Bankruptcy Breakdown – Craft Law Office
Bankruptcy can be an intimidating topic. There are different types of bankruptcy, each with different meanings, and it can be confusing. Craft Law Offices are here to help; here’s a breakdown of the different types of bankruptcy.
Bankruptcy can help you to:
- Eliminate your debts, such as medical bills, personal loans, credit card debts, and previous repossessions.
- Halt foreclosures and repossessions.
- End harassing phone calls, wage garnishments, and other collection antics.
- Resolve tax issues with the IRS.
Chapter 7 Bankruptcy:
Chapter 7 bankruptcy will let you cancel some or all of your debts – from medical bills to credit card debts. If you’re current in your payments, certain properties (like your house and car) are exempt, meaning you get to keep them. With Chapter 7, you’ll have to give up any of your non-exempt property to pay back your creditors. Craft Law Offices can help you determine what of your property is exempt and protected and which isn’t. This tends to be on a situational basis. It’s important to note that if you want to file for Chapter 7, you’ll have to pass a “means test” to continue with filing. This federally established formula takes into account your income, household size, taxes, living expenses, secured debt, etc. You DO NOT need to try to calculate your qualifications without the help of an experienced bankruptcy attorney, like Leslie Craft. These standards are complicated and change constantly, thus an experience attorney should be consulted.
Chapter 11 Bankruptcy:
Chapter 11 is used for both individuals and businesses that have accumulated a large sum of debt. A Chapter 11 plan will be submitted to the bankruptcy courts that details how your secured and unsecured claims will be handled, how much and which creditors will be paid, and how long the plan will last. Chapter 11 is a commitment and can take between 3 and 5 years to complete. In North Carolina, businesses that file for Chapter 11 bankruptcy can still operate their business or control their liquidation under the supervision of a North Carolina bankruptcy administrator. If the plan is completed successfully, the case may be turned into a Chapter 7 bankruptcy or dismissed.
Chapter 13 Bankruptcy:
Chapter 13 is another type of bankruptcy where similarly to Chapter 11, you can repay some or all of your debts – all of which is dependent on which properties you want to keep, how much you earn, and what non-exempt property you own. To qualify for Chapter 13, you have to have a steady income to make sure you can pay your debts and your ongoing living expenses.
What is the benefit of filing Chapter 13? If you’re falling behind on house or car payments but want to keep the assets, Chapter 13 will devise a plan to help you catch up. Plus, if you owe money to the IRS or NC Department of Revenue, you can pay those debts back without penalties or interest.
Leslie Craft is an experienced bankruptcy attorney, helping good clients find their way out of bad financial situations. If you’re considering bankruptcy and want to learn more about the bankruptcy process, schedule your free consultation with Craft Law Offices by calling 252-752-0297.