Five things to know about bankruptcy
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Are you living paycheck to paycheck? Do you worry that you can’t pay your bills and afford Christmas this year? Does your phone constantly ring with debt collections calls? This is no way to live and North Carolina bankruptcy may be the answer. But before you file, here are five things you must know about bankruptcy to get the best possible results and most complete debt relief.
#1 What caused your financial problems?
If you don’t know how your finances ended up a mess, you might end up with the same problem later. Did you have a bout of unemployment and didn’t have enough savings to see you through? Did you have a car accident that kept you out of work for several months? Did you suffer an income loss for some reason and your bills and expenses were based on higher earnings? Did you go through a divorce (or are going through one) - and legal expenses plus supporting two homes is just too costly?
#2 Have you fixed the financial problem?
Understanding what got you into a mess will help keep you out of it again – but you also need to have corrected the issue. If you were unemployed, bankruptcy is best filed after you have a new job so you can make a fresh start with less debt and a new job. If it’s a divorce not yet filed, bankruptcy is usually best filed prior to the split so both spouses can have a fresh start. If you had an illness or accident, have you recovered and are back to work? Best to file North Carolina bankruptcy once the problem is fixed.
#3 Is Chapter 7 or Chapter 13 best for you?
There are two chapters of bankruptcy available to most consumers – Chapter 7 and Chapter 13. Chapter 7 is more sweeping debt relief that gets rid of most unsecured debt and allows you to keep secured assets like your home and auto so long as you are current on your payments and don’t have more equity than is allowed under North Carolina bankruptcy exemptions. Chapter 13 allows you to make installment payments to catch up on past due debt. Your circumstances will determine which is best but you need the advice of an experienced bankruptcy attorney to decide which you should choose.
#4 Have you filed all your income taxes?
Part of the bankruptcy process, no matter whether you choose Chapter 7 and Chapter 13, is attesting that you have filed your income taxes. You will have to submit income tax returns for at least the prior year and perhaps longer. If you haven’t filed your taxes, you still can. Talk to your bankruptcy attorney and get advice on how many years of taxes you should file if you have skipped more than one year. Even if you can’t afford to pay any taxes due, you’ll still have to file to get bankruptcy protection. And if you can’t afford to pay, the IRS may work out a payment plan or reduce the amount owed.
#5 Are you prepared to make the most of your fresh start?
In addition to fixing the underlying issues that caused your financial problems, you must be able to make the most of the fresh start you get. That means making a plan to adjust your spending, increase your income (if possible), downsize your lifestyle, or make whatever adjustments needed to keep your finances straight in the future. Now is the time to set up a budget based on the expenses you now will remain after bankruptcy and be sure to include savings as part of your plan. Prepare yourself so you get off to a good start once your debts have been addressed by bankruptcy.
To find out more about how Chapter 7 or Chapter 13 can help you, contact the Law Offices of John T. Orcutt – call us at +1-919-646-2654. We offer a free North Carolina bankruptcy consultation to all consumers at our offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington. Don’t live with unreasonable debt – call us today!