FREQUENTLY ASKED QUESTIONS
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BANKRUPTCY |
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| What is Bankruptcy? |
| Am I eligible to file? |
| What is Chapter 13? |
| What is Chapter 7? |
| What is Chapter 11? |
| Which type of Bankruptcy should I file? |
| What property is exempt from creditors? |
| What about secured property (property that has a lien on it, such as a car title)? |
| Will all of my debts be discharged? |
| What about co-signers? |
| What effect will bankruptcy have on my credit rating? |
| What about harassing calls from creditors? |
| Do I have to attend a court hearing? |
| What actions should a debt collection agency avoid? |
| Famous people who have filed bankruptcy |
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| What is bankruptcy? |
Bankruptcy affords individuals protection from creditors in order to obtain a "fresh start" while protecting assets. Some bankruptcy cases are reorganization cases which restructures debt and permits repayment. Other cases are liquidation cases which eliminates debt but allows retention of some property.
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| Am I eligible to file? |
Generally there are no eligibility requirements; however, there are restrictions on how many times you can file.
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| What is Chapter 13? |
Chapter 13 is a reorganization plan in which the debtor pays a Bankruptcy Trustee a percentage of his debts over a period, not exceeding five years. At the end of the plan, a Discharge is normally granted forgiving any remaining unsecured debts. Chapter 13 is best for individuals who might lose property in a Chapter 7 or who have a sincere desire to repay a percentage of their debts. Normally, no property is lost in a Chapter 13.
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| What is Chapter 7? |
A Chapter 7 is a liquidation case which discharges most debts. A Trustee, appointed by the court, liquidates non-exempt property and distributes them to unsecured creditors. Some property is exempt and may be retained by the client.
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| What is Chapter 11? |
A Chapter 11 is a business reorganization which delays creditors' collection activities while a reorganization plan can be approved by the court.
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| Which type of Bankruptcy should I file? |
The attorney will discuss your case with you. Each case is different. The only way to determine what type of bankruptcy is most beneficial is to consult with the attorney.
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| What property is exempt from creditors? |
Most individuals, but not all, will be eligible for North Carolina's exemptions. The exemptions are as follows:
- $18,500.00 equity in a residence
- $3,500.00 in a motor vehicle
- $5,000.00 in household and personal items
- $5,000.00 in other property depending upon the extent to which the residential exemption was used
The amounts double when husband and wife file bankruptcy together. Additionally, other property may be exempt.
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| What about secured property (property which has a lien on it, such as a car title)? |
In a Chapter 13 reorganization, the secured status is provided for in the debtor's plan (retained or released). In a Chapter 7, the property may also be retained or released. In Chapter 7 there is no additional money due when the property is released and sells for less than the balance of the debt.
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| Will all of my debts be discharged? |
No. Child Support, Alimony, usually student loans and most taxes are not discharged. Special circumstances may prevent the discharge of other debts. Student loans may be discharged if repayment will present an undue hardship for the debtor. Debts not listed on the schedules filed at the outset of the case will not be discharged. Talk to the attorney if you have any questions.
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| What about co-signers? |
Chapter 13 provides some protection for co-signers, but not in Chapter 7 cases.
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| What effect will bankruptcy have on my credit rating? |
There is financial life after bankruptcy. Your attorney will discuss obtaining credit.
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| What about harassing calls from creditors? |
Upon filing bankruptcy, collection activities must cease. Bankruptcy will also stop a foreclosure and repossession.
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| Do I have to attend a court hearing? |
Yes. There is an informal meeting with the Trustee. No judge is present.
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| What actions should a debt collection agency avoid? |
Under the Fair Debt Collection Practices Act, a collection agency may not act in the following ways:
Third-party communications. The collection agency may not contact third parties other than the debtor's attorney or a credit bureau for any reason other than to locate the debtor. Collection agents who contact third parties must state their names and may only add that they are confirming or correcting information about the debtor. They cannot give the collection agency's name unless asked directly. They cannot state that they are calling about a debt.
