Chapter 7 Overview
Chapter 7 Bankruptcy Lawyers
If you are overwhelmed by credit card debt, past-due medical bills, and other crushing expenses, filing for Chapter 7 bankruptcy may be a way for you to get some relief from creditors and start fresh with your finances.
Although individuals may file for either Chapter 7 or Chapter 13 bankruptcy, you may decide to file for Chapter 7 because these cases are typically:
At the Sasser Law Firm, our board-certified Chapter 7 bankruptcy lawyers have more than 15 years of experience helping people navigate and overcome financial setbacks. Contact us today to set up a free consultation on whether Chapter 7 is right for you.
What Debt Can Be Discharged in Chapter 7 Bankruptcy?
If you qualify for Chapter 7 bankruptcy, you may be able to receive a discharge for most of your debts. This means creditors cannot continue to hound you. However, not all debt can be discharged under Chapter 7.
Debt That Can Be Discharged in Chapter 7:
- Credit cards
- Medical bills
- Deficiency balances resulting from the sale of a repossessed car or foreclosed mortgage
- Unsecured personal loans
- Store accounts
- Trade or vendor debt
- Personal liability resulting from the guarantee of another’s debt
- Certain kinds of tax obligations
Debt That Cannot Be Discharged in Chapter 7:
- Student loans
- Marital/domestic obligations
- Certain tax obligations
- Criminal restitution
- Debt incurred through fraud
- Debt incurred by defalcation of fiduciary duty
- Debts incurred by willful and malicious injury
It is important to note that there are strict income limits to qualify for Chapter 7 bankruptcy. To learn more about whether you qualify, contact our knowledgeable Chapter 7 bankruptcy attorneys today.
What Is Considered Exempt Property in North Carolina Bankruptcies?
Chapter 7 bankruptcy is also known as liquidation. This means a trustee will sell your non-exempt assets to pay off as much of your debt as possible. However, that does not mean you will lose everything. North Carolina law is generous in allowing property exemptions in Chapter 7 bankruptcy cases.
Some of the most common property exemptions include:
- Homestead exemption: This exemption protects up to $35,000 in equity for property that is used as a residence. (The exemption can be higher under certain circumstances.)
- Burial plots: If you do not use the homestead exemption, you can exempt up to $35,000 in equity for burial plots.
- Motor vehicles: If you purchased your vehicle more than 90 days before filing for bankruptcy, you can exempt up to $3,500.
- Personal property: You may exempt $5,000 for personal property such as clothing, furniture, appliances, etc. You may also exempt $1,000 in personal property per dependent (up to a maximum of $4,000).
- Professional tools: You may exempt up to $2,000 in tools and other instruments used as part of your trade.
- Wages: If you earned wages 60 days before the filing but were not paid, those wages are exempt.
- Government benefits: This includes money for unemployment, workers’ compensation benefits, veterans’ benefits, future Social Security benefits, etc.
- Alimony, child support, and separate maintenance: If you are receiving payments for alimony, child support, or separate maintenance, you may be able to prove that these are necessary and therefore exempt.
- Personal injury claim compensation: If you received compensation as the result of a personal injury claim, that money is considered exempt under many circumstances (unless you have debts related to the claim, such as hospital bills).
- Retirement and pensions: The majority of pensions and retirement plans are considered exempt.
- Life insurance: If you have life insurance for the benefit of your children or spouse, it would be exempt, along with any employee group life insurance.
If you are ready to talk about your options for filing for Chapter 7 bankruptcy, contact our North Carolina law firm today. Our attorneys will be straightforward with you about what to expect, and we will be honest if we feel bankruptcy is not the best route for you.
Information We Will Need from You
When you schedule an initial consultation with our Chapter 7 bankruptcy attorneys, we will move as quickly as possible to provide relief from your creditors.
However, filing for bankruptcy does require a lot of paperwork, so it will help to gather the following information ahead of our meeting:
- A list of your creditors and the amount you owe them
- Any sources of income you have, as well as the amount and frequency of payments
- A list of your assets
- A list of your monthly living expenses (food, shelter, utilities, transportation, medication, clothing, etc.)
Our attorneys will talk you through what to expect when you file for bankruptcy, as well as any other alternatives that may be available to you. Our law firm does not charge for this initial consultation, and you are under no pressure or obligation to move forward until you feel ready.
How Does Chapter 7 Bankruptcy Work?
The first step in a Chapter 7 bankruptcy case is to meet with an attorney to determine whether you qualify for this type of bankruptcy. There are strict income limits that are based on the state’s median income level, and your attorney can help you apply the Chapter 7 bankruptcy “means test” to determine whether you may be eligible or whether you should consider filing for Chapter 13 bankruptcy instead.
If you decide to move forward, here are the steps when filing for a Chapter 7 bankruptcy:
- Complete credit counseling. You will receive a certificate to show the court.
- File a petition with the Bankruptcy Court. This will automatically stop most creditors from contacting you.
- File additional documentation regarding your assets and liabilities, income and expenditures, financial affairs, and other information. You will also need to provide a copy of your tax return for the most recent year.
- The Bankruptcy Court will appoint a trustee to liquidate any nonexempt assets and oversee the case. The trustee will pay unsecured creditors with proceeds from the sale of nonexempt assets. (In many Chapter 7 cases, all of the person’s assets are either exempt or subject to valid liens, which means they cannot be liquidated.)
- The trustee will hold a meeting of creditors, known as a 341 meeting. This will be held between 21 and 40 days after your bankruptcy petition is filed. You and your attorney will attend, and you will be put under oath to answer questions about your finances.
- In most cases, the Bankruptcy Court will issue a discharge order. A discharge releases you from most debts and stops creditors from pursuing you any further. This typically happens 60 to 90 days after the creditors’ meeting.
Although most Chapter 7 cases move through the system smoothly, our experienced bankruptcy lawyers are always prepared for bumps in the road. We have extensive experience in bankruptcy litigation, and if needed, we can help you convert a Chapter 7 into a Chapter 13.
Why Could a Chapter 7 Discharge Be Denied?
In general, 99 percent of individual debtors receive a discharge in Chapter 7 cases (excluding those that are converted or dismissed).
Some of the reasons a Chapter 7 discharge could be denied include:
- The debtor did not keep or provide adequate financial records.
- The debtor could not adequately explain loss of assets.
- The debtor committed a bankruptcy crime (perjury, etc.)
- The debtor fraudulently transferred, hid, or destroyed property that should have been liquidated.
Working with a qualified Chapter 7 bankruptcy lawyer can help you avoid making mistakes that may prove harmful to your case. Schedule a free consultation with our team today to talk about your situation and learn about your options.
How Can Our Bankruptcy Lawyers Help You?
At the Sasser Law Firm, we are committed to helping individuals and families get a fresh start financially. We pride ourselves on being honest and open about what we think would be best for you, especially if we think there are ways you could avoid bankruptcy.
Since our firm’s founding, we have handled more than 8,500 bankruptcy cases, and we have extensive experience in both emergency and complex cases. Schedule a free consultation with our team today to talk about your case.
When you choose the Sasser Law Firm, you will work directly with a board-certified attorney, not a paralegal or a legal assistant. Our North Carolina bankruptcy law firm serves clients throughout the state, including in Wake, Harnett, Johnston, Durham, Orange, Granville, Vance, Franklin, Warren, Nash, Lee, Chatham, and Moore counties.