Many people who file bankruptcy do so due to experiencing an unexpected or sudden hardship, such as medical problems and loss of income. While bankruptcy may seem uncommon, in 2019, there were 774,940 total bankruptcy filings (according to the United States Courts).
While there are several different chapters of bankruptcy under which you can file, most bankruptcy filings are completed by individuals and are Chapter 7 or Chapter 13 filings. There were 483,988 Chapter 7 filings and 283,413 Chapter 13 filings. Bankruptcy allows you to either discharge your debts or create a plan to pay back your creditors. A Forest City bankruptcy lawyer can advise you about which options are available to you.
Filing bankruptcy temporarily suspends collection attempts from creditors, which can include bills and debt such as:
- Foreclosure actions
- Car payments
- Utility bills
- Civil judgments
- Installment payments or contracts
The bankruptcy process is complex because you have to complete detailed paperwork that outlines your income, assets, and debts. A lawyer can file your petition and complete all necessary forms, which ensures that your bankruptcy filing complies with the rules of court. Failing to file a proper bankruptcy petition can result in your filing being dismissed, which can make it more difficult to file for bankruptcy protection in the future.
When a lawyer files your case, your assets are under the control of the bankruptcy court, which assigns a trustee to manage and review your bankruptcy estate. During your bankruptcy case, you will have to complete financial literacy courses and comply with decisions made by your trustee involving your assets. However, most people filing bankruptcy are able to retain their assets.
Filing for bankruptcy allows you to achieve a fresh financial start and is meant to prevent harms caused by an inability to pay debts. Bankruptcy allows you to protect certain assets (such as your home) from creditors—which can prevent significant hardships.
If you want to discuss your bankruptcy options, call Farmer & Morris Law today at (828) 286-3866 to schedule your free consultation.
What You Need to Know About Exempt Property
Bankruptcy prevents your exempt property from being repossessed or forcibly sold to pay off most creditors. That means if you have a civil judgment against you in state court and your state allows the creditor to have your property sold to pay the judgment, bankruptcy prevents the state from allowing a creditor from pursuing collection against your exempt property.
Under N.C. Gen. Stat. § 1C-1601 and 11 U.S.C. § 522(a)(3)(C), North Carolina debtors can claim the following as exempt property during bankruptcy:
- Up to $35,000 in equity in your personal home
- One personal vehicle worth up to $3,500
- Up to $5,000 worth of household goods and furnishings and related household items
- $1,000 worth of your dependent’s personal property—capped at $4,000
- Tax-exempt retirement accounts
There are additional assets that you can claim as exempt, which is why you may want to consult with a lawyer before you file. For example, people can usually claim a burial plot exemption in addition to an exemption in their home. The exemptions you choose to apply dictate what assets and personal property you can retain following a Chapter 7 or Chapter 13 case.
For a free legal consultation with a bankruptcy lawyer serving Forest City, call 828.286.3866
What You Should Know About Chapter 7 Bankruptcy
Many bankruptcy cases are Chapter 7 liquidation filings. After your Forest City bankruptcy lawyer reviews your assets and debts, your lawyer will discuss whether you have any nonexempt property that can be liquidated by a bankruptcy trustee. The money earned through liquidation is distributed to your creditors. However, most people filing Chapter 7 bankruptcy are able to retain all of their assets.
You must meet certain filing criteria—such as not having above-median income—to quality for Chapter 7 filing status. Congress imposed these provisions to prevent individuals from abusing the bankruptcy process. Determining if you meet the criteria to file Chapter 7 can be a complicated analysis. A Forest City bankruptcy lawyer can advise you properly as to whether you qualify.
Many people filing Chapter 7 bankruptcy do not have any nonexempt assets, in which case all qualifying debts are discharged and you retain all of your assets. Once your debts are discharged, a creditor is permanently barred from attempting to collect a discharged debt.
Examples of debts that can be discharged in Chapter 7 bankruptcy cases include:
- Most civil judgments
- Credit card debt
- Medical bills
- Loans, including installment contract debts
- Utility bills
Some debts can be reaffirmed during the Chapter 7 process, meaning that you could continue paying on a car loan with the court’s permission. Although Chapter 7 bankruptcy discharges many debts, certain debts are almost always non-dischargeable, such as:
- Alimony, child support, and other domestic support obligations
- Property taxes
- Income taxes
- Student loans
- Court costs, fines, and restitution
- Some debts incurred within 90 days before your filing
Immediately after filing Chapter 7 bankruptcy, creditors are barred from attempting to collect debts without permission from the court. Creditors are allowed to contest whether a debt is dischargeable, which is another reason you may want to hire a lawyer.
Forest City Bankruptcy Lawyer Near Me 828.286.3866
What You Should Know About Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to reorganize and create a payment plan to resolve your debts with creditors while offering particular advantages over Chapter 7 in certain scenarios. Chapter 13 filings allow you to exempt certain property and keep certain nonexempt property. To retain nonexempt property, you must pay the value of the property you are keeping. The value will be added to your payment plan pay-off amount.
During a Chapter 13 filing, you must demonstrate an ability to meet your payment obligations, meaning having a steady income improves your chances of having your Chapter 13 plan approved.
Chapter 13 can restructure some of your secured debts such as vehicle loans, meaning you may be able to decrease your interest rate or total payout.
A Chapter 13 repayment plan typically lasts three to five years, depending on the details of your plan. If you are unable to adhere to your payment plan, it may require you to transition to a Chapter 7 case.
Call Farmer & Morris Law today at (828) 286-3866 for your free bankruptcy consultation.
Contact Farmer & Morris Law Today to Discuss Your Case
When financial emergencies happen, it can make it increasingly difficult to afford your bills—let alone pay off debt. Losing a job or becoming temporarily or permanently disabled can make bankruptcy a valid option. You may want a Forest City bankruptcy lawyer by your side during this time.
To discuss your options, call Farmer & Morris Law today at (828) 286-3866 for a free consultation.