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Chapter 13 Bankruptcy Nash County, North Carolina

Nash County Chapter 13 Bankruptcy

If you are struggling with unmanageable debt and having trouble paying it off, you might be considering bankruptcy. Chapter 13 bankruptcy is a type of bankruptcy that gives you a chance to repay a portion of your debts over time, often wiping away a good bit of debt and allowing you to keep your assets.

Want to learn more about Chapter 13 and whether it’s right for you? Then contact the Chapter 13 bankruptcy attorneys serving Nash County at Sasser Law Firm for a free consultation. Sasser Law Firm is located in Cary. The Raleigh Division of the Eastern District of North Carolina encompasses Nash County, Warren County, Franklin County, Vance County, Granville County, Wake County, Johnson County, and Harnett County. 

Advantages of Chapter 13 Bankruptcy

Chapter 13 bankruptcy may be the right choice for many people who need a fresh start. Some key advantages of declaring bankruptcy under Chapter 13 include the following:

  • A repayment plan that may be manageable – Instead of liquidating assets to pay off debt all at once, Chapter 13 bankruptcy lets you repay a portion of your debt over three to five years of monthly payments. Once your payment plan is complete, many creditors cannot come at you for the unpaid portion of your debts. There are exceptions for student loan debt and certain types of tax debt.
  • Protection of non-exempt assets – In Chapter 7 bankruptcy,  a trustee may sell off non-exempt assets in exchange for your debt discharge. With Chapter 13 bankruptcy, you can keep your property.
  • The automatic stay against creditors – An automatic stay is an injunction that takes effect as soon as you file for bankruptcy. It prohibits your creditors from taking collection actions, such as foreclosure or repossession, against you or your property.
  • Protection for co-signers on consumer loans – If you have one or more co-signers on an outstanding consumer loan, filing for Chapter 13 will protect the co-signer from liability. Like the automatic stay, a co-debtor stay goes into effect when you file Chapter 13 to prevent creditors from taking collection actions against your co-signers.

Disadvantages of Chapter 13 Bankruptcy

While Chapter 13 bankruptcy certainly has benefits, it’s not for everyone. Here are some of the biggest disadvantages of filing under Chapter 13:

  • Lengthy repayment schedules – Some types of bankruptcy, such as Chapter 7, can discharge debts within a few months. But with Chapter 13, you must adhere to a court-approved repayment plan for three to five years before discharge.
  • Strict debt repayment plans – You must stick to the court-approved Chapter 13 repayment plan for its full term, which can be challenging when unexpected changes or expenses arise. If you do not do this, then a case can be dismissed. Although plan modifications, cure arrangements, and hardship discharges are possible, a persistent inability to pay the plan will be an insurmountable problem in most cases. If the case is dismissed then creditors can resume their collection actions.
  • Source(s) of money to fund the plan are required –A debtor needs a source of income to qualify and/or assets that can be sold voluntarily to fund the trustee payments.
  • Impact on credit – When you file under Chapter 13, the bankruptcy will remain on your credit report for up to seven years afterward. This may help or hurt your credit score depending on the nature of your credit score when the case was filed. Most Chapter 13 debtors can qualify for auto and credit card debt fairly soon after Chapter 13 is filed, but a conventional home loan may require a debtor to be in the plan for one to two years. In the Eastern District of North Carolina, a court order is required to make purchases or incur debt in excess of $10,000.00.

How Does Chapter 13 Bankruptcy Work in North Carolina?

When you file Chapter 13 bankruptcy and create a repayment plan, you divide your debts into three main categories. Debts in certain categories must be repaid in full. You may be able to discharge other debts without paying 100 percent of what you owe, depending on the court approval process.

The three types of debt in a Chapter 13 bankruptcy are:

  • Priority debt – As its name suggests, a priority debt has higher status over other types of debt. Examples of priority debts include outstanding child support payments and unpaid back taxes.  You must pay the whole outstanding balance for priority debts in Chapter 13 unless a particular creditor agrees otherwise.
  • Secured debt – A secured debt is backed or secured by an asset, meaning the lender can take the asset away if you fail to make your loan payments. Mortgages and auto loans are examples of secured debts. If you want to keep these types of assets during bankruptcy, you must pay at least the present value of the collateral. Newer secured loans must be paid in full – namely, a vehicle financing in the prior 910 days or other debts incurred within the prior one year.
  • Unsecured debt – Unsecured debts are not backed by assets that creditors can seize for non-payment. Examples of unsecured debts include credit cards, medical bills, student loans, and personal loans. Unsecured debts have the lowest priority in Chapter 13 bankruptcy. Depending on the circumstances (e.g., household income and non-exempt assets), you may be able to discount this debt.

In addition to creating and obtaining court approval for a Chapter 13 repayment plan, you must attend a meeting of creditors, complete a credit counseling course, and attend a financial management course to get your discharge. Remember that the court will hold your case to the same high standards whether or not you have legal representation. It may be a good idea to work with an experienced bankruptcy attorney as you navigate this complex process. 

How Do You Qualify for Chapter 13 Bankruptcy in North Carolina?

You might be eligible to file for Chapter 13 bankruptcy in North Carolina if you meet each of the following requirements:

  • You have a regular source of income that will allow you to contribute to a repayment plan and cover your living expenses at the same time.
  • You have no more than $2,750,000 in secured and unsecured debts.
  • It is helpful if you have filed all required tax returns or will do so within a reasonable period of time following the filing.

How Can Our Chapter 13 Bankruptcy Lawyers Help?

If you’re struggling with debt and considering Chapter 13 bankruptcy, Sasser Law Firm can help. Our board-certified bankruptcy attorneys have experience addressing many types of situations.  We can even work with you in emergency situations, such as foreclosure or repossession.

We will never pressure you to file for bankruptcy. Our firm is here to provide the guidance and information you need to make the right choice for you. And when you come to us, you’ll work directly with an attorney instead of getting passed off to a paralegal. Our fees are straightforward and affordable. We do not require any upfront fees or costs to file a Chapter 13, although we do collect fees and costs through trustee disbursements.

Get a Free Consultation with Our North Carolina Chapter 13 Bankruptcy Lawyers

If you still have questions or wish to discuss your case with a Chapter 13 bankruptcy attorney serving Nash County, contact Sasser Law Firm. We can attempt to provide the answers you may need and review your case for free. Call us at (919) 319-7400 or contact us online to get started.

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