Attorney-represented debtor. A collection agency cannot contact the debtor directly if represented by an attorney.
Debtor communications. Collection agents may not:
a. Contact debtors before 8:00 a.m. or after 9:00 p.m.
b. Contact a debtor at work if he or she knows that the employer bans receipt of collection calls while on the job.
Harassment or abuse. Agents may not:
a. Threaten the use of violence.
b. Use obscene or profane language.
c. Publish a debtor's name on a "blacklist" or other public posting.
d. Call repeatedly, but when they do call, they must identify themselves as debt collectors.
False or misleading statements. Agents may not lie about the debt, their identity, the amount owed or the consequences for the debtor. They cannot send documents that resemble court papers or law suits.
Unfair practices. Collection Agents may not engage in unfair, deceptive or shocking methods to collect a debt. They may not solicit postdated checks by threatening criminal prosecution or threaten to seize property in which the agency has no interest.
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| Do not be embarrassed by financial problems. Many well known and later successful individuals have filed for protection from creditors. |
Abraham Lincoln, 16th President of the United States
John James, Audubon Illustrated Birds of America
P.T. Barnum, The Great American Circus Owner
John Barrymore, Actor: Romeo and Juliet
Kim Basinger, Oscar Winning Actress
Melvin Belli, Famous Lawyer known as "The King of Torts"
John Wayne Bobbitt, Penectomy survivor
Bjorn Borg, Pro Tennis Player
Matthew Brady, portrait/US Civil War photographer (1872)
Lenny Bruce, Comic
Buffalo Bill, Wild West showman
Gary Burghoff, Radar O'Reilly in M.A.S.H.
Anita Bryant Singer, 1958 Miss America 2nd runner up (1997)
Nell Carter Actress; Housekeeper on Gimme a Break
Samuel L. Clemens, ("Mark Twain") Best selling American author - humorist (1894)
Natalie Cole, Singer
Gary Coleman, Actor (1999)
John Connally, Former Texas Governor, wounded in 1963 Kennedy assassination in Dallas (1987)
Francis Ford Coppola, Oscar winning film writer, director, producer (1999)
Cathy Lee Crosby, Actress-American Author (1992)
David Crosby, Singer/Songwriter
Vic Damone, Singer (1971)
Daniel Defoe, Author; Robinson Crusoe
John DeLorean, Automobile designer and entrepreneur
Walt Disney, Oscar winning film producer, animation and theme park pioneer (1923)
William C. Durant, Founder of General Motors
Freddy Fender, Musician; Before the Next Teardrop Falls
Red Foxx Actor, Entertainer
Zsa Zsa Gabor, Cop-slapping Gabor sister
Marvin Gaye, Singer (1970's)
Charles Goodyear, 19th century American inventor who discovered how to vulcanize rubber
Ulysses S. Grant, 18th US President, Civil War General, best-selling American Author
Merle Haggard, Country Music Star (1993)
Dorothy Hamill, Olympic gold-medal ice skater (1996)
M.C. Hammer, Rock Star (1996)
George Frideric, Handel Messiah composer
Sherman Hemsley, Actor (2002)
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Milton Snavely, Founder of Hershey's chocolate
E. Howard Hunt, Coordinated Watergate break-in
Nelson Bunder Hunt, Tried to corner the silver market
La Toya Jackson, Rock Star (1995)
Don Johnson, Actor, producer
George Jones, Country singer
Buster Keaton, Actor, The General
Margot Kidder, Lois Lane in Superman movie
Larry King, Talk show host, best selling American author (1978)
Bowie Kuhn, Former US basebal commissioner
Veronica Lake, Actress (1951)
Cyndi Lauper, Rock Star (1983)
Jerry Lewis, Comic
Jerry Lee Lewis, Famous Rock 'n Roll Star
Meat Loaf, Rock Star (1983)
Jackie Mason, Comedian, Entertainer
F. Donald Nixon, Former President Nixon's brother
Thomas Paine, Common Sense Activist
Gaylord Perry, Baseball Player
Philip II, King of Spain, 1556-1598
Buddy Post, Lottery Millionaire
Randy Quaid, Actor
Lynn Redgrave, Actress
Rembrandt, Painter
Burt Reynolds, Oscar nominated actor, director, American Author (1995)
Debbie Reynolds, Oscar nominated actress, singer,American Author (1907)
Mickey Rooney, Oscar nominated actor, American Author (1962)
Anna Nicole Smith, Model, actress, 1993 Playboy magazine "Playmate of the Year" (1996)
