Chapter 13 bankruptcy is a type of bankruptcy that allows individuals to reorganize their debts and repay them over time, usually three to five years. This type of bankruptcy is often called a “wage earner’s plan” because it is designed for people with a regular income.
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North Carolina residents may consider Chapter 13 bankruptcy if they are struggling with debt and unable to make their payments. This type of bankruptcy can help them avoid foreclosure, stop wage garnishment, and reduce their debt.
The purpose of this guide is to provide North Carolina residents with a comprehensive understanding of Chapter 13 bankruptcy, including the eligibility requirements, the filing process, and the benefits and drawbacks of this type of bankruptcy.
Understanding Chapter 13 Bankruptcy in North Carolina
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals to reorganize their debts and repay them over time, usually three to five years. This type of bankruptcy is designed for people with a regular income who are unable to make their debt payments.
Eligibility for Chapter 13 Bankruptcy in North Carolina
To be eligible for Chapter 13 bankruptcy in North Carolina, you must have a regular income and your total unsecured debts must be less than $419,275, and your secured debts must be less than $1,257,850. You must also complete credit counseling before filing for bankruptcy.
Advantages and Disadvantages of Chapter 13 Bankruptcy
The advantages of Chapter 13 bankruptcy include the ability to keep your property, stop foreclosure and wage garnishment, and reduce your debt. The disadvantages of Chapter 13 bankruptcy include the cost of filing fees and attorney fees, the length of the repayment plan, and the impact on your credit score.
Filing for Chapter 13 Bankruptcy in North Carolina
- Finding a Bankruptcy Attorney: It is important to find a bankruptcy attorney who is experienced in Chapter 13 bankruptcy. You can find an attorney by searching online or asking for referrals from friends or family members.
- Completing the Bankruptcy Forms: To file for Chapter 13 bankruptcy, you must complete several forms, including the petition, schedules, and statement of financial affairs. These forms require detailed information about your income, expenses, assets, and debts.
- Filing the Bankruptcy Petition: After completing the bankruptcy forms, you must file the petition with the bankruptcy court. You must also pay the filing fee and provide proof of completion of credit counseling.
The Chapter 13 Bankruptcy Process
- The Automatic Stay: When you file for Chapter 13 bankruptcy, an automatic stay goes into effect, which stops all collection actions against you, including foreclosure and wage garnishment.
- The Meeting of Creditors: After filing for bankruptcy, you will be required to attend a meeting of creditors. This meeting is conducted by the bankruptcy trustee and allows creditors to ask you questions about your finances.
- The Confirmation Hearing: The confirmation hearing is held to determine the feasibility of your repayment plan. At this hearing, the bankruptcy judge will review your plan and determine whether it is reasonable and feasible.
- The Repayment Plan: The repayment plan is the heart of Chapter 13 bankruptcy. It outlines how you will repay your debts over the next three to five years. The plan must be approved by the bankruptcy court.
- The Discharge: After completing your repayment plan, you will receive a discharge of your remaining debts. This discharge releases you from any further obligation to pay those debts.
Common Questions About Chapter 13 Bankruptcy in North Carolina
- Can Chapter 13 Bankruptcy Stop Foreclosure? Yes, Chapter 13 bankruptcy can stop foreclosure and allow you to catch up on missed mortgage payments over time.
- Can Chapter 13 Bankruptcy Stop Wage Garnishment? Yes, Chapter 13 bankruptcy can stop wage garnishment and allow you to repay your debts over time.
- Will I Lose All My Property in Chapter 13 Bankruptcy? No, you will not lose all your property in Chapter 13 bankruptcy. You will be able to keep your exempt property and may be able to keep your non-exempt property by paying its value into your repayment plan.
Alternatives to Chapter 13 Bankruptcy in North Carolina
- Debt Settlement: Debt settlement is an alternative to bankruptcy that involves negotiating with your creditors to reduce your debt. This option may be less expensive than bankruptcy but can also have a negative impact on your credit score.
- Credit Counseling: Credit counseling is a service that helps you develop a budget and a debt repayment plan. This option may be less expensive than bankruptcy but may not be effective if you have significant debt.
- Debt Consolidation: Debt consolidation involves combining your debts into one monthly payment. This option may be less expensive than bankruptcy but may not be effective if you have a significant amount of debt.
Conclusion
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals to reorganize their debts and repay them over time, usually three to five years.
