Admitting that your financial worries have spiraled beyond your control is a humbling realization. Thanks to protections offered through federal law, the situation does not have to be hopeless. Bankruptcy helps countless individuals who are experiencing financial distress get back on track. There are two main types for consumers. Chapter 7 bankruptcy involves a liquidation of assets to repay creditors as much as possible, and then your remaining debts are discharged. With Chapter 13, debts are not erased, but rather reorganized into a repayment plan that spans a set time period.
While bankruptcy is part of federal law, the rules vary a bit by state. North Carolina debtors seeking bankruptcy protection should be aware of key factors pertaining to filing in that state.
Where to File Bankruptcy in North Carolina
North Carolina has three districts for filing bankruptcy:
- Eastern District, with locations in Wilson and Raleigh
- Middle District, with locations in Greensboro and Winston-Salem
- Western District, with locations in Statesville and Asheville
You must file in the district in which you live.
Is Chapter 7 an Option for You?
Not everyone can file Chapter 7. Your eligibility depends on your income. You must earn less on average each month than the median monthly income in North Carolina. You may still qualify if you earn more than North Carolina’s median income, but only if you are able to pass a stringent means test.
How Long Do Chapter 13 Repayment Plans Last?
Chapter 13 plans vary depending on your income. If you earn less on average than North Carolina’s median income, your chapter 13 plan will be limited to 36 months, unless you can prove good cause to extend it. In such cases, the limit is usually 60 months. Filers who earn equal to, or more than, the median income in North Carolina generally get 60-month plans.
What Exemptions are Available?
Each state maintains a list of exemptions—property that cannot be seized as part of a bankruptcy liquidation—to ensure that you are not without basic necessities. The federal government maintains a list of exemptions, as well. Some states allow you to choose between the two lists, but North Carolina is not one of them. You must use the North Carolina list, which includes exemptions for:
- Your home, valued to $35,000 (double the value if you own your home with your spouse, and up to $60,000 if you are 65 or older and widowed)
- Motor vehicle valued to $3,500
- Earned unpaid wages received 60 days before filing
- Personal and household items such as books, clothing, furniture, musical instruments, animals, and crops valued to $5,500 total (may add $1,000 per dependent, up to $4,000 total, and all property must have been purchased at least 90 days before filing)
- Items needed to do your job, valued up to $2,000
A Personal Bankruptcy Lawyer Can Help
For more detailed information relative to your current position, please contact a North Carolina bankruptcy lawyer.