Leon Spinks, Boxer
J. Fife Symington, Governor of Arizona (1995, while still in office)
Lawrence Taylor, NFL Hall of famer
Randall Terry, Operation Rescue founder
Donald Trump, Billionaire entrepreneur
Mark Twain, Author of Huckleberry Finn
Mike Tyson, Boxer (2003)
Johnny Unitas, Legendary Hall of Fame football quarterback
Oscar Wilde, Acclaimed poet and author
James Wilson, U.S. Supreme Court Justice 1789-1798 |
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DISCLAIMER |
| The information provided here is only general in nature. Each case is different. You should consult an attorney to discuss your particular situation. |
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REAL ESTATE |
| Do I need a survey? |
| What is title insurance, and why do I need it? |
| What are "closing costs", and what costs should I expect to pay as the purchaser? |
| What closing costs should I expect to pay as the seller? |
| How long does it take to put a closing together? |
| What is the difference between a deed and a deed of trust? |
| Is an equity line considered a mortgage, and does it constitute a lien against my real property? |
| If I am married, but the property is just in my name, does my spouse have to sign anything at closing? |
| What is an escrow account? |
| What is private mortgage insurance, or PMI? |
| Why is the interest rate on my note not the same as my annual percentage rate, or APR? |
| To Top | Home |
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| Do I need a survey? |
Generally speaking, a survey is not necessary unless your lender requires one. If you are purchasing a home in an established neighborhood, or a vacant lot in a new development, there is a good chance that there is already a plat on file with the Register of Deeds Office. However, if there is uncertainty as to the location of the property lines or the location of any improvements on the property, a survey would be advisable.
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| What is title insurance, and why do I need it? |
Title insurance is a part of most modern real estate transactions and serves to protect both the purchaser and the lender against defects in the title to the property which may not be discoverable by an examination of the public records. Some common examples include forged deeds, releases or wills, undisclosed or missing heirs, fraud, etc. Title insurance is issued after a careful examination of copies of the public records. However, even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of our attorneys. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.
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| What are "closing costs", and what costs should I expect to pay as the purchaser? |
Closing costs are fees associated with the purchase and sale of real property. While each situation is different, your closing costs will vary depending on a number of factors, including whether you are paying cash for the property or financing it, the number and type of inspections performed, and the amount of work necessary to perform an accurate title examination. If you are financing the property through an institutional lender, you can expect to pay the following fees: a loan origination fee (usually 1% of the loan amount), an appraisal fee, a tax service fee, a credit report fee, recording costs, any mortgage broker's fees, and possibly a commitment fee. Additionally, you may be required to pay prepaid interim interest and up-front escrows for taxes and hazard insurance. As the purchaser, your attorney's fees include the title examination and the preparation of all of your closing documents.
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| What closing costs should I expect to pay as the seller? |
If there is a realtor involved, the seller is responsible for payment of the real estate agent's commission, as well as the preparation of your seller's documents, state revenue stamps, and your share of the annual property taxes and any other assessments against the property. As the seller, you may agree to pay some of the purchaser's closing costs.
