Steps for Filing Personal Bankruptcy in North Carolina
There are many factors to weigh when considering filing for personal bankruptcy. It helps to have knowledgeable guidance and to be familiar with the steps in the process.
At Sasser Law, our three North Carolina board-certified bankruptcy attorneys have more than 20 years of experience helping people work through the process of personal bankruptcy. We work to make the process understandable and predictable each client we represent. Bankruptcy is not right for every individual in financial distress. But it is a tool designed to give honest people who are overwhelmed by debt a fresh start and stop creditors from pursuing you.
You may have lost your job or had a significant health issue and be unable to pay your bills. If you are considering personal bankruptcy and have questions about the steps involved, contact a board-certified bankruptcy lawyer attorney at Sasser Law Firm.
Steps in the Personal Bankruptcy Process in NC
- Collect Documents— Gather your financial documents so that you and your attorney can review your debts and your overall financial health and discuss whether a bankruptcy filing is appropriate. This is the first step in the process. You’ll need to pull together your monthly household bills, information about your income, your credit card bills, student loans, and your investments such as stocks and bonds.
- Evaluate Options—Your attorney will evaluate what type of bankruptcy is appropriate. There are two sections of the federal bankruptcy code, Chapter 7 and Chapter 13, that are used for filing personal bankruptcy depending on the individual circumstances.A Chapter 7 bankruptcy, sometimes referred to as a straight bankruptcy, involves the sale of non-protected assets to pay off as much debt as possible and allows a debtor to have most debts dismissed such as credit card debt and medical bills. It is available for individuals who do not have regular income to pay their obligations. Your attorney will determine whether you pass the Chapter 7 means test and are eligible for Chapter 7.A Chapter 13 bankruptcy requires the debtor to submit a proposed repayment plan for court approval to pay debts owed to creditors within three to five years. To qualify, you must have enough monthly income to keep up with the repayment schedule and also cover household expenses. Chapter 13 is the most common type of bankruptcy protection sought in the Eastern District of North Carolina. A trustee will oversee disbursement of payments to creditors and issue a discharge of debt if you complete the repayment plan.
- Get Credit Counseling—All individuals who are planning to file a Chapter 7 or Chapter 13 personal bankruptcy are required to complete a pre-bankruptcy credit counseling class within six months before filing for bankruptcy. The agency may prepare a debt repayment plan. Once you complete the class, the agency will issue you a certificate of completion, which must be filed with the bankruptcy court. The credit counselor is not allowed to advise you whether you should file for bankruptcy. The bankruptcy administrator keeps a list of approved organizations that offer credit counseling.
- File Bankruptcy Petition —Your attorney will file a bankruptcy petition with accompanying forms listing your income and expenses. When you have completed filing the petition and claiming your exempt property, an automatic stay goes into effect and prevents creditors and collection agencies from pursuing debt collection efforts against you, including foreclosure proceedings, eviction, repossession of vehicles and garnishment of wages. The stay will remain in effect while the bankruptcy is pending.
- Appointment of Trustee—The federal bankruptcy court will appoint a trustee to handle the administrative tasks related to your case. The trustee reviews the bankruptcy petition, manages the bankruptcy estate and oversees the sale of any assets to pay creditors. If the bankruptcy filing involves a repayment plan, the trustee will oversee the plan as well. The trustee also monitors your obligation to file a tax return and yearly financial statements.
- Attend Creditors Meeting—The trustee also organizes the creditors meeting. You will receive notification from the trustee of the time and place of the meeting, also known as a 341 meeting. The individual filing for bankruptcy is required to attend the meeting to provide the trustee and creditors an opportunity to question the individual seeking bankruptcy protection about his or her financial situation and information in the petition.
- Administering the Bankruptcy— If you have a Chapter 7 bankruptcy, the trustee will decide whether you have property that is worth seizing to sell and pay creditors. If you have a Chapter 13 bankruptcy, you will send the trustee all of your disposable monthly income left after paying your household expenses. The trustee will receive monthly payments from you and distribute them to the creditors, according to the repayment plan. You must complete all the payments in order to receive a discharge at the end of the bankruptcy.
- Attend Debtor Education Class — Before you receive a discharge from the bankruptcy court, you are required to complete a required personal financial management counseling class. Whereas the prior credit counseling class focused on your existing debts, the debtor education class, as it’s commonly known, is designed to teach you how to budget and manage your finances going forward. When you complete the class, you’ll receive a certificate of debtor education. In Chapter 7, you are required to complete the class within 60 days of the date set for the meeting of creditors. In Chapter 13, you must complete the class before filing a motion requesting a discharge of debts.
Contact NC Bankruptcy Attorney
Bankruptcy is not right for everyone, and some types of debts cannot be erased through bankruptcy. But if you have accumulated an overwhelming amount of debt or a creditor has threatened to take legal action, then you may need to talk with a bankruptcy lawyer about seeking legal protection to prevent the seizure of assets.
A North Carolina bankruptcy attorney at Sasser Law will help you analyze your options and discuss your options. We understand that you are feeling stress if you are contemplating bankruptcy or are being pursued by debt collectors. Our attorneys will be both understanding and honest about what steps you need to take. Since the year 2000, we have filed more than 8,500 cases for clients in Raleigh, Cary, Durham and communities throughout the Triangle.
We want what is best for each client and are ready to help you make a fresh start.