The process of filing bankruptcy starts with deciding which type of bankruptcy is right for you. Then you will need to submit a petition to your local bankruptcy court. This article will explain more about how bankruptcy works and how an attorney can help you throughout the process.
How to File for Bankruptcy
In North Carolina, as the U.S. Bankruptcy Court for the Middle District of North Carolina explains, you have to petition the bankruptcy court. This action involves submitting many documents about your financial situation and paying bankruptcy fees.
Once you petition for bankruptcy, you are protected from any legal action (e.g., lawsuits) your creditors may have been thinking of taking. What happens after filing depends on what kind of bankruptcy you have chosen. In some cases, you may have to liquidate your assets. In others, you must come to an agreement with your creditors about how (and how much) you will pay them back.
There Are Several Types of Bankruptcy
However, before you get to the filing stage, you must decide which type of bankruptcy to file for. Your type of bankruptcy will, among other things, determine how much of your debt you still have to pay. The most common types of bankruptcy are Chapter 7, Chapter 11, and Chapter 13.
There are many differences between each type of bankruptcy, but that is beyond the scope of this article. However, there is one important distinction we would like to touch on here: with Chapter 7, you will be completely absolved of all responsibility for paying back your debts (with limited exceptions). With Chapter 13, you will have to pay back part of your debt as part of a structured repayment plan; any debt left over after a specified time period will be discharged.
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When to File for Bankruptcy
As you are already aware, bankruptcy is a very serious step. If you have not yet tried other ways to manage your debt, such as debt consolidation or debt management, do so. If these measures do not work, think about bankruptcy as a way to deal with debt.
You must also consider what kind of debt you are struggling with. Bankruptcy may only help you in certain situations, like if you cannot repay your credit card debt or medical bills. Debt stemming from mortgages or car loans will not be expunged by filing for bankruptcy if you plan to keep the home or vehicle.
If you have truly run out of options, there are multiple kinds of bankruptcy for you to choose from. What type of bankruptcy is best for you depends on your situation and whether you plan to file as an individual, a couple, or a business.
For example, you may file for Chapter 7 bankruptcy as either an individual or a business. Per the U.S. Courts, Chapter 7 is particularly advantageous to individuals, as most do not have any nonexempt assets to be sold off. In other words, you may be allowed to keep all of your assets.
If this sounds confusing to you, do not worry. You have the option of hiring a lawyer to explain how the process works and to take care of the most difficult tasks.
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How to Get Help with Your Bankruptcy Case
Bankruptcy can be a very complicated subject, especially for those with no legal experience. It may be a good idea to consult an attorney before you start any legal proceedings. They can guide you through the bankruptcy process and make sure everything is handled properly by:
- Going over your options: If there is any less drastic way to improve your finances, your lawyer may be able to find it. If not, they can figure out which type of bankruptcy best fits your situation.
- Submitting paperwork: As mentioned before, bankruptcy proceedings involve a lot of forms and documents. A lawyer can help you figure out what to submit and make sure it gets to the right place before the deadline.
- Handling disputes: Some bankruptcy cases are more straightforward than others. If disagreements arise in your case, a lawyer may be able to sort them out in the way that is best for you.
- Demystifying the process: Your lawyer will help you make important decisions by updating you about progress in your case and explaining why they are doing what they are doing.
If you need help with the process of filing bankruptcy, Farmer & Morris Law, PLLC is here for you. Call our Rutherfordton, North Carolina office today at (828) 286-3866. Someone is standing by to talk to you at any time, day or night, and we can review your case at no charge.