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People filing for bankruptcy as individuals are typically not required to surrender their assets. Specific rules apply to each case, and a bankruptcy attorney can explain those in detail. When you have exhausted your savings and all other financial options, bankruptcy may seem like a last resort. Still, it can also be a new beginning.
There are several different types of bankruptcy relief available. Our bankruptcy attorney can help you determine the best way to file to keep the assets you worked so hard to obtain. We understand the complexities of the laws and will work to ease your anxiety about taking this huge step toward financial recovery.
Explaining Exemptions and How They Affect Your Bankruptcy
Exemptions permit you to maintain items necessary for everyday living, such as the need to have a home and a vehicle. In North Carolina, per G.S. § 1C-1601, filers are allowed an exemption of $3,500 specifically for a car. In South Carolina, per S.C. § 15-41-30, the vehicle exemption is $5,000 and is adjusted for inflation.
Our bankruptcy attorney will fully explain information about exemptions available for your case. The requested exemptions will be included in your petition to the court to discharge your debts. The chapter that your bankruptcy falls under will make a difference in the assets that you may maintain.
The Type of Bankruptcy Makes a Difference
Individuals may file under Chapter 7, 11, or 13 of the U.S. Bankruptcy Code. Each state may also enact exemption regulations and clarify specific filings rules within its court system. Having a bankruptcy attorney that works within your state and is familiar with bankruptcy laws and how they will apply to your situation is a great benefit.
Chapter 7 Bankruptcy
Chapter 7 is used to eliminate debts without requiring a repayment schedule. The following criteria mean you may file under Chapter 7:
- Individuals who cannot maintain monthly payments for debts
- A business preparing to cease operations
- Under the strain of any amount of debt
Under a Chapter 7 filing, any assets that are not exempted must be liquidated to pay your debtors. The proceeds from the sale of non-exempt assets will be distributed to your creditors based on their status. Secured or collateral loans receive payment first, and unsecured or personal loans receive payment last. The large majority of Chapter 7 cases for individuals and couples do not involve non-exempt assets, meaning you may be able to keep everything.
Chapter 7 is for people with no financial means to pay their debts. Suppose you acquired the debt while in a high-paying position. Then were laid off and accepted a lesser-paying position. You may be able to keep most of your assets, such as your home, a vehicle, and household goods.
Chapter 11 Bankruptcy
The Internal Revenue Service (IRS) explains that to file for bankruptcy reorganization under Chapter 11, you must be able to show that:
- You are a corporation, limited liability company (LLC), sole proprietor, or a partnership with too much debt to file under Chapter 13
- You are an individual with too much debt for a Chapter 13 filing
- You have made an effort to reorganize your finances to alleviate the debt
- You have developed a workable plan for repayment of your debts over time
Chapter 11 is helpful when a business intends to remain in business and needs relief from its debt load to continue operating. A Chapter 11 bankruptcy attorney will help negotiate with creditors to arrange payment plan details that facilitate rebuilding your business. Before finalizing a Chapter 11 bankruptcy filing, all creditors must agree to the adjusted repayment schedule.
Although a business or individual may opt to liquidate unused or under-used assets, they may keep a majority of them to continue conducting business.
Chapter 13 Bankruptcy
Under Chapter 13 bankruptcy rules, the court may forgive some of your debt while you reorganize finances and repay creditors. To file under Chapter 13, you must:
- Work with creditors to develop a repayment plan
- Have the means to meet all payment plan obligations
- Show a willingness to sell or surrender assets as necessary to settle balances with creditors
Payment plans under Chapter 13 may extend three to five years and will put an “automatic stay” in place to protect your assets. The stay prevents your creditors from collecting your assets to settle the debt as long as you make your scheduled payments under the established plan.
Chapter 13 might be viable if you fall behind on payments but still have an income that will allow future payments to continue. It can prevent foreclosure action on your home, keep a small business in operation, and avoid the need to liquidate your assets.
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How a Bankruptcy Attorney Helps You Keep Your Assets
Bankruptcy laws and the entire process can be confusing and overwhelming. Our bankruptcy team knows the rules and how they apply to various situations. A bankruptcy attorney offers the following services to assist you:
- Free case evaluation to review your financial situation
- Assistance in compiling and organizing your documentation
- Determining the best chapter to file under
- Inform you of the process and prepare you for each step
- Representing you in all meetings, negotiations, and court proceedings
- Helping you understand your rights and responsibilities
- Answering your questions and offering peace of mind
Considering bankruptcy is a huge step, and it can become overwhelming. Having a bankruptcy team on your side will help a lot.
Contact Farmer & Morris Law, PLLC, for Your Bankruptcy
At Farmer & Morris Law, PLLC, bankruptcy is one of our primary practice areas. Our team has many success stories and a record of delivering positive results. We stay on top of changes in the laws that may affect our clients. Contact our bankruptcy team to schedule your free case evaluation.
