Unpayable bills often lead people to consider bankruptcy. Your financial worries can be relieved and you can get a fresh start by filing for bankruptcy in North Carolina. However, before taking any action, you should understand the process and what to expect. This blog post will provide an overview of how to file for bankruptcy in North Carolina and everything you need to know to make the best decision for you. Keep reading to learn more!
What Is Bankruptcy?
Bankruptcy provides relief to individuals and businesses who are unable to pay their debts. An automatic stay prevents creditors from collecting from you in bankruptcy, at least temporarily, so you can come up with a payment plan.
Signs that You May Need to File for Bankruptcy
Filing for bankruptcy is not for everyone, so understanding this before filing is important.
Here are some signs that you may need to file for bankruptcy:
- You’re struggling to catch up with your mortgage payments.
- You’re paying your essential living expenses with your credit cards.
- Your creditors aren’t willing to work out a payment plan with you.
- Debt collectors are contacting you, or your house is being foreclosed on.
Is Bankruptcy The Only Way Out?
It’s key to explore all your options before filing for bankruptcy. Alternatives to bankruptcy are debt settlement or credit counseling. You can determine the best option for you with the help of an advisor.
It is possible to reduce your payments by consolidating your debt. As a result, you will save money on interest and be able to repay your debt more quickly. Direct negotiations with creditors are also possible. If you can reach an agreement, you will be able to avoid bankruptcy.
The Types of Bankruptcy for Individuals
There are two main types of bankruptcies for individuals available in North Carolina: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is typically considered first because it takes only a few months and does not require payments to creditors. In addition, it is an excellent option for those with minimal living and working requirements to avoid losing unnecessary luxury items. However, a Chapter 7 bankruptcy cannot be used to catch up on mortgage or car payments, so you can lose them.
Chapter 13 filers, on the other hand, usually have three to five years to repay their debts. There are many distinctions between Chapter 13 and Chapter 7. Keeping all your property and avoiding foreclosure and repossession is one example. In the event that your debt cannot be discharged by bankruptcy, you can also negotiate a payment plan with your creditor.
How to File for Bankruptcy in North Carolina
Many people avoid bankruptcy because they are worried they won’t be able to afford a lawyer. Bankruptcy attorneys are expensive and the most costly part of filing for bankruptcy in North Carolina. Fortunately, you do not need an attorney to file for bankruptcy on your own.
Below are the steps to do so.
- Gather Your North Carolina Bankruptcy Documents: Make sure you have copies of your tax returns from the past two years, a bank statement showing the bankruptcy filing date, and your last 60-day pay stubs.
- Take a Credit Counseling Course: Learn more about the credit counseling course here.
- Fill Out the Bankruptcy Forms: The forms are available free of charge at USCOURTS.gov.
- Pay Your Filing Fee: Chapter 7 bankruptcy requires a court filing fee of $338. If your income does not exceed 150% of the poverty guidelines in North Carolina, you can request a fee waiver.
- Print Your Bankruptcy Forms: Make sure to print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the North Carolina Bankruptcy Court: There are three bankruptcy districts in North Carolina: the Western District, the Middle District, and the Eastern District. Bankruptcy petitions are filed in the district in which you live. North Carolina’s Middle District lists the counties in each of its three districts.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Sign up for a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: Your creditors can attend this meeting to ask questions.
What Happens After You File for Bankruptcy in North Carolina?
Bankruptcy discharges most of your unsecured debts, so you won’t have to repay them. There are, however, some debts that bankruptcy cannot discharge, such as student loans, child support, and alimony. You may also have to surrender some assets depending on your bankruptcy choice.
Does Bankruptcy Affect Your Credit Score?
After filing for bankruptcy, your credit report will reflect bankruptcy for seven to ten years. As a result, loans and credit lines may be difficult to obtain.
Rebuilding Your Credit Post Bankruptcy
Despite what many people believe, bankruptcy does not mean the end of your financial future. The following actions can help you rebuild your credit:
- Take out a small loan.
- Make on-time payments.
- Get a secured credit card.
- Maintain a good payment history.
- Regularly check your credit report for errors.
- Become an authorized user on a credit card.
Sell Your House for Cash & Avoid Bankruptcy in North Carolina
If you’re considering filing for bankruptcy, the best way to avoid it is by selling your house. At Favor Home Solutions, we buy houses as-is for cash, so you don’t have to worry about making repairs or dealing with the emotional upheaval that comes with bankruptcy.
We’ll work together to develop a solution that meets your unique needs within your preferred timeframe! Get the cash you need in as little as 14 days and regain your peace of mind. Contact us today to learn more about how we can help you!