If you are struggling month after month to pay your bills, and are seeing the debt pile up with no way forward, it may be time to file for a Chapter 13 bankruptcy NC. Chapter 13 allows those with enough income to repay all or part of their debts in a three to five year repayment plan as an alternative to liquidation. The amount to be repaid is determined by several factors including the debtor's disposable income.
To be eligible to file for Chapter 13 bankruptcy in NC, an individual must have no more than $394,725 in unsecured debt (like credit card bills or personal loans). They also can have no more than $1,184,200 in secured debts (like mortgages and car loans).
Before you can file for a Chapter 13 bankruptcy, you must receive credit counseling from an agency approved by the Bankruptcy Administrator in North Carolina. Within a six month period after receiving your credit counseling, you can apply for bankruptcy. After filing, you will then be required to take a debtor education course from an approved agency in order to qualify for your debt discharge.
When preparing your bankruptcy paperwork, there are some considerations to keep in mind:
Official Federal and State Bankruptcy Forms
Before the North Carolina Bankruptcy Court can discharge your qualifying debts, you will have to fill out the official bankruptcy forms. Within these forms, you must input lists of your property, debts, income, expenses, and financial transactions. Once complete, you will submit the forms to the bankruptcy court. Along with the paperwork, you will have to submit a filing fee or a request for a fee waiver and proof that you have completed the credit counseling course. All bankruptcy cases fall under federal law, but you will also have to submit specific North Carolina based paperwork as well. Other information you may need to include are:
- A list of creditors and the amount of their claims
- A list of the debtor’s property, as well as an accounting of all contracts and leases in the debtor’s name
- A breakdown of the debtor’s monthly living expenses
- Tax information, including a copy of the debtor’s most recent federal tax return and a statement of any unpaid taxes
Chapter 7 bankruptcies require a means test to ensure that your income is below the median point. A chapter 13 bankruptcy has no means test, but a similar calculation will help you determine your monthly plan payment.
When you file for a chapter 13 bankruptcy in NC, you will likely be able to exempt or protect most of your property. A full list of exempt assets appear on the list of North Carolina exemptions, and is safe as long as the value of the property doesn’t exceed the exemption amount. If your property or asset does not appear on the list, you won’t have to give it up, but instead, its value will be added to your Chapter 13 repayment plan. In addition, spouses filing a joint bankruptcy in North Carolina can double the exemption amount as long as they both own the property.
You can file your chapter 13 bankruptcy NC paperwork in one of two locations. Either the district where you have been residing for the greater part of the 180 days before or the district where you maintain your home.
How Can a Chapter 13 Bankruptcy NC Help You
If you want to keep a valuable piece of property like a car or a home, Chapter 13 will allow you to keep your property by catching up on the payments and continuing to make them based on a payment plan.
If you rely heavily on your home or a car, Chapter 13 can be used to prevent a house foreclosure, catch up on missed mortgage or car payments, pay back taxes, keep valuable non-exempt property, or even stop interest from accruing on your local, state or federal tax debt. If you are able to complete your repayment plan as outlined in the agreement, your remaining dischargeable debt will be released at the end of the plan.
Chapter 7 vs Chapter 13: Which Should I File?
When it comes to filing for bankruptcy, there are generally two options to choose amongst - Chapter 13 bankruptcy is a reorganization whereas Chapter 7 bankruptcy is a liquidation. Choosing which one is right for you depends on your income level and what assets or property you hope to keep. Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets, such as a home or car. In the bankruptcy filing, debtors do not have to lose their secured assets. A chapter 13 bankruptcy allows the debtor to make a repayment plan, making up their overdue payments over the course of 3-5 years and reinstating the original agreement. Also, a debtor may be able to keep valuable nonexempt property with Chapter 13.
However, for the vast majority of individuals who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice. This chapter erases things like credit card debt, medical bills, and most civil judgments, though it is not guaranteed that you will be able to keep your expensive property.
Filing Bankruptcy Chapter 13 in NC with An Experienced Attorney
When you work with the experienced lawyers at our bankruptcy law firm, you can get the sound legal advice and guidance to comfortably move forward with your filing. We provide honest and tenacious representation, providing thorough case evaluations, quick action and even an estimated repayment plan. Our attorneys can help walk you through every step of the process, from deciding which chapter to file for, to making sure you are meeting all the legal and filing requirements. Have any questions? Speak to an attorney today!