Filing for bankruptcy is a big decision, and you want to make sure that your choice is an informed one. Bankruptcy is designed to help people and businesses with debt problems. According to U.S. Bankruptcy Court for the Middle District of North Carolina, the goal is to give debtors a fresh start while giving creditors a chance to be repaid.
While there is no real minimum requirement for filing for bankruptcy, a bankruptcy judge will evaluate your claim to see if this situation is fair for debtors and creditors alike. Generally, to file bankruptcy, you want to show that paying off this debt you or your business has accrued is unrealistic without such an agreement in place. In such a case, declaring bankruptcy is the best way to move forward.
Types of Bankruptcy
There are multiple types of bankruptcy. Your situation or the situation of your business will determine which type of bankruptcy you file for. The type of bankruptcy can also affect what kinds of assets you end up keeping after the process is complete. Some common types of bankruptcy include the following.
This provides for the complete forgiveness of debt and “liquidation” of the debtor’s non-exempt assets. In some cases, assets could be sold off and used to pay off outstanding debts. Due to asset exemptions, however, this does not mean that you have to sell off everything that you own when you file for bankruptcy. In fact, most people will be able to keep all of their assets, even when they file for Chapter 7 bankruptcy.
This is often a plan of reorganization for a business partnership or entity. The goal here is usually to keep the business running and to make a plan for paying off debts over time.
Chapter 12 bankruptcy is specifically for family farmers and fisherman to restructure their debts and continue operating their business.
This is a type of bankruptcy for individuals who make a regular income. Often a debtor can keep the property and make a plan to pay off debts over a period of a few years.
For a legal consultation, call 828.286.3866
Bankruptcy Exemptions and Your Assets
Filing for bankruptcy does not necessarily mean that you have to liquidate all of your assets. The legal system does not necessarily want to leave someone homeless or without their primary method of transportation just because they have filed for bankruptcy.
There is a whole section of federal rules governing these exemptions. However, in the state of North Carolina, General Statutes (GS) §1C-1601 creates a number of rules for exempt properties when you file for bankruptcy in the state. The following includes some properties that can be legally protected during bankruptcy proceedings:
Homestead exemption. This exemption covers a property that is used as your residence. The exemption covers up to $35,000 in equity and can cover more for older bankruptcy filers. This exemption can also be used for burial plots.
Motor vehicle exemption. A vehicle that is not greater than $3,500 in value is covered under this exemption.
Qualified college savings accounts exemption. Up to $25,000 put in a college savings account can be exempted as well.
Personal items exemption. This broader exemption allows a filer to exempt up to $5,000 total in personal items. This can include clothing, books, appliances, and many other types of items.
Professional equipment exemption. You can also exempt up to $2,000 in tools and books if they are used to perform your job or trade.
There are many other types of exemptions, including some covering public benefits, retirement accounts, and much more. The subject of bankruptcy exemptions is complicated and an experienced bankruptcy lawyer can help you determine what assets may or may not be exempt.
How a Lawyer Can Help
A lawyer can help you file for bankruptcy and get back on the right financial footing. They will help you figure out:
- Which type of bankruptcy works best for you
- How you can keep as much of your property as possible
- What kind of debt repayment plan is fair
- How to navigate the court system and make the most out of the exemptions available to you
There is no reason to attempt filing for bankruptcy on your own. You can have a legal advocate on your side who has your best interests in mind and will fight for you.
Call for a Bankruptcy Consultation
If you are wondering if you should have a certain amount of debt to file for bankruptcy, you do not need to be concerned with a specific debt amount. There are both benefits and downsides to filing bankruptcy. Depending on your circumstances, filing for bankruptcy may be your best financial option, and we can help.
Contact Farmer & Morris Law, PLLC at (828) 286-3866 and learn more about your legal options today. We represent clients with several forms of bankruptcy cases, including individuals and small businesses.
We can tell you more about how a lawyer can help you navigate the bankruptcy process in North Carolina, and we will do our best to help you keep as many assets as possible. Let us help you get back on the right financial track today.