Suffering significant financial hardship—such as losing your career or having excessive medical bills—can make it difficult to manage your finances. When your debt obligations exceed your assets and you are unable to settle your debts, bankruptcy allows you to receive relief from creditors—which can stop foreclosure and repossession efforts.
When you choose to explore your bankruptcy options, a Shelby bankruptcy lawyer can advise you what type of bankruptcy you should file. Individuals typically file Chapter 7 or Chapter 13 cases. While businesses can also file for bankruptcy, the majority of bankruptcy cases are filed by individuals. The goal of bankruptcy is to allow debtors to have a fresh financial start, which otherwise would not be possible.
For a free bankruptcy consultation, call Farmer & Morris Law, PLLC today at (704) 482-1112. Filing for bankruptcy requires you or your Shelby bankruptcy lawyer to:
- Itemize your debts
- Submit a list of secured and unsecured debts
- Provide an inventory of your assets
- Provide the estimated worth of your assets
- Declare state or federal exemptions
- Notify your creditors of your bankruptcy filing
Failing to comply with filing rules and deadlines can prevent your case from proceeding, or could result in some debts not being discharged. If creditors have already filed court actions to collect a debt, working with a Shelby bankruptcy lawyer is especially important because it can be difficult to navigate multiple jurisdictions as a pro se litigant (“When a litigant proceeds without legal counsel,” according to the Legal Information Institute). Bankruptcy proceedings can also impact divorce proceedings, as some of your debts may be co-owned with your spouse.
Filing for bankruptcy can impact your credit score, as the petition will show up on your credit reports. That makes it essential to responsibly manage your credit and finances following bankruptcy. It is also the reason why you must complete financial management classes during bankruptcy.
We Can Inform You of Your Financial Options
Falling behind on bills and facing a foreclosure or repossession action can indicate that your financial situation is compromised. While reckless spending plays a role in some bankruptcy cases, the most cited reason for filing for bankruptcy is health problems, according to CNBC reporting.
A medical issue may prevent you from working and result in excessive medical debt. When you lose some (or all) of your income, you may be unable to continue making payments on loans or other debt. Certain debts—like child support obligations or student loans—can result in your income being garnished, which can worsen your financial situation.
When you finance a vehicle or obtain a mortgage, the loan amount and monthly payment may seem reasonable based on your current monthly income. If you are suddenly unemployed or making significantly less annually, the loan may become unaffordable. Creditors are allowed to initiate collection actions when you default on a loan. A foreclosure can occur when creditors execute a judgment against your personal property.
You may face losing your home or vehicle, which can create a severe hardship that is difficult to overcome. Experiencing a medical problem that requires prolonged hospitalization or costly treatment can prevent you from working and cause exorbitant medical bills. This situation can cause you to have to pick and choose between which bills and debts you pay. Ultimately, your debt can increase as interest rates cause your balance to rise.
If you are unable to cut down on your expenses or increase your income, you may become unable to pay off your creditors. Collection proceedings can allow creditors to execute a judgment against your personal property, such as your home or car.
Call Farmers & Morris Law, PLLC today at (704) 482-1112 for a free bankruptcy consultation.
For a free legal consultation with a bankruptcy lawyer serving Shelby, call 828.286.3866
Chapter 7 vs Chapter 13 Bankruptcy
Many individual debtors seek liquidation or reorganization relief. Read on to learn more about how to do so through Chapter 7 and Chapter 13 bankruptcies.
What Chapter 7 Bankruptcy Consists Of
Most individuals file a Chapter 7 case, which results in discharging debt and possibly liquidating certain assets. During a Chapter 7 case, you can claim some property as exempt—meaning that it will not be sold or liquidated to cover debt owed to creditors. Once a Shelby bankruptcy lawyer files a Chapter 7 petition, your creditors are temporarily prevented from collecting the debts you owe them.
The court assigns you a trustee who reviews your estate, which includes personal assets such as:
- Cash, bank accounts, and investment accounts
- Real estate holdings and your personal home
You can exempt certain property up to a certain amount. You can typically utilize exemptions to protect the equity you have in your home, vehicle, household furnishing, electronics, and jewelry.
Certain debts are almost always dischargeable, such as:
- Installment loans
- Credit card debt
- Civil judgments
- Utility bills
Although most debts are discharged during Chapter 7 proceedings, some are non-dischargeable, such as:
- Student loans
- Domestic support obligations
- Debts incurred because of fraud
What Chapter 13 Bankruptcy Consists Of
You can file for Chapter 13 bankruptcy if you can pay back all or most of your debt, if you are given more time to do so. This is why Chapter 13 is referred to as reorganization. Unlike Chapter 7 filings—which fully discharges your debts—Chapter 13 filings allow you to create a payment plan with creditors, to pay back what you can afford over a period of time. After this repayment, the remaining portion of your debt is discharged or forgiven in Chapter 13.
You are allowed to retain both exempt and nonexempt property during a Chapter 13 case, but you must demonstrate an ability to afford them. The market value of the nonexempt property you want to keep is added to the balance of your payment plan. If you can not afford to retain nonexempt property, the Chapter 13 trustee may liquidate it and distribute the proceeds to creditors.
Chapter 13 plans can last for several months or longer. Chapter 13 provides you a way to restore your financial health by adjusting the terms of your debts with your creditors.
Shelby Bankruptcy Lawyer Near Me 828.286.3866
Contact Farmer & Morris Law, PLLC Today
When you experience a major life change (like an unexpected loss of income), your debt can exceed your assets. This can make it impossible to pay off your creditors. A Shelby bankruptcy lawyer can help you navigate the bankruptcy process.
Call Farmer & Morris Law, PLLC today at (704) 482-1112 for a free bankruptcy consultation. The U.S. Courts report that bankruptcies were high during the Great Recession, and that, “A national wave of bankruptcies that began in 2008 reached a peak in the year ending September 2010, when nearly 1.6 million bankruptcies were filed.” In times such as these, we can help