Submitted by Rachel R on Tue, 03/19/2013 - 4:10pm
Image source: TotalBankruptcy.com
If you are in debt – in over your head – and it feels like you have nowhere to turn and no way out, bankruptcy may be the best option for you. There are two types of personal bankruptcy – Chapter 7 and Chapter 13 – each with its own merits and drawbacks. Today we’ll discuss Chapter 7 and what it offers to consumers trapped in debt purgatory who are desperate for a fresh start.
Here are five reasons why Chapter 7 bankruptcy may be right for you:
#1 Your Debts Are Mostly Unsecured
The type of bankruptcy you file – or if you file at all – should largely depend on the type of debts you have. Because Chapter 7 only applies to unsecured debt – credit cards, medical bills, personal loans, etc – it is important that your debt be of the appropriate type to be relieved in this type of filing. If you have little in the way of these types of bill and instead it’s your student loans, car notes and mortgage that have you struggling, this is not the best solution for you. A reputable North Carolina bankruptcy attorney will be able to advise you if your debts are a good match for Chapter 7 bankruptcy!
#2 Your Debts Are Sizeable and/or Overwhelming
We all have bills – some of us even have a ton of them – but if you can pay them and are getting by, even if your budget is tight, you may not want to jump into bankruptcy. If, however, your bills are so overwhelming that you simply can’t pay them or that paying them means your family is going without, a well-timed Chapter 7 bankruptcy may be a good option for you. Bankruptcy is only intended to help those in severe financial circumstances that could not otherwise go on without some relief – that’s what you’ll likely hear from a bankruptcy lawyer. Durham NC consumers – and those all over the state – who are languishing in financial torment can look to Chapter 7 for relief if their debts are unbearable.
#3 Your Income Will Not Increase
If you’ve suffered a bout of unemployment, are on a fixed income due to retirement or disability, and this has left you unable to pay your bills, a Chapter 7 filing is likely a good solution to give you a fresh financial start. Getting free of your unsecured debt is a great way for those on a limited income to get a clean slate that will allow them to get by on their modest income. If, however, you are just starting out and your income is likely to be on the rise, or you’re experiencing a small blip in your career, you may want to hold off filing bankruptcy to see if your financial outlook improves.
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#4 You Don’t Have Significant Assets
If you are pretty much broke – not a lot of cash in the bank, not a huge amount of equity in your home, not earning a huge salary, no expensive cars and no stash of gold under your bed, you are probably a fit for a Chapter 7. If you do have significant assets, outside of North Carolina state exemptions for home and car equity, the court can require that you apply your assets to pay down your debts to creditors. But generally, standard furniture, clothes, computers, appliance, cars and a home with a nominal amount of equity can be retained and still have a successful Chapter 7 filing.
#5 You Are Prepared to Sacrifice Secured Debt Collateral
If you have car loans and a mortgage, your lender will have to be notified that you are filing Chapter 7 bankruptcy and then you will have to discuss the terms and whether they will agree to allow you to keep your property. Generally, if you are current on your house and car payments, the lender will allow you to retain the collateral so long as you continue to meet your monthly payment obligations. Your lender may require that you reaffirm with a new financing document that includes your bankruptcy filing in its terms and conditions. However, if you are delinquent in your payments on your vehicle or home, be prepared for the lender to ask you to surrender the collateral back to them. Hopefully this will not be the case – but this can sometimes happen with a Chapter 7. But if you are behind on payments anyway, filing a Chapter 7 will likely not exacerbate the situation any and can still be a good fit for you!
Remember, there are some unsecured debts that can follow you after bankruptcy. Alimony, child support, income taxes and student loans are examples of debt that can carry over. If asked, your North Carolina bankruptcy lawyers can file special paperwork to request that income tax and student loan debt be relieved with your bankruptcy filing. It’s wise to ask your attorney to address any delinquent student loans you have because many schools are now suing former students over delinquent loans – bankruptcy relief is preferable to a lawsuit with your school!
To learn more about whether a Chapter7 bankruptcy filing is right for you, contact a reputable North Carolina bankruptcy attorney today!
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