How to File for Bankruptcy in North Carolina

North Carolina is 8^th in the nation in unemployment, which makes their more than 27,000 bankruptcy filings in 2009 not surprising.  With such high unemployment, no doubt many more residents will consider that serious step in the coming years.  If so, they should understand the process and make sure it is the right choice for them.  There are those who may think it is an “easy out” from under uncontrolled debt, but especially since the reforms of 2005, it is more difficult than ever to have a bankruptcy petition approved.  That is why it is vital to obtain legal help to determine the right course for each debtor.

Finding a Bankruptcy Attorney

As bankruptcies increase, so do con artists and unqualified bankruptcy attorneys claiming to have all the answers for unsuspecting debtors.  It is important for each debtor to do their own research to find an experienced and skilled legal representative:

• Get recommendations from trusted sources, including the state bar association
• Research the track record and public reports of work done by candidates
• Obtain written quotes of services and fees from candidates to compare
• Hold personal interviews to determine which lawyer works well with the debtor

Bankruptcy Options

Not only are there numerous alternatives to bankruptcy, there are several types of bankruptcy to choose from, although two are generally most appropriate for individuals.

• Chapter 7 is the simplest and most straightforward, putting a filer’s assets under the control of a bankruptcy trustee who will determine which, if any, assets should be liquidated to pay creditors.  At the end of the process, most of a debtor’s unsecured debts will be discharged, or erased.  This is a good choice for those with few or no assets.
• Chapter 13 is a better choice for those with significant assets they do not wish to have liquidated.  Those who do not qualify for Chapter 7 may also be converted to Chapter 13.  In this type of bankruptcy, the debtor’s finances and obligations are reorganized and a repayment plan based on their monthly disposable income is established.  At the end of the process, most unsecured debts that remain unpaid may be discharged, but the filer retains their property.

North Carolina Exemptions

Chapter 7 filers may have little property, but much or all of it may be protected under legal exemptions that prevent liquidation.  In North Carolina, only state exemptions are allowed, which include:

Filing the Petition

There are numerous decisions to be made, even before the bankruptcy petition is filed.  With the help of their bankruptcy attorneys, filers can make those decisions wisely and be prepared for the process that follows:

• Attending credit counselling before filing their bankruptcy petition
• Submitting to the administration and oversight of the bankruptcy trustee appointed by the court
  • The trustee determines if the filer is eligible for Chapter 7
  • If they have any property subject to liquidation
  • Which debts are eligible to be discharged, or erased
• Attending a required 341 meeting, so named because of its bankruptcy code section, with the trustee for questions about their assets and obligations, which they must answer under oath.  Creditors may also attend and ask any questions they have
• Chapter 13 filers must have their repayment plan approved by the bankruptcy judge
• Attending debt education courses
• For Chapter 7 filers, discharge of all eligible debts
• For Chapter 13 filers, commencement of their repayment plan, at the end of which any of their eligible debts may be discharged