Filing Chapter 7 Bankruptcy In NC

filing chapter 7 bankrupcy in NC

Bankruptcies can have far-reaching effects beyond just the financial burden. They can cause a strain on marriages, ruin a business, or even destroy future plans when handled incorrectly.

A Chapter 7 bankruptcy is designed to wipe out debt and give a new, fresh start to those who file under it. Under this filing, a trustee collects all of your assets and sells any assets which are not exempt. If you are considering personal Chapter 7 bankruptcy and have questions about the steps involved, contact an Eden bankruptcy attorney at Ivey McClellan.

How Does Bankruptcy Chapter 7 Work in Eden, NC?

One of the biggest misconceptions about this bankruptcy chapter is that when filing you will lose all of your property. In the vast majority of cases, debtors who file successfully for bankruptcy Chapter 7 end up keeping all of the property they own because of exemption laws. A Chapter 7 bankruptcy is a liquidation bankruptcy, unlike Chapter 13 which is a reorganization bankruptcy. In a liquidation bankruptcy, unsecured debts that you are behind on (like credit card bills and medical bills) can be wiped away to give you a fresh start. 

However, with secured debt (like a mortgage or car payment), the situation becomes a little more complicated. If you are current on your bills, you will likely be able to keep your car, home or other types of secured assets. If you are behind on payments, Chapter 7 offers other types of solutions or exemptions, or you can instead see if you qualify for a Chapter 13 bankruptcy which offers reorganization of debt rather than liquidation. Certain debts, like alimony, child support, student loans, and other items cannot be discharged in a Chapter 7 bankruptcy.

The federal government offers exemptions to debtors that allows them to protect a portion of their property from creditors (and from the trustee when a bankruptcy case is filed. North Carolina is also one of a handful of states that allows for state exemptions as well. One of these exemptions is the North Carolina homestead exemption, where debtors can protect up to $35,000 of equity in their primary residence. If you are married and filing a joint bankruptcy with your spouse, this amount can be doubled to $70,000. Equity does not amount to the overall value of your residence. For example, if you own a home worth $200,000 with a mortgage of $150,000 the equity is $50,000. North Carolina also offers automobile protection up to $3,500 equity in your cars.

Steps To Complete when Filing Bankruptcy Chapter 7 in NC

When you’re struggling with debt you can’t afford, living paycheck to paycheck, or being hounded by debt collectors, filing bankruptcy Chapter 7 in NC may be the best way to reorganize your home, your life, and your finances. 

There are certain requirements that must be met when filing for a Chapter 7 bankruptcy. Here are 5 requirements to pass when filing for this chapter:

Income requirements

In filing bankruptcy Chapter 7 in NC, you must be below the median income for the state. For a household of two people in North Carolina, that means less than $50.7k, $55k for a household of three, and $63.7k for a household of four. If you earn more than this, you may still qualify for Chapter 7, but you must pass the Means Test.

Pass the means test

If you make more money than the average family in North Carolina, you will have to pass a Means Test. This is generally constructed so that most consumers who earn more than the median income will be redirected to a Chapter 13 bankruptcy so that at least some of the unsecured debt may be paid off to the creditors. In this test, your last 6 months of income, expenses, debt, and other living expenses are evaluated to see if you can afford your debt. If it is decided that you don’t earn enough to afford your debt, you will qualify for Chapter 7 bankruptcy and be allowed to file. If it is decided that there is too much disposable income left over after expenses, it will be presumed that you belong in a Chapter 13 bankruptcy.

Prior or recent bankruptcies

If you have filed a Chapter 7 bankruptcy that went through to discharge within the last 8 years you will not qualify for a new filing. If you have filed a Chapter 13 bankruptcy that went through to discharge within the last 6 years you will not qualify for a new filing. If you filed a Chapter 7 or 13 that did not go through to discharge, you still may not be able to qualify for a new filing. Discuss your filings with your Eden bankruptcy attorney to see if you qualify for a new filing.

Fraud or abuse allegations

If you have recently filed for bankruptcy that did not go through to discharge or was dismissed because of a court order violation, or if your case was found to be fraudulent or an abuse of the system by the court, you may be ineligible to file a new case. Speak to an attorney about your specific case to see if you are still eligible. 

Work with an experienced Eden Bankruptcy Attorney

If you’re behind on bills and falling further and further into debt, than a Chapter 6 bankruptcy may be the solution for you. Providing relief through wiping away all unsecured debts, debtors are able to start with a fresh slate. But navigating bankruptcy law can be a difficult task and can cause major problems when handled incorrectly. The bankruptcy attorneys at our Eden law office have been successfully handling Chapter 7 bankruptcy cases for over 40 years, helping provide guidance and legal assistance through the filing and qualifying process.

To find out more about filing bankruptcy chapter 7 in NC and to see if you qualify, contact the Eden bankruptcy attorneys at Ivey McClellan for a consultation. Contact us now to learn more about your case and see if filing bankruptcy Chapter 7 in NC is right for you.

Office Locations


100 South Elm Street Suite 500
Greensboro, NC 27401
Phone: (336) 274-4658
Fax: 336-274-4540


551 Monroe Street
Eden, NC 27288
Phone: (336) 623-4600