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What Bankruptcy Chapter Is Right for You?

Filing Bankruptcy in Raleigh, North Carolina

Filing bankruptcy isn’t something you should take lightly. It is a legal proceeding that may have long-term consequences on your finances. When filing bankruptcy, it is essential to choose the best one for your financial situation to get the most out of it. Consult an experienced Raleigh bankruptcy attorney today to start getting a debt-free life.

Choosing the Right Bankruptcy Type

If you’re considering bankruptcy, one of the things you need to do is to choose the right bankruptcy chapter for you. There are many different bankruptcy chapters available for individuals and small businesses under the United States bankruptcy code. Each bankruptcy chapter differs in handling your debt and how long it will last. Consulting a reliable Raleigh bankruptcy attorney is encouraged before you file bankruptcy.

What is Bankruptcy?

Bankruptcy is a legal process that eliminates all or parts of your debts. Filing bankruptcy allows a debtor to repay their creditors when they can no longer pay their debts. This can be due to financial hardship, unexpected job loss, medical expenses, or divorce. Often treated as a last resort, you should only seek bankruptcy if all other debt solutions are already explored. 

The most common types of bankruptcy for individuals are Chapter 7 bankruptcy or Chapter 13 bankruptcy. No matter which bankruptcy type you choose, it is best to file bankruptcy with the help of a trusted bankruptcy lawyer in Raleigh, NC. Our experienced bankruptcy attorneys guide you in every step of the bankruptcy process, from preparing the necessary paperwork to filing bankruptcy papers. Schedule a consultation with our law firm today!

Chapter 7: Liquidation Bankruptcy

Also known as liquidation bankruptcy, Chapter 7 involves selling all or part of your assets and properties to pay back your creditors. A bankruptcy trustee will handle the sale of your properties, and they will then give the proceeds to your lenders. 

The Bankruptcy Means Test

Chapter 7 is generally great for individuals who do not own much property. To be able to file this bankruptcy, a debtor must pass the Bankruptcy Means Test

The means test determines whether you’re eligible to file for chapter 7 bankruptcy. It assesses who can file for debt erasure through Chapter 7. It considers your income, living expenses, and your family’s size to determine whether you have enough disposable income to repay your debts.

If you want to know more about Chapter 7 bankruptcy and whether you can pass the means test or not, consult with our bankruptcy attorneys at Cameron Bankruptcy Law.

Chapter 13: Wage Earner’s Plan

Chapter 13 bankruptcy is also known as a wage earner’s plan. It allows you to develop a debt repayment plan to repay all or some of your debts if you have enough regular income. 

A Chapter 13 debt repayment plan usually lasts for about 3-5 years. Under this bankruptcy chapter, a debtor will develop a repayment plan to make installment payments to creditors. 

Different from chapter 7, you don’t have to sell your properties to repay your debts. You can keep your car, home, and property.

What Are the Qualification to File Bankruptcy?

The most important factor that determines whether you’re qualified to file for bankruptcy is your income. Your monthly income should be less than the median income in North Carolina. This is usually evaluated by taking the bankruptcy means test. 

If you have enough disposable income, the bankruptcy court might not allow you to file Chapter 7. Instead, they will allow you to file for Chapter 13. 

Will All My Debts Be Wiped Out in Bankruptcy?

Not all debts can be forgiven in bankruptcy. The type of debts that bankruptcy will discharge depends on the bankruptcy chapter you will file.

Dischargeable Debts

Unsecured debts are discharged in both bankruptcy chapters.

  • Credit card bills
  • Medical bills 
  • Collection agency accounts
  • Personal loans
  • Social Security overpayments
  • Veterans assistance loans and overpayments

If you file for chapter 7 and the court approves it, your debts will be discharged. On the other hand, if you file under chapter 13, you must continue paying your debts through your debt repayment plan. Once the repayment plan is complete, the court will eliminate your unsecured debts.

Dischargeable Debts

Unsecured debts are discharged in both bankruptcy chapters.

  • Credit card bills
  • Medical bills 
  • Collection agency accounts
  • Personal loans
  • Social Security overpayments
  • Veterans assistance loans and overpayments

If you file for chapter 7 and the court approves it, your debts will be discharged. On the other hand, if you file under chapter 13, you must continue paying your debts through your debt repayment plan. Once the repayment plan is complete, the court will eliminate your unsecured debts.

Non-Dischargeable Debts

However, it is essential to remember that not all types of debts may be discharged once you declare bankruptcy. Non-dischargeable debts include:

  • Student loan debts
  • Alimony
  • Child support
  • Tax liens

Under Chapter 13, you may reduce certain secured debts through a “cramdown.” This reduces the amount you need to pay back under your approved debt repayment plan.

Does Bankruptcy Affect Your Credit Score?

Once you file bankruptcy, it will be reflected in your credit score. This might seem like a bad thing, but you must remember that your credit score might already be in bad shape before filing bankruptcy due to your mounting debt. 

A Chapter 7 bankruptcy can stay in your record for up to ten years, while a Chapter 13 bankruptcy can stay in your credit record for up to 7 years. Don’t be intimidated by this. Our bankruptcy attorneys can help you rebuild your credit score after bankruptcy. You can also take advantage of the extra income after relieving your debts to manage your finances and slowly rebuild your credit effectively.

Contact our bankruptcy law firm in North Carolina to know more about filing bankruptcy.

Got Debt? Consult a Reliable Raleigh Bankruptcy Attorney Today

Bankruptcy can be intimidating, but it is an excellent help for individuals, families, and small businesses looking for debt relief. It can give you a fresh start and release you from your debts. A reliable and experienced Raleigh bankruptcy attorney can help you choose the right bankruptcy chapter for you. We will assess your financial situation and assist you in filing bankruptcy in North Carolina. Schedule a consultation with our North Carolina bankruptcy law firm today!

 

Raleigh Bankruptcy Attorneys

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