The burden of insurmountable debt, coupled with persistent harassment from creditors can feel like an ordeal that is impossible to escape. However, through bankruptcy you can eliminate certain debt, stop most debt collection activities and often keep all of your property. Learn more about how filing bankruptcy can get you back on track and on the road to a fresh start.
In a Chapter 7 case, a repayment plan is not proposed to creditors. Instead, a debtor's "non-exempt" assets are sold in order to repay creditors. However, under North Carolina's exemptions, or those applicable to your case, debtors can often keep all of their property, including their home, when they file chapter 7 bankruptcy. A careful examination into a debtor's assets and certain transactions preceding bankruptcy can help to determine whether your property can be protected.
In a Chapter 13 case, a repayment plan is proposed to creditors which lasts three, to five years. In order to qualify for chapter 13, debtors must have some form of regular income (so that they can make their reqiured plan payments). Chapter 13 offers many benefits that are not available in chapter 7, including: stoping a foreclosure and curing mortgage deficiencies, lowering the interest rate on a vehicle, preventing the reposession of a vehicle and restructuring certain tax debt. Debtors may also be able to "strip-off" wholly unsecured second or third mortgages on their principal residence. In addition, certain debtors may be eligible for $0.00 money down if filing under chapter 13.
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Exemptions are important in both chapter 7 and chapter 13 cases. In chapter 7, exemptions will help determine how much property you may keep and how much (if any) will have to be sold to repay creditors. In chapter 13 cases, exemptions will help dictate the amount that must be payed to certain "unsecured creditors." Each state and the federal government have their own set of exemptions and where you lived prior to filing bankruptcy will help determine which state's exemptions you are entitled to use.