Chapter 7 Bankruptcy
What is Chapter 7?
If you are feeling overwhelmed with debt, unable to keep up with your credit card bills or loan payments, filing for Chapter 7 bankruptcy might able to erase some of your debts and be the right option for you. Chapter 7 Bankruptcy is typically referred to as liquidation bankruptcy, even though most individuals that file bankruptcy Chapter 7 don’t even end up losing anything. However, in cases of Chapter 7, your possessions may be sold in order to pay existing debts.
Individuals and companies are both eligible to file a Chapter 7 Bankruptcy in Greensboro, NC, though it is intended for consumers or households with a limited income. In the course of filing, you must list all of your assets and all of your debts. A Trustee is appointed to your case and is placed in charge of collecting assets and selling them for the benefit of creditors.
In this type of bankruptcy, there are federal exemption rules and state exemption rules. Some states allow you to choose whether you want to use the federal exemptions or your state's guidelines, while other states insist that you use the state guidelines. Talk to a Chapter 7 bankuptcy attorney in Greensboro to see which applies to your state.
In addition to listing all your assets, you can declare certain property as “exempt” from collection (commonly referred to as your exemptions). Exemptions are dollar amounts of value in things that the trustee can’t take. Exemptions are not available to business entities, so anything they own in a Chapter 7 is available to creditors. The actual exemptions and how they apply vary, but typically people are able to claim most of the things they own as exempt, depending on the amount of equity you hold in it. This may include:
- Your House
- Your Car
- Your Household Furnishings
- Retirement Accounts
- A Wild Card
The Wild Card can apply to anything else you own, such as bank accounts. Since most individuals don’t own anything beyond their exemptions, they are coded as a “no asset case” and the trustee doesn’t collect anything from them.
How To File Bankruptcy Chapter 7
To apply for this bankruptcy type, you will need to complete a series of official bankruptcy documents, including filling out the means test. Your petition must then be filed at the U.S Bankruptcy Court. Below is an outline of what a typical filing process for Chapter 7 Bankruptcy would look like. Keep in mind that this is only a broad overview, and may differ from your own experience. To learn more about how to file bankruptcy Chapter 7 in Greensboro, a Chapter 7 bankruptcy attorney will have to go over your particular case and offer guidance on if you qualify for Chapter 7 in North Carolina.
What Can It Do For Me?
The goal of filing Chapter 7 bankruptcy is to get your discharge, or your “get out of jail free card.” If you comply with the provisions of the Bankruptcy Code, a few months after you file bankruptcy, the Court mails an Order that says creditors are not allowed to collect any debts from you. This is your “clean slate” and the fresh start most people look for when pursuing bankruptcy.
Unsecured debt, such as credit card bills or medical bills will be discharged when you qualify for Chapter 7 bankruptcy. In many cases, your personal obligation to pay your debts such as your mortgage, car payments and more will be wiped out, but your lender will be able to foreclose on the home if they wish to do so.
What It Can't Do
Not all debt is discharged in a Chapter 7 bankruptcy. Student loans, some tax debts, child alimony and a list of other less common situations including debts incurred through fraud and debts resulting from drunk driving accidents will not be discharged.
While Chapter 7 will discharge most of your unsecured debts (credit card and medical bills, for example) as well as let you walk away from secured debts you no longer wish to keep (surrendering a car and walking away from the debt), Chapter 7 will not be able to help you with some tax debts or help you keep property that you have loans on that you aren’t up to date on payments for. For these kinds of debts you will need to look for relief under either Chapter 13 or Chapter 11, which are both forms of reorganization rather than liquidation. To understand what among your personal debt can be forgiven, contact a Chapter 7 bankruptcy attorney and learn how to file bankruptcy Chapter 7 in Greensboro, NC.
How Do I Qualify?
In order to qualify for Chapter 7 in North Carolina, your household income must be below your state's median income level. If your income is above that, you may still be eligible to file Chapter 7 bankruptcy by satisfying the Means Test. The Means Test is a very long and complicated formula, but in short, it says that if you made too much money in the past 6 months, you won’t be allowed to file a Chapter 7.
In those situations, the Bankruptcy Code states that you can afford to pay back some of your debts, and in the interests of fairness, will require you to file a Chapter 13 instead and repay some of your debts. While the Means Test is very complicated, Ivey, McClellan, Gatton & Siegmund, LLP has a long history of working through the Means Test, and is familiar with the forms and processes.
Contact a Chapter 7 Bankruptcy Attorney
The attorneys at Ivey McClellan have years of experience working with Chapter 7 cases in North Carolina. While we can’t guarantee everyone will qualify to be a Chapter 7 debtor, we know enough of the pitfalls and loopholes in the forms to get most people to qualify. If you are interested in finding out if you qualify for Chapter 7 in North Carolina, contact us today to arrange a confidential consultation with our Chapter 7 bankruptcy attorneys.
100 South Elm Street Suite 500
Greensboro, NC 27401
551 Monroe Street
Eden, NC 27288
Phone: (336) 623-4600