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If you and your family face financial difficulties or your debt is out of control, a Kings Mountain bankruptcy lawyer at Farmer & Morris Law, PLLC, may be able to help you file for bankruptcy.
If you find yourself getting deeper into debt due to unpaid credit cards because you must pay other bills instead, our team can help you explore your best options to achieve financial stability. Filing for bankruptcy can allow consumers to free themselves from debt and, under some circumstances, keep their automobile and home. We offer free consultations.
How Filing for Bankruptcy Can Help Consumers
If you cannot pay your debts, bankruptcy is a legal proceeding available to stop creditors from trying to collect. Those who are filing for bankruptcy in North Carolina might be able to:
- Eliminate or “legally discharge” their legal obligation to pay debts
- Stop the foreclosure process on homes or mobile homes to allow time to catch up on missing payments
- Prevent the repossession of automobiles and other property
- Stop all actions from creditors regarding debt collection
- Restore utility services or prevent the termination of them
However, it is important to note that bankruptcies typically does not usually allow for the following:
- Elimination of secured creditors from collecting, like those who have a lien, for example
- Elimination or discharge of alimony, child support, court restitution, criminal fines, student loan debt, taxes, and other debts
- Protection to cosigners on debts means, if bankruptcy occurs, they are still responsible for debt repayment
Our bankruptcy attorneys can work with you to determine what options are available for discharging your debt and what kind of debt may be eligible for discharge.
Determining Whether You Need Chapter 7 or Chapter 13 Bankruptcy
Several types of bankruptcy claims are available in North Carolina, as detailed by the North Carolina Bar Association. However, Chapter 7 or Chapter 13 are typically the most common but have key differences between them. Your best option is based on your specific situation and needs.
Chapter 7 Bankruptcy
Another way of referring to a Chapter 7 bankruptcy is as a liquidation. When you file for this type of bankruptcy you are asking the court system to clear out all of your debt. When these debts are discharged, some may have to give up some of their assets or property, but most retain everything.
Exceptions include property the government considers exempt under North Carolina law. In many Chapter 7 bankruptcy cases, all of a debtor’s property is exempt. If you have acquired debt through a secured creditor, a Chapter 7 bankruptcy may not be the best option. This type of bankruptcy may allow secured creditors to seize property to secure an underlying debt even after discharge.
Chapter 13 Bankruptcy
When you file under this type of bankruptcy, that means you are setting up a repayment plan with your creditors. Generally, in Chapter 13 bankruptcies, all of your disposable income goes toward paying your debt for a period of three to five years before your remaining debt is discharged. This type of bankruptcy may work best for you if:
- You do not qualify for Chapter 7 bankruptcy
- You are a homeowner who has difficulty keeping up with mortgage payments
- You are falling behind on debt payments and need help catching up
- You have a valuable property that is not exempt
- It is affordable for you to enter into a repayment plan with your creditors
Farmer & Morris Law, PLLC may be able to help you navigate the bankruptcy claims process and can work diligently on your behalf. Our bankruptcy attorneys in Kings Mountain can take care of all details of your bankruptcy claim while you concentrate on getting back on your feet financially.
Understanding North Carolina’s Bankruptcy Case Exemptions
Those filing for bankruptcy in North Carolina might be able to protect the majority of their property in some situations. According to North Carolina § 1C-1601, these may include the following:
- Exempt property: If the property does not exceed the exemption amount and appears on North Carolina’s exemption list, it is considered safe in bankruptcy.
- Non-exempt property: If the property does not appear on the list of exemptions, the property might be sold to benefit a debtor’s Chapter 7 creditors.
- Jointly owned properties: If both spouses own property in North Carolina, they can double the amount of the exemption available. However, couples cannot double the exemption if only one spouse is the owner.
Examples of North Carolina’s Exemptions:
- Alimony or child support payments
- Automobiles
- Burial plots
- Government benefits
- Home equity
- Life insurance cash value
- Pensions and retirement income
- Personal injury compensation
- Personal property, like furniture, appliances, and clothing
- Professional tools, like those necessary for your trade
- Recently earned wages
What to Expect Regarding the Bankruptcy Process
Filing a bankruptcy case in North Carolina involves meeting two different requirements. These include:
- Passing the means test: Those filing for Chapter 7 must meet income eligibility requirements. Doing so involves passing the “means test.” In North Carolina, debtors must have an income lower than the median to be eligible. However, if you have an income exceeding the median, you could pass if you subtract allowable expenses. There is no “means test” when filing for a Chapter 13 bankruptcy.
- Participating in credit counseling: Most debtors must participate in at least one credit counseling session before filing their bankruptcy claim. After filing the case, debtors must also participate in a financial management course to qualify for a discharge. Each of these courses receives approval through North Carolina’s Bankruptcy Administrator.
Information You May Want to Gather
When preparing to file for bankruptcy, taking the time to gather all of the documents you may need can help ensure a smooth process. Our bankruptcy lawyers suggest collecting the following documents for your bankruptcy:
- Creditors: create a list of all of the creditors you owe money to, as well as how much money you owe them.
- Income: gather evidence of all of your income, including bank statements, as well as the frequency of wage payments.
- Assets: develop a list of every asset you currently have and include estimates on the total value of all assets.
- Living expenses: prepare a detailed list of your monthly living expenses, including clothing, food, shelter, transportation, and utilities, for example.
- Tax returns: you may want to request official copies of your tax returns for the two years before filing.
- Credit report: request an official copy of your credit report from each credit bureau.
Our Kings Mountain Bankruptcy Lawyer Is in Your Corner
If your debts are piling up and you are unable to afford repayment to your creditors, you could qualify for filing a bankruptcy claim. Having the experience of bankruptcy attorneys Joshua B. Farmer and Caleb J. Farmer in your corner can get you on the path to financial freedom and stability.
Call us at (828) 286-3866 to learn more about what legal options are available for your bankruptcy and how we may be able to help.
