Filing for bankruptcy is an important financial decision—and for many Asheville residents, it can be the first real step toward peace of mind. But bankruptcy is also a process with rules, deadlines, and legal requirements that must be followed carefully. Making the wrong move can delay your case, cost you money, or even lead to dismissal.
At Pitts Hay & Hugenschmidt, our Asheville bankruptcy lawyers help clients avoid common mistakes every day. In this updated guide, we also touch on related legal questions clients often ask—including what is the statute of limitations in North Carolina for debt collection and why timing matters when considering bankruptcy.
Below are the most important mistakes to avoid when preparing for bankruptcy in Asheville, NC.
Understanding the Timing: Why Waiting Too Long Can Hurt Your Case
Many people delay filing because they feel overwhelmed, ashamed, or hopeful their situation will improve. Unfortunately, waiting often makes things worse.
Why Timing Matters
- Interest and penalties keep growing
- Wage garnishments, lawsuits, or foreclosure may begin
- Your stress and anxiety increase
If you’re receiving collection letters or facing constant calls, ask an attorney about your options—including bankruptcy and what the statute of limitations in North Carolina means for your situation. Acting early provides more choices and better results.
Choosing the Wrong Chapter: Chapter 7 vs. Chapter 13
One of the biggest mistakes is filing for the wrong type of bankruptcy.
Chapter 7
Best for people who:
- Have low income
- Cannot repay their debts
- Need fast debt relief
Discharges many unsecured debts but may involve liquidation of non-exempt assets.
Chapter 13
Best for people who:
- Have steady income
- Want to protect their home or car
- Need time to catch up on payments
Creates a 3–5 year repayment plan.
Don’t make these mistakes:
- Filing for Chapter 7 when you don’t qualify
- Starting Chapter 13 without understanding the commitment
Your attorney will help determine the right chapter based on your finances.
Hiding Income or Assets
Failing to disclose your full financial picture is a serious error—one that could lead to dismissal or legal consequences.
Why honesty matters
- Bankruptcy requires full transparency
- Hiding assets is considered fraud
- You risk fines or criminal charges
Let your attorney help you use legal exemptions to protect your assets instead.
Not Gathering the Right Documents
Bankruptcy requires detailed paperwork. Missing documents can delay or derail your case.
You will need:
- Tax returns
- Pay stubs or proof of income
- Bank statements
- Car titles and property deeds
- A complete list of debts and creditors
- Monthly household expenses
Your lawyer will give you a tailored checklist to make the process easy.
Running Up Debt Before Filing
Some people think they can “load up” on debt shortly before filing. This is extremely risky.
What can go wrong:
- Recent purchases may be labeled fraudulent
- Luxury expenses won’t be discharged
- Creditors may challenge your case
Avoid major purchases and cash advances before filing. Always consult your attorney first.
Ignoring Non-Dischargeable Debts
Bankruptcy wipes out many debts—but not all.
Debts that cannot be discharged include:
- Child support
- Alimony
- Most tax debts
- Student loans (in most cases)
- Court fines or restitution
Your attorney will help you understand what stays and what goes.
Failing to Protect Co-Signers
If you have a co-signed loan, bankruptcy affects them too.
What to know:
- In Chapter 7: Co-signers remain responsible
- In Chapter 13: Some protections apply through the repayment plan
Discuss these risks with your attorney to avoid surprises.
Attempting DIY Bankruptcy
Bankruptcy might seem straightforward, but even a small mistake can cost you.
DIY dangers include:
- Filing incorrect or incomplete paperwork
- Missing important deadlines
- Choosing the wrong chapter
- Failing to claim exemptions
- Losing property unnecessarily
Hiring an attorney protects your rights and ensures your case is handled correctly.
Paying Debts You Don’t Need to Pay
Many people continue paying unsecured debts—like credit cards—even when those debts will eventually be discharged.
Instead, focus on:
- Mortgage payments
- Car payments
- Essential expenses
Your attorney will explain which payments matter and which do not.
Forgetting About Required Credit Counseling
Before filing, you must complete an approved credit counseling course. If you skip this step, your case may be delayed or dismissed.
Why it matters:
- It confirms whether bankruptcy is right for you
- It’s required by law for your case to move forward
Your attorney can recommend approved providers.
Learn more: understanding Understanding Chapter 7 vs. Chapter 13 Bankruptcy
Not Planning for Life After Bankruptcy
Bankruptcy is a fresh start—but rebuilding takes effort.
After filing, focus on:
- Creating a budget
- Building savings
- Rebuilding credit with small, manageable steps
- Monitoring your credit reports
Your attorney can guide you with post-bankruptcy planning tools.
Why Understanding the Statute of Limitations Matters
Many Asheville residents ask: What is the statute of limitations in North Carolina for debt?
Here’s what to know:
- Most debts in NC have a 3-year statute of limitations
- After 3 years, creditors cannot sue you
- But they may still attempt to collect
- Making a payment or acknowledging the debt can restart the clock
A bankruptcy lawyer can review whether your debts are too old for collection—or whether bankruptcy is still the better option.
Why Work With Pitts Hay & Hugenschmidt?
Choosing the right attorney is one of the most important steps in the bankruptcy process.
We offer:
- Decades of combined experience
- Compassionate, judgment-free guidance
- Customized solutions for your financial situation
- Support from your first consultation to your fresh start
We know how stressful financial challenges can be, and we’re here to help you regain control.
Conclusion: Get Trusted Bankruptcy Help in Asheville, NC
Avoiding these common mistakes can make the bankruptcy process smoother, faster, and far less stressful. Understanding your rights—including what is the statute of limitations in North Carolina—helps you make informed decisions about your next steps.
If you’re considering bankruptcy or want to explore your options, don’t wait.
Contact Pitts Hay & Hugenschmidt today to schedule a consultation with an experienced Asheville bankruptcy lawyer.
Together, we’ll help you take confident steps toward a stronger financial future.