Are you having problems with debt?
If so, you should consider the debt relief afforded by federal bankruptcy laws. You may find that bankruptcy provides a fresh start by allowing you to reduce, restructure, or eliminate debt while still retaining most or all of your assets.
Bankruptcy is a legal proceeding where a person or company who is having difficulty meeting financial obligations can obtain a fresh start. The right to file for bankruptcy is provided by federal law, and all bankruptcy proceedings are handled in federal bankruptcy court. Filing bankruptcy generally stops most creditors from seeking to collect debts. The goal of most debtors is to obtain a discharge order from the bankruptcy judge. The discharge order has the effect of releasing the debtor from many forms of debt that were incurred prior to the bankruptcy filing.
When should bankruptcy be considered?
- The amount of unpaid bills is such that repayment is unlikely or impossible in the foreseeable future.
- A secured creditor is threatening foreclosure or repossession.
- An unsecured creditor has commenced or threatened a lawsuit.
- Creditors and/or collection agencies are making frequent calls to collect on unpaid bills.
- The debtor’s credit report is irretrievably damaged.
- To stop execution on a judgment or to stop wage garnishment [note that wage garnishment in North Carolina is limited to creditors collecting taxes, domestic support obligations and student loans].
What are some events that lead to many bankruptcy filings?
- Unemployment or underemployment.
- Business reverses.
- Health problems.
- Divorce or separation.
What are the different types of bankruptcy?
Chapter 7. A debtor’s non-exempt assets are liquidated and many unsecured debts are discharged. Chapter 7 is sometimes referred to as straight bankruptcy.
Chapter 13. A debtor retains his or her assets but proposes a payment plan through which creditors are paid part or all of what is owed over a period of 3 to 5 years. Chapter 13 is sometimes referred to as a wage-earner plan or debt-adjustment plan. A chapter 13 debtor must have a regular source of income, unsecured debts of less than $336,900.00, secured debts of less than $1,010,650.00 and an ability to set out a budget where he or she can realistically afford a monthly payment plan to a trustee.
Chapter 11. Generally utilized for corporate reorganization or for individual reorganizations where the debtor is over the chapter 13 debt limits.
Chapter 12. Family farmer reorganization.
Summary
Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the number of people filing is so massive that very few publications have the space, the manpower or the inclination to run all of them.
While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing.
For most people, they'll pass through a bankruptcy case and keep everything they have. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments.
The bottom line is that no one wants to file for bankruptcy. But, sometimes life throws us curve balls and we need some help. Let our attorneys provide that help and get you back to where you want to be.
