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First step towards solvency is facing the music

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Are my 401k and IRA protected in bankruptcy?”


This is a new year, and no time beats the present when it comes to throwing the lasso round out-of-control debts.

Credit Cards Charlotte Debt Lawyer North Carolina Chapter 7 AttorneyHow do you know when your debts have spiraled out of control? One expert, writing in the Orange County, California Register, has devised a simple equation you can use to determine whether you have too much debt: Pretend you don’t have to make a mortgage or rent payment for the next year. With the money you have and the money you will save on rent or mortgage payments, can you pay off your debts? If the answer is no, you probably do not have a firm handle on your finances.

Other telltale signs of an impending personal financial crisis include a reliance on credit cards to pay for every day expenses, payment of only minimums due each month on credit cards, late or missed payments on credit cards, taking out new loans or credit cards to pay off old ones, or taking on a second (or third) job just to keep up with your current obligations.

If you have done the math and you are drowning in debt, the first, crucial step is to be honest about how much you owe and whether there is any reasonable likelihood that you can ever repay your debts. The best practice, of course, is to not fall into credit-card trouble in the first place—that is, you should always pay your credit card balances in full, every month.

But you can’t change the past, and if you have fallen behind on payments, the best thing to do is to obtain a copy of your credit report, identify your creditors, and contact them to see if they will work with you. You might be surprised at the response; oftentimes creditors are willing to work with debtors who have fallen behind on payments to work towards a solution that satisfies both parties.

Some people simply cannot earn enough money to keep up with even the minimum amounts that creditors will accept towards repayment of debts, for a variety of reasons. These reasons—a lost job, a divorce, poor investment choices, medical issues that render one unable to work—are important, but in the eyes of many creditors, they are irrelevant.

You should treat your financial situation like a business transaction, and remove from your dealings with creditors the emotional weight you may attach to keeping up with your debts. Things happen in life, and sometimes bad things will happen to you.

Even when the odds are stacked high against you, however, you have a way out. A Chapter 7 bankruptcy allows debtors to wipe out nearly all of their debts. The downside is that debtors in a Chapter 7 bankruptcy must surrender their assets—if any are owned—to their creditors. Another common form of bankruptcy is the Chapter 13 bankruptcy, which allows debtors to pay off debts over a period of time—commonly three to five years. Many debtors in a Chapter 13 bankruptcy are allowed to keep their home and other assets.

A bankruptcy stays—or halts—any lawsuits brought against you, and can shield you from collections actions and utility shutoffs. The bankruptcy process is not painless. Some debts are discharged, but the discharge comes with a price: a debtor is forced to learn to better manage one’s money.

Spend a little time in this New Year taking a hard look at your finances. What you see may not be pretty, but the best time to start moving towards financial solvency—and success—is right now!

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.



About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.







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