Filing Bankruptcy as an Individual in North Carolina

Filing for bankruptcy can be a challenging decision, especially for individuals facing overwhelming debt. In North Carolina, the process is structured to provide relief while adhering to state and federal guidelines. Understanding the types of bankruptcy available, the steps to file, and the implications of filing can help you navigate this complex process.

Types of Bankruptcy Available for Individuals

In North Carolina, individuals can primarily file for Chapter 7 or Chapter 13 bankruptcy.

Chapter 7 Bankruptcy: This is often referred to as "liquidation bankruptcy." It involves the discharge of most unsecured debts, allowing individuals a fresh financial start. However, it's essential to have qualifying income below a certain threshold, as determined by the means test.

Chapter 13 Bankruptcy: This type is also known as "reorganization bankruptcy." It allows individuals with a regular income to create a repayment plan to pay back all or a portion of their debts over three to five years. Chapter 13 is ideal for those who want to keep their assets while making manageable payments.

Eligibility Criteria

Before filing for bankruptcy, you must meet specific eligibility criteria:

For Chapter 7, your income must be below the median for North Carolina. If it exceeds the median, you may have to file under Chapter 13.
For Chapter 13, you must have a regular income that allows you to adhere to a repayment plan.
You must complete credit counseling from an approved agency within 180 days before filing.

The Bankruptcy Filing Process in North Carolina

The process of filing for bankruptcy involves several steps:

Credit Counseling: Complete a credit counseling course through an approved provider.
Gather Documentation: Collect financial documents, including income, expenses, debts, and asset information.
Complete Bankruptcy Forms: Fill out the necessary bankruptcy petition and schedules, detailing your financial situation.
File the Petition: Submit your completed forms to the U.S. Bankruptcy Court in your district, along with the required filing fee.
Attend the 341 Meeting: After filing, attend the Meeting of Creditors (341 meeting) where you will answer questions about your finances under oath.
Complete Financial Management Course: After filing, you must complete a financial management course before your debts can be discharged.

Implications of Filing Bankruptcy

While bankruptcy can provide relief from overwhelming debt, it also has long-term implications:

Credit Impact: Bankruptcy will stay on your credit report for several years, impacting your credit score and future borrowing.
Asset Liquidation: In Chapter 7, non-exempt assets may be sold to pay creditors, while Chapter 13 allows you to keep your assets while repaying debts.
Future Borrowing: Obtaining credit after bankruptcy may be more challenging, and interest rates may be higher.

Consulting a Bankruptcy Attorney

Considering the legal complexities and potential consequences, consulting with a bankruptcy attorney familiar with North Carolina law can be invaluable. An attorney can help evaluate your financial situation, guide you through the filing process, and provide representation in court.

Filing for bankruptcy can be a lifeline for individuals facing financial distress. With the right information and support, you can make informed decisions and work towards a more secure financial future in North Carolina.