Anyone in North Carolina who is contemplating a bankruptcy plan as the answer to their debt needs should first understand the two types of consumer bankruptcy. Each plan, the Chapter 7 bankruptcy and the Chapter 13 bankruptcy, has its own set of pros and cons for a consumer based upon their unique situation. The two plans operate very differently but both have the potential to give a person a fresh financial future.
As explained by Experian, a Chapter 7 plan is likely the bankruptcy option that most people think about or know about. In this plan, assets may be sold in order to repay some of the debt that a person owes. For this reason, it is often called a liquidation bankruptcy. There are some exemptions so that people may retain some of their belongings based on value amount and category. This type of bankruptcy can often be completed in just a few months. At the end of this time, all of the debts included in the plan are discharged.
A Chapter 13 bankruptcy, in contrast, does not result in any potential loss of assets. Instead, a person enters into a repayment plan in which at least some of what is owed is repaid over the course of the plan. Plans usually last between 36 months and 60 months. The United States Courts explains that homeowners often look to Chapter 13 plans to stop foreclosure actions and save their homes.
For a Chapter 13 bankruptcy, a consumer is limited to a maximum amount of both secured and unsecured debt as one of the qualifications for this type of plan.