Once you start falling into debt in North Carolina, you may find it increasingly difficult to fig yourself out. When you are already struggling to stay current on your bills, something as small as a late fee may mean the difference between keeping the lights on or feeding your family. Many people who see no way of realistically digging themselves out of debt consider filing for bankruptcy as a possible means to a fresh start.
According to Quicken Loans, consumer bankruptcies fall into one of two categories: Chapter 7 bankruptcies and Chapter 13 bankruptcies.
Chapter 7 bankruptcies
Also called liquidation bankruptcies, Chapter 7 bankruptcies give filers with limited income a potential way to discharge certain unsecured debts. However, this often involves selling off “secured” assets to free up money to do so. To file for Chapter 7, you first have to qualify to do so, and this involves taking a means test to prove you are working with limited resources. If you qualify and move forward with a Chapter 7 filing, your debts may undergo discharge within about three-to-five months.
Chapter 13 bankruptcies
If you do not want to potentially have to turn over some of your assets, or if you have too much income available to you to qualify for Chapter 7, a Chapter 13 bankruptcy may meet your needs. This type of filing generally takes between three-and-five years to discharge your debts and involves you following a payback plan until you pay off at least some of your outstanding debt.
Many factors help determine which bankruptcy type might better suit your needs, including what type of assets you own and what your current debt-to-income ratio is.