If your personal or business debt is overwhelming and you are considering filing for bankruptcy, it is important to understand the different bankruptcy filing options you have available. The North Carolina Bar Association affirms that Chapter 7 bankruptcy allows men and women who fall below certain income levels (with more debt than they can pay) to eliminate unsecured debt. By filing Chapter 7 bankruptcy:
- No repayment of your debt is required
- Most people can retain all of their assets
- Qualifying debts are completely discharged
Chapter 13 bankruptcy allows men and women with consistent income to reorganize and restructure their debt. By filing Chapter 13 bankruptcy:
- Debt collection, vehicle repossession, and property foreclosures can be stopped
- Debt can be reduced and repaid in smaller amounts and over a longer period of time
- Non-dischargeable debts can be reorganized but not eliminated
Chapter 7 bankruptcy is sometimes called “straight bankruptcy” while Chapter 13 is sometimes called “wage-earner’s bankruptcy”. Both types of bankruptcy can provide its filers with the opportunity of a fresh financial start once the debt is eliminated and bankruptcy is discharged.
Defining Dischargeable and Non-Dischargeable Debt
One of the primary objectives of declaring bankruptcy is to get out from under debt that far exceeds your income. When you file for bankruptcy protection, your accumulated debts will fall into two categories—dischargeable and non-dischargeable debt. The United States Courts define these types of debt in the following manner:
- Dischargeable debts are debts that can be partially or completely eliminated through bankruptcy and not require further Additionally, creditors will not be allowed to pursue discharged debts after your bankruptcy is completed.
- Non-dischargeable debts are debts that cannot be eliminated by filing for bankruptcy. Debts that may be non-dischargeable include divorce settlements, child support payments, taxes, and other debts owed to the government, and debts accrued because of criminal penalties.
Your lawyer will explain the difference between dischargeable and non-dischargeable debt, which categories each of your creditors falls into, and how the type of bankruptcy you choose will affect the debt you owe. Your lawyer will also explain how the process of filing for bankruptcy protection works.
For a legal consultation, call 828.286.3866
Understand the Bankruptcy Process
Filing for bankruptcy is an intricate procedure. Your petition for bankruptcy will stop creditors from engaging in debt collection activities, which can provide much-needed stress relief from the threat of legal action and wage garnishments. Your lawyer will help you complete the following actions:
- Complete and file a petition for bankruptcy
- Prepare a detailed list of your assets
- Prepare a detailed picture of your income
- List all creditors and the amount they are owed
Your creditors will be notified when you file for bankruptcy and you will be given time to dismiss, reorganize, or restructure your debt. You will never be required to repay some debts after they are discharged in bankruptcy. Other debts will still require repayment, but in smaller amounts and over an extended timeframe.
Like other types of trials, bankruptcy proceedings can require discovery sessions, settlement agreements, or going to trial. Your lawyer will help you navigate the bankruptcy filing process from the initial petition until your debt is settled and discharged.
The Primary Purpose of Bankruptcy Protection
When you file for bankruptcy, your case will be heard in federal bankruptcy court. Filing for bankruptcy protection can give you the opportunity to eliminate and diminish your debts and to start recreating your finances.
The three leading types of bankruptcy—Chapter 7, 11, and 13—allow you achieve two primary goals:
- Debt relief or strategic repayment
- The chance to start over financially
Overwhelming debt can lead to stress and anxiety and rob you of your peace of mind. Your lawyer can help you explain the specific benefits bankruptcy can provide your family and what your filing options are.
Get a Fresh Financial Start with the Right Bankruptcy Filing
Filing for bankruptcy can relieve you of many (if not all) of your accumulated debts. Speak to a member of our team today about the difference between Chapter 13 and Chapter 7 bankruptcy protection and for which you may be able to file.
Whether you are single, married, or a business owner, you can reap the benefits of bankruptcy protection and give yourself a fresh financial start for the future. You will also experience the relief that comes when debt collection activities are curtailed by filing for bankruptcy. Call Farmer & Morris Law, PLLC at (828) 286-3866 to reach a team member today.