being sued. As long as your house and car do not have too much equity, or more equity than the equity exemptions allow, you will be able to keep your house and car.
- I’ve recently lost my job and I’m now getting unemployment compensation, can I still file for bankruptcy? The answer to that question is yes. As a rule of thumb, if you are having trouble paying your bills, you can file for bankruptcy. The only time your income amount becomes an issue is when you are trying to catch up an arrearage on a secured debt (that means missed payments on your house or car). In that case, you will have to file a chapter 13 and you will need to show the court that you make enough money to fund the chapter 13 plan.
- Should I wait until I am being sued or my house is in foreclosure before I file for bankruptcy? The answer to that question is always no. The longer you wait to file for bankruptcy, the more arrearage you will have on your mortgage, the more negative entries you will have on your credit report and the worse off you will be. A lot of our clients spend their 401(k)s and other assets trying to manage their situations when some of those assets can be protected in bankruptcy.
Remember, it is always a good idea to speak to an attorney about your options. Call us or e-mail us today for your free consultation.