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| How long does it take to put a closing together? |
Assuming that there are no complications with the title and that the lender is prepared, a closing can be held within a week or so from the date that we receive the request for a title examination. If there are complications, the closing may be delayed until such time as they are resolved to the satisfaction of all of the parties involved.
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| What is the difference between a deed and a deed of trust? |
A deed is the document which conveys the grantor's (seller's) interest in the real property to the grantee (purchaser). A deed of trust is the document which, among other things, perfects the new lender's security interest in the property and is commonly referred to as a mortgage.
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| Is an equity line considered a mortgage, and does it constitute a lien against my real property? |
Yes, an equity line is an extension of credit to you from a lender, which is secured by a deed of trust against your real property. It has the same, or similar, characteristics as your first mortgage.
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| If I am married, but the property is just in my name, does my spouse have to sign anything at closing? |
Yes, your spouse would need to sign the deed of trust to release his or her marital rights in the property, as well as the truth-in-lending disclosure statement, and the notice of right to rescind (if it is a refinance transaction). A valid prenuptial agreement or free trader agreement may eliminate this requirement.
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| What is an escrow account? |
An escrow account is an account set up by your lender for the payment of hazard insurance and property taxes. Each month, when you make your mortgage payment, a portion of that payment goes toward the principal and interest, and a portion goes toward the payment of your annual hazard insurance premium and annual property taxes. While some lenders do not require escrow accounts, it is generally a good idea.
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| What is private mortgage insurance, or PMI? |
Private mortgage insurance is insurance that protects your lender in the event that you default on the loan. It is generally required when the amount of your loan exceeds 80% of the value of your property. Theoretically, such a loan has a higher rate of default, and the lender is seeks to minimize their risk.
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| Why is the interest rate on my note not the same as my annual percentage rate, or APR? |
Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan, taking into account one-time fees and standardizing the way the rate is expressed. The APR is likely to differ from the "note rate" or "headline rate" advertised by the lender. The aim of using APR is to calculate a total cost of borrowing which allows easy comparison between loans and lenders.
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DISCLAIMER |
| The information provided here is only general in nature. Each case is different. You should consult an attorney to discuss your particular situation. |
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ESTATE MANAGEMENT |
| What is a Will? |
| Do I need a Will and why? |
| If I die without a Will, what happens to my property? |
| If I am divorced, will my spouse inherit? |
| What is probate? |
| How do I avoid probate? |
| If I die without a Will, how is my estate administered? |
| Do I need a Trust? |
| Why do I need a Will when I can have a Living Trust instead? |
| What is a Living Will? |
| What is a Power of Attorney and why should I give someone the authority to act on my behalf? |
| What is a Health Care Power of Attorney, and how is it different from a Power of Attorney? |
| Can a person make a Power of Attorney if he/she is incompetent? |
| I am about to be married; do I need a Prenuptial Agreement? |
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| What is a Will? |
A Will is a written document providing for the distribution of your property, appointing a person to handle the administration of your property, paying your debts, and seeing that your heirs comply with your wishes.
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| Do I need a Will and why? |
If you have any property such as vehicles, checking accounts, Certificates of Deposit, land, a house, etc., you should make a Will. Persons with children definitely need a Will. If you have specific items of property, such as family heirlooms, which you want to leave to a specific person, then you should make a Will.
Each person's circumstances are different. In a consultation, we will determine your situation, what you want, and advise you of the best possible means to meet your objective.
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| If I die without a Will, what happens to my property? |
The State of North Carolina has made provisions for those persons dying without a Will, but the provisions may not give your property to the people you wish to benefit. Many people think the State will inherit their property if they do not have a Will. This is usually not true, as the State of North Carolina has certain "classes" of persons who will inherit prior to any others, such as a spouse, children, parents, siblings, etc. If you have relatives whom you do not want to inherit, then you need to have a Will, as the State does not have provisions for omitting any relatives who may be in the "class."
