bankruptcy

Qualifying for Bankruptcy in North Carolina

Bankruptcy offers a fresh financial start for those struggling with debt by providing a structured way to manage or discharge debts. Understanding the eligibility criteria for bankruptcy is crucial before embarking on the process. Eligibility requirements vary depending on the type of bankruptcy you’re considering (such as Chapter 7 or Chapter 13) and your financial situation. Meeting these criteria ensures that your bankruptcy filing is valid and legally recognized, giving you the best chance to achieve financial relief through bankruptcy proceedings.

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Income Requirements in Bankruptcy

Chapter 7 bankruptcy is often called “liquidation bankruptcy” and requires debtors to pass a means test to qualify based on their income. The means test compares the debtor’s income to the median income in North Carolina for their household size. It determines if the debtor has enough disposable income to repay creditors under Chapter 13 or if Chapter 7 is appropriate.

In North Carolina, the current maximum income limits as of 2024 for Chapter 7 eligibility are:

  • For a household of one person: $61,811
  • For a household of two people: $78,415
  • For larger households: The limit increases by approximately $10,000 for each additional person.

Calculation of Disposable Income for Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves creating a repayment plan based on the debtor’s disposable income. Disposable income is the income left after deducting necessary living expenses, such as rent/mortgage, utilities, food, and transportation, from the debtor’s monthly income.

To qualify for Chapter 13 bankruptcy in North Carolina:

  • The debtor’s disposable income must be sufficient to fund a repayment plan over three to five years.
  • The debtor’s income must be regular and stable enough to make monthly payments as outlined in the plan.

Residency Requirements for Bankruptcy in North Carolina

Individuals filing for bankruptcy in North Carolina must establish legal residency in the state. This means having a physical presence and intent to remain in North Carolina. Bankruptcy cases are filed in the district where the debtor resides or where the principal place of business or assets are located.

Duration of Residency Necessary to File

Unlike some states that require a minimum period of residency to file for bankruptcy, North Carolina does not specify a minimum duration. However, debtors must establish North Carolina residency at the time of filing. Courts may consider the debtor’s intent to remain in North Carolina as a factor in determining eligibility for bankruptcy.

Credit Counseling Requirements in Bankruptcy

In North Carolina, individuals planning to file for bankruptcy must undergo credit counseling from a government-approved agency before they can proceed with their case. These sessions are crucial as they help debtors assess their financial situation and explore alternatives to bankruptcy. According to North Carolina bankruptcy law, credit counseling must be completed within 180 days before filing for bankruptcy. This requirement ensures that debtors have recent and relevant financial counseling before making significant decisions about their financial future. Debtors can find a list of approved credit counseling agencies on the website of the U.S. Trustee Program (https://www.justice.gov/ust), which oversees bankruptcy administration in North Carolina.

If you would like to learn more about the options for your bankruptcy case, please contact the attorneys at Stephen E. Robertson Law Office. Contact us today to schedule a consultation for your case. You can set up an appointment by calling 336-370-6760 today.