Since the pandemic struck, most Americans have felt financially strained and stressed. While that’s not too surprising, what has caught experts off guard is the fact that bankruptcy filings have decreased nearly 30% since the pandemic began!
One of the main reasons why bankruptcy filings have decreased is because most Americans simply don’t understand their rights and how bankruptcy can help.
If you’ve struggled under the weight of crushing debt for years, then filing for a Ch 7 bankruptcy in NC could be exactly the financial relief you need to get a fresh start. Are you wondering how this bankruptcy process works and the steps involved in petitioning the courts? Learn everything you need to know about filing for a Chapter 7 bankruptcy in North Carolina below.
How Does a Chapter 7 Bankruptcy Work?
Before you get started, it’s crucial to determine if filing for a Chapter 7 bankruptcy is right for you. In a nutshell, citizens file for this type of financial relief when their current debts exceed their ability to pay them off. Immediately upon petitioning the bankruptcy court, your creditors will be forced to stop all collection efforts until your case concludes.
In the meantime, you’ll need to provide detailed information about your finances, debts, and assets. A trustee will discuss your situation with you, review your situation, and then arrange a meeting between you and your creditors. Depending on your situation, some of your assets may be sold to help pay off your creditors. Keep in mind that you will be able to claim exemptions on certain types of assets from this process.
Once the process is complete, your debts will be discharged, so you’ll no longer be legally or financially liable for those debts. It’s like getting a complete financial reset!
There are certain liabilities that are not eligible for discharge. Credit card debt, for instance, is considered unsecured and can be discharged by the court. Debts like medical bills, student loan debt, child support debt, and alimony payments aren’t eligible for discharge.
Steps to Complete when Filing a Chapter 7 Bankruptcy Case
Before you petition the courts for bankruptcy, you need to make sure that you meet the eligibility requirements for filing for a Chapter 7 bankruptcy. Learn more about the 4 requirements you’ll need to meet based on current bankruptcy laws:
1. Income Requirements
Chapter 7 bankruptcies are designed for individuals with a modest income. To be eligible to file, you must make an income that’s below the median income for NC.
If you earn more than the state’s median income, then you’ll need to pass the Means Test to qualify.
2. Pass the Means Test
The means test helps courts determine if you should apply for a Chapter 7 or a Chapter 13 bankruptcy. The test requires you to provide your last 6 months of income, expenses, debts, and other living expenses. The courts will then determine if you earn enough to repay your debt. If you don’t, then you will be ruled as eligible to file for a Chapter 7 bankruptcy.
Bankruptcy law dictates that if you can afford to pay your debts, you will be required to file a Chapter 13 claim. This type of personal bankruptcy still allows for reorganization of your unsecured debt and secured debt, but you’ll be subject to a repayment plan.
3. Fraud or Abuse Allegations
Have you already attempted to file for bankruptcy in the past? Was your case discharged because of a court order violation? Did your bankruptcy filing end in a dismissal? Was your bankruptcy found to be fraudulent or an abuse of the system? If you’ve faced these types of accusations before, then you might not be eligible to file a new bankruptcy case.
Do you think you could possibly fall into this category? If so, then it’s important to speak with a bankruptcy lawyer. They can help you determine whether you’re still eligible to file for another bankruptcy case.
4. Prior or Recent Bankruptcies
Similarly, if you’ve filed a bankruptcy case within the past 8 years, then you may not be eligible to file a new bankruptcy case yet. For Chapter 7 bankruptcies, you must wait at least 8 years. For a Chapter 13 bankruptcy, you must wait at least 6 years.
5. File the Bankruptcy Petition
Once you’ve determined that you’re eligible to file for bankruptcy, you’ll want to file the petition with your local court. Immediately upon taking this action, your creditors will be alerted to the situation. Until further notice, they can not legally pursue any type of collection activity. This is called an automatic stay, and it’s an important part of the debt-relief process. If your home was in danger of foreclosure or your vehicle was in danger of repossession, this will prevent any further action. If you were at risk for garnishment, then that will halt, too.
At this point, you’ll want to collect all your necessary financial information and documents.
6. Attend Your Hearing
Next, you’ll attend a hearing with your creditors where they’ll inquire more about your financial situation. Depending on how detailed your financial documents are, your creditors may make a decision without having an in-person meeting with you.
Working With an Experienced Eden Bankruptcy Attorney
As you go through this process, your finances will be out in the open. It is advised that you hire a bankruptcy attorney to help protect your rights and interests as you go through this process. A good bankruptcy attorney will help you determine your eligibility, collect your financial documents, and help you get through your hearing. They’ll help with filing exemptions to protect your important assets, and they’ll help you reach the best possible legal outcome in your situation. Even better, they can continue to help even after bankruptcy.
Are You Ready to File for a Chapter 7 Bankruptcy in NC?
Are you ready to file for a Chapter 7 bankruptcy in NC? If so, then you should use this guide to help you through each step of the process. It’s equally as important, though, to hire a quality bankruptcy lawyer who can provide you with the best possible legal advice in your situation.
If all goes well as you file for bankruptcy, then what you owe will decrease dramatically.
Are you currently in the Eden area? Are you looking for the best bankruptcy lawyer to represent you? If so, then we want to help. Reach out to our office now to discuss your financial situation in more detail.