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| If I am divorced, will my spouse inherit? |
No, unless you specify in your Will that your divorced spouse is to receive some of your property.
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| What is probate? |
Probate is the process of determining a decedent's assets, paying the debts, proving the Will, and distributing the property of the decedent. The Clerk in the County in which the Decedent died cannot give legal advice.
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| How do I avoid probate? |
The only way to avoid probate entirely is for a person not to own or have any property in his/her name at the time of their death. This can be accomplished in different ways but is usually accomplished by Irrevocable Trusts.
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| If I die without a Will, how is my estate administered? |
An administration of the estate is set up through the Office of the Clerk of Court in the County in which the decedent resided.
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| Do I need a Trust? |
Much information is needed in order to determine the need or desire for a Trust. A Trust is an arrangement in which one or more individuals, institutions or entities have legal title to the property, while other individuals, institutions or entities are entitled to the benefits of the property. It may be revocable or irrevocable. Trusts may be created under a will or established during a person's lifetime. Parents often create trusts in their wills for their minor children.
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| Why do I need a Will when I can have a Living Trust instead? |
The salesman's pitch, a "myth" regarding a Living Trust, is just that, a salesman's pitch. A Living Trust is a tool which should be considered in the planning of an estate, but the reality is an average person does not need a Living Trust. In North Carolina, property owned jointly by married persons with right of survivorship passes outside of the Estate. Some property owned jointly by unmarried persons with right of survivorship passes outside of the Estate. Further, there is no tax benefit to a Living Trust vs. an Estate. Under North Carolina law, you will not have to pay estate taxes unless your estate's net value exceeds $2,000,000.00. This amount increases as of January 1, 2009, to $3,500,000.00.
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| What is a Living Will? |
A Living Will is a document which provides for your care in the event you should have a medical condition which becomes terminal and incurable. If you are diagnosed as being in a persistent vegetative state, such as a coma, you direct a physician to withhold or discontinue extraordinary means or artificial nutrition or hydration. A Living Will relieves your loved ones from having to make a decision as to whether you should be kept on life support or allowed to die naturally.
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| What is a Power of Attorney and why should I give someone the authority to act on my behalf? |
A Power of Attorney is a document, which may be recorded, in which a person authorizes one or more persons to act for them. A Power of Attorney can authorize someone to act on your behalf for limited purposes or for all matters. Giving someone a Power of Attorney does not mean you cannot handle your own affairs; rather, it simply gives them the right to act on your behalf. If a person becomes incapacitated or incompetent after signing a Power of Attorney, the Attorney In Fact (the person appointed to act under the Power of Attorney) could act for them. However, if the person signing the Power of Attorney later becomes incompetent, the Power of Attorney must be recorded for it to be valid. If a person is undergoing surgery, has minor children and is leaving them with someone for visitation, is going to be out of town for some time, or is becoming older, designating a Power of Attorney should be considered.
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| What is a Health Care Power of Attorney, and how is it different from a Power of Attorney? |
A Health Care Power of Attorney is just what it says - "health care." A Health Care Power of Attorney is used only for health care and does not include signing checks, selling property, or any of the other matters which may be included in a general Power of Attorney. A Health Care Power of Attorney gives someone the right to sign for someone else for the sole purpose of health care.
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| Can a person make a Power of Attorney if he/she is incompetent? |
A Guardianship must be established for an incompetent person. Establishing a Guardianship, which must go through the Court systems, can be expensive and lengthy. In addition, a Guardian must serve with a bond and make annual audits to the Court.
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| I am about to be married; do I need a Prenuptial Agreement? |
In previous times, only very wealthy individuals considered premarital agreements as part of their wedding plans in order to protect their assets. Not today. People who have property and/or children from a previous marriage or property of their own should consider a Prenuptial Agreement.
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DISCLAIMER |
| The information provided here is only general in nature. Each case is different. You should consult an attorney to discuss your particular situation. |
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