If your debts are unmanageable, filing for bankruptcy stops all collection actions and provides long-term relief. Chapters 7 and 13 of the Bankruptcy Code offer options for individuals, sole proprietors, and married couples in a variety of circumstances. When preparing to discuss your situation with a bankruptcy attorney, knowing the information below will help you better understand the process and your options.

Chapter 7 Bankruptcy

Often called liquidation or straight bankruptcy, Chapter 7 wipes out unsecured debts, such as medical bills and credit card balances.  You can claim exemptions and keep certain assets, including clothing, low-value vehicles, and individual retirement accounts (IRAs).

Liquidation bankruptcy is usually a quick process, with most filers receiving their discharges within four to six months. To qualify, you must take a means test. This evaluates whether your income is low enough in relation to your debts. If you don’t qualify for Chapter 7 due to a higher income, Chapter 13 remains an option.

Chapter 13 Bankruptcy 

If you own valuable nonexempt assets, such as high-equity or income-producing real estate, a Chapter 13 plan might be a solution. Called a wage-earner plan, this debt-relief option allows filers to keep their property while they reorganize and pay down the debts. You need a reliable revenue source, such as employment, government benefits, rent collections, or royalties.

Chapter 13 bankruptcies often lower debts with creditors, making the amounts more manageable. After the court approves your payment plan, it runs for three to five years. At the end of this period, the court wipes out any outstanding debts that qualify for discharge.  

Consulting an experienced bankruptcy attorney is a wise step toward making sound financial decisions. The attorneys at Ferguson, Hayes, Hawkins & DeMay, PLLC offer more than 90 years of combined experience serving clients throughout Downtown Concord, NC. These skilled lawyers provide high-quality personalized service. Visit their website for more about their work, and call (704) 788-3211 for a consultation. For special promo information, opt into the firm’s text messaging service by texting LAWYER to (910) 830-0939 now.