Do I Qualify for Bankruptcy in North Carolina?
If you are struggling to keep up with your bills and feel like you are drowning in debt, bankruptcy may be a way to get a fresh financial start. However, before filing, it’s important to know whether you actually qualify for bankruptcy—and what type of bankruptcy may be right for you.
Two Main Types of Bankruptcy for Individuals
The two most common forms of bankruptcy for individuals are Chapter 7 and Chapter 13.
Chapter 7
Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” allows individuals to wipe out most unsecured debts, including credit card balances and medical expenses. It is designed for people with low incomes who are unable to realistically repay their obligations.
Chapter 13
Chapter 13 bankruptcy is a reorganization plan that allows you to repay part of your debts within three to five years. It is ideal for individuals with steady incomes who wish to retain their assets, like a home or vehicle.
Are You Eligible for Chapter 7 Bankruptcy?
In North Carolina, filing for Chapter 7 involves completing the means test, which evaluates your income in relation to the median income for your household size within the state. If your earnings fall below the median, you usually qualify.
If your income is above the median, the court looks at your disposable income (what’s left after paying for essentials) to decide if you can reasonably pay your debts through a Chapter 13 plan instead.
Other eligibility requirements:
- You cannot have filed for Chapter 7 within the past eight years.
- You need to finish a credit counseling course with an approved agency within 180 days prior to filing.
Do You Qualify for Chapter 13 Bankruptcy?
Chapter 13 features more adaptable income criteria. However, a consistent income is necessary to demonstrate to the court your ability to adhere to a repayment plan.
Other eligibility rules include:
- Your secured debts (like a mortgage or car loan) must be under $1,580,125.
- Your unsecured debts (credit cards or medical bills) must be under $526,700.
- You must be current on filing your income tax returns for the past four years.
- Like Chapter 7, you also need to complete credit counseling before filing.
What Debts Can Bankruptcy Help With?
Bankruptcy can help eliminate or reduce:
- Credit card debt
- Medical bills
- Personal loans
- Utility bills
- Certain older tax debts
However, not all debts can be discharged. You’ll still be responsible for:
- Child support and alimony
- Most student loans (unless you meet strict hardship criteria)
- Recent tax obligations
- Court fines and restitution
Why Bankruptcy May Be a Good Option
Many individuals fear filing for bankruptcy signifies failure, but this couldn’t be further from the truth. Bankruptcy serves as a legal mechanism intended to assist individuals in starting anew when unexpected challenges arise, such as job loss, illness, divorce, or unforeseen expenses. It can:
- Stop foreclosure and repossession
- Halt wage garnishments and creditor harassment
- Provide a clear path to rebuild your credit over time
How an Experienced Bankruptcy Attorney Can Help
Bankruptcy law is complex, and a mistake in the process can cost you time, money, and protection. At Stephen E. Robertson Law Office, we take the time to understand your unique financial situation and guide you toward the best solution—whether that’s Chapter 7, Chapter 13, or an alternative to bankruptcy.
Contact Us Today To Discuss Your Options in Further Detail
If you’re wondering whether you qualify for bankruptcy in North Carolina, do not guess—get answers. Contact Stephen E. Robertson Law Office today for a confidential consultation. We can help you understand your rights, explore your options, and work toward a fresh start.