What Debts Will Be Left After Your North Carolina Bankruptcy?

What's life like after bankruptcy?

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You probably know that bankruptcy is designed to help you deal with debt you can’t afford to pay. After filing North Carolina bankruptcy and following the process through to discharge, you’ll be rid of lots of your debt. Depending on the type of bankruptcy you file, you’ll get caught up on some debt and discharge many other obligations. However, not all debts are gone after NC bankruptcy. Here’s what you should about know what debts remain after bankruptcy.

Debts That Remain After Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is designed to shed lots of debt in a short time. Within three to four months, most of your unsecured debt should be discharged, with some exceptions. Secured debt is handled differently in Chapter 7. If you’re current on your mortgage or auto loan, you should be able to keep the loan and the associated asset if you want to. If you’re behind on your secured debt, you’ll have to work something out or give up the asset and the debt both.  

With that summary in mind, here’s a look at the categories of debt in Chapter 7 - debts that will automatically be discharged (in most cases), debt that will remain, and debt that will remain if the creditor successfully objects to their discharge.

Debts Automatically Discharged In Chapter 7

Within just a few months, you can see all the following debts discharged, and you’ll owe nothing:

• Credit cards
• Medical bills
• Older qualified income tax debts
• Signature loans
• Non-collateral loans (ex. furniture loans)
• Personal loans
• Homeowner’s association fees and fines
• Older utilities

Debts That Will Automatically Remain After Chapter 7

These are debts that are usually not dischargeable in North Carolina Chapter 7:

• Recent income taxes
• Child support, spousal support, or alimony
• Court fines and penalties
• Some debts owed to government agencies as penalties and fines
• Attorney fees for child custody and support cases

Debts That Remain If the Creditor Successfully Objects  

Occasionally, some creditors might object to discharge of debt in your NC Chapter 7. You can fight the objection, but you should know these might remain if the court agrees. These include:  

• Credit card purchases for luxury goods of $675 or more incurred within 90 days of your case
• Credit card cash advances of $950 or more incurred within 70 days of filing for bankruptcy
• Debts gained by fraud or false pretense (i.e., debt you accumulated while never intending to pay)
• Debt resulting from malicious and willful injury to another person or property

Debts That Remain After Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is a debt repayment plan designed to catch up on secured debt on which you’ve fallen behind and offers significant relief on unsecured debt. After going through with the debt repayment plan, the remaining debt is discharged. If you’re behind on your mortgage or auto payments, the past-due balance is rolled up into your repayment plan, so you can catch up and keep your home.

If you have a second mortgage and lower equity in your home, you might be able to strip that off as well. With your auto loan, you can catch up on delinquent balances and might be able to lower your balance and interest rate if your loan is a few years old, you owe more than the market value of your vehicle, and your interest rate is high. With that summary in mind, here’s a look at what debt is left after Chapter 13.

Debts That Can Be Discharged In Full (or Partially) In Chapter 13

Depending on your income and the terms of your repayment plan, you may see these unsecured debts discharged from 0-100%:

• Credit cards
• Medical bills
• Older qualified income tax debts
• Signature loans
• Non-collateral loans (ex. furniture loans)
• Personal loans
• Homeowner’s association fees and fines
• Older utilities

Debts That Will Automatically Remain After Chapter 13

• Domestic, spousal and child support obligations  
• Debts from criminal fines, even for traffic tickets
• Debts that are fines and penalties owed to a government agency
• Recent income taxes
• Debts incurred from fraud, theft or a breach of fiduciary duty

In both Chapter 13 and Chapter 7, you might be able to get some relief on student loans depending on your circumstances. To request help, your lawyer must file a separate action called an Adversary Proceeding. Filers that have persistently low income, chronic medical conditions, or who are seniors on a fixed income stand a greater chance of partial or total discharge, but your circumstances might qualify.

To find out more about what life looks like after bankruptcy, read reviews from our clients then contact the Law Offices of John T. Orcutt. Call +1-833-627-0115 and ask for a free North Carolina bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro or Wilmington.