Filing Chapter 7 Bankruptcy In North Carolina
Not everyone can file Chapter 7 Bankruptcy. In fact with the passage of the Bankruptcy Abuse Prevention and Consumer Act (BAPCA) of 2005, more individuals will have to file Chapter 13 Bankruptcy and pay all or a portion of their debt under a bankruptcy repayment plan. If you do qualify to file Chapter 7 Bankruptcy, most of your qualifying unsecure debt can be discharged in four to six months. Chapter 7 Bankruptcy is considered a liquidation bankruptcy, which means your non-exempt assets will be sold and the proceeds will be used to pay your creditors.
Chapter 7 Bankruptcy can be the cheapest, easiest and quickest way to discharge your debt. To file Chapter 7 Bankruptcy, contact a North Carolina Bankruptcy Lawyer who will review your financial situation and file the correct bankruptcy forms in the appropriate North Carolina Bankruptcy Court. The bankruptcy forms will include the bankruptcy petition and a statement of financial affairs which will outline the amount and type of debt you owe, a list of your creditors, your property, and your income and expenses. After filing the petition, debt collection will be temporarily halted with an “automatic stay”.
Discharged debt may include hospital bills, unsecured personal loans and credit cards bills. Not all debt will be discharged by filing bankruptcy. Corporations, married couples, individuals and partnerships may be able to file Chapter 7 Bankruptcy.
The Bankruptcy Abuse Prevention and Consumer Act (BAPCA) required individuals who are considering filing Chapter 7 Bankruptcy to pass an income test. The income test will analyze your median income for the last six months and determine if it is below other North Carolina families of similar size. If it is below the state’s median income, you may file Chapter 7 Bankruptcy. If it is above the state’s median income, additional means testing will have to be done. Means testing will determine if you have enough disposable income to pay your outstanding debt obligations.
The means test will subtract certain expenses from your income, expenses will include mortgage payments, car payments, tuition expenses up to $1650, and taxes owed. If after the calculation, you have enough disposable income to pay up to $6,000 ($100/month) toward your debt, you will most likely not be able to file Chapter 7 Bankruptcy. If you fail this test, but can pay up to 25% of your disposable income toward debt repayment, you may not qualify to file Chapter 7 Bankruptcy. This is general information and there may be extenuating circumstances for your financial situation. It is important to discuss your specific financial situation and bankruptcy options with a North Carolina Bankruptcy Lawyer.
North Carolina’s median income is published by the United States Trustee program in the State Median Income List. For the state of North Carolina, after March 15, 2009, the average median income for a single wage earner is $38,478. For a family of two it is $52,355 and for a family of three it is $57,301. For a family of four it is $70,134.