Chapter 13 bankruptcy can be a good option for North Carolina residents who are struggling with debt and unable to make their payments. It can help them avoid foreclosure, stop wage garnishment, and reduce their debt.
If you are considering Chapter 13 bankruptcy, it is important to seek legal advice from an experienced bankruptcy attorney. They can help you navigate the process and ensure that your rights are protected.
FAQ
Q1. What is Chapter 13 bankruptcy?
A1. Chapter 13 bankruptcy is a type of bankruptcy that allows individuals to reorganize their debts and create a repayment plan over a period of three to five years.
Q2. How does Chapter 13 bankruptcy differ from Chapter 7 bankruptcy?
A2. Chapter 7 bankruptcy is a liquidation bankruptcy, where assets are sold to pay off debts. Chapter 13 bankruptcy allows individuals to keep their assets and pay off their debts over time.
Q3. What debts are eligible for inclusion in a Chapter 13 repayment plan?
A3. Most types of debts are eligible for inclusion in a Chapter 13 repayment plan, including credit card debt, medical debt, and personal loans.
Q4. How long does a Chapter 13 repayment plan last?
A4. Chapter 13 repayment plans typically last for three to five years, depending on the individual’s income and debts.
Q5. Can a Chapter 13 bankruptcy stop foreclosure on a home?
A5. Yes, a Chapter 13 bankruptcy can stop foreclosure on a home by allowing individuals to catch up on their missed mortgage payments over time.
Q6. Can a Chapter 13 bankruptcy stop wage garnishment?
A6. Yes, a Chapter 13 bankruptcy can stop wage garnishment by allowing individuals to repay their debts through a court-approved repayment plan.
Q7. Can a Chapter 13 bankruptcy discharge all debts?
A7. No, a Chapter 13 bankruptcy does not discharge all debts. Some debts, such as student loans and tax debts, cannot be discharged in bankruptcy.
Q8. How does a Chapter 13 bankruptcy affect credit scores?
A8. A Chapter 13 bankruptcy will negatively impact credit scores, but the impact may be less severe than that of a Chapter 7 bankruptcy.
Q9. Can an individual file for Chapter 13 bankruptcy more than once?
A9. Yes, an individual can file for Chapter 13 bankruptcy more than once, but there are time limits between filings.
Q10. How can an individual determine if Chapter 13 bankruptcy is the right choice for them?
A10. An individual should consult with a bankruptcy attorney to determine if Chapter 13 bankruptcy is the right choice for them, based on their income, debts, and financial goals.
Glossary
- Chapter 13 Bankruptcy: A form of bankruptcy that allows an individual to reorganize their debt and develop a repayment plan.
- Debtor: A person who owes money to creditors.
- Creditor: A person or entity who is owed money by a debtor.
- Automatic Stay: A court order that stops creditors from taking any action to collect a debt from a debtor.
- Trustee: A court-appointed official who oversees the bankruptcy case and administers the repayment plan.
- Plan Confirmation: The process of the bankruptcy court approving the debtor’s proposed repayment plan.
- Disposable Income: The amount of income a debtor has left over after paying for necessary living expenses.
- Priority Claims: Claims that must be paid first in the debtor’s repayment plan.
- Secured Debt: Debt that is backed by collateral, such as a home or car.
- Unsecured Debt: Debt that is not backed by collateral, such as credit card debt.
- Reaffirmation Agreement: An agreement between a debtor and creditor to continue paying a debt that would otherwise be discharged in bankruptcy.
- Exemptions: Certain property or assets that a debtor is allowed to keep during bankruptcy.
- Means Test: A calculation used to determine if a debtor qualifies for Chapter 13 bankruptcy.
- Discharge: The release of a debtor from personal liability for certain debts.
- Arrearages: The amount of missed payments on secured debts, such as a mortgage or car loan.
- Co-Debtor Stay: A court order that stops creditors from collecting from a co-debtor who is also liable for the debt.
- Confirmation Hearing: A court hearing where the bankruptcy court approves or denies the debtor’s repayment plan.
- Priority Claims: Claims that must be paid first in the debtor’s repayment plan.
- Secured Debt: Debt that is backed by collateral, such as a home or car.
- Unsecured Debt: Debt that is not backed by collateral, such as credit card debt.
- Bankruptcy Law: Bankruptcy law is a legal framework that governs the process of declaring bankruptcy, including the procedures for filing, the treatment of assets and debts, and the rights of creditors and debtors. It is designed to provide relief to individuals and businesses who are unable to pay their debts, while also ensuring that creditors are treated fairly.
