Bankruptcy in North Carolina
North Carolina is home to beautiful beaches, luscious tree covered mountains, and hard-working people. In current economic times, it’s common for even hard-working people to struggle financially and to consider bankruptcy. Bankruptcy laws were made for difficult times like these.
If you’re like many folks, you’re trying to figure out if filing bankruptcy is right for you or if there are alternatives. That’s the job of a bankruptcy attorney.
In this article, we’ll show you how North Carolina bankruptcy laws compare to the laws of other states; discuss the options of Chapter 7 and Chapter 13 bankruptcy; and provide simple advice on how to choose and work with a bankruptcy attorney.
How North Carolina Bankruptcy Laws Compare to the Laws of Other States
The procedure for filing bankruptcy is the same in North Carolina as in other states because the rules are made under federal law.
In addition, about half the states, including North Carolina, offer tenancy by the entireties protection for a home. A married person, who owns his or her home with a spouse and who is filing bankruptcy as an individual, may be able to protect the entire value of the house.
The exemptions (the property that can be protected throughout bankruptcy) are different in North Carolina than in other states. Some states offer a choice between federal exemptions and state exemptions. In North Carolina, only state exemptions are available.
But that’s okay; the exemptions are relatively generous and most folks don’t lose any assets at all.
Here is a very simplified summary of North Carolina bankruptcy exemptions:
- Your home (up to $35,000 or $70,000, if you’re married and filing jointly).
- Your home if you are 65 or older and your spouse is deceased (up to $60,000).
- Your car (up to $3,500 or $7,000, if you’re married and filing jointly).
- Personal items of $5,500 or $11,000, if you’re married and filing jointly).**
**More can be protected if you have dependents. Your bankruptcy attorney will show you how to make the most out of your exemptions and keep as many assets as possible.
Your Options: Chapter 7 or Chapter 13
Both Chapter 7 and Chapter 13 bankruptcies will offer you relief from creditor phone calls, letters, lawsuits, and most garnishments. Relief is granted immediately upon the acceptance of your bankruptcy petition under either chapter.
If you meet the “means test” for Chapter 7, it has a fast resolution and all of your unsecured debts are extinguished. Unsecured debts include medical bills, credit card bills, and personal loans. You never have to pay them back.
If you don’t qualify for Chapter 7, Chapter 13 is likely the most viable route. Some unsecured debts are discharged but many are reorganized under more favorable terms, so you can repay them under a 3 to 5 year plan.
How to Choose and Work with a Bankruptcy Attorney
Choosing a bankruptcy lawyer is an important step in your financial recovery process. Pick an attorney that you trust and feel comfortable asking questions of. It’s important that after you make your choice, that you follow the legal advice you’re paying for and provide all the information requested in a timely manner.
Choose an attorney who focuses his or her practice on bankruptcy law and helping people in your situation and who will answer your questions in an understandable and friendly manner.