What is Chapter 7 Bankruptcy in North Carolina?

Chapter 7 is simple, basic bankruptcy. More than 40% of bankruptcies filed by residents of Raleigh NC are filed as chapter 7 cases.

What's the Goal of Chapter 7 Bankruptcy?

The goal of most chapter 7 bankruptcy cases is discharge (i.e. get rid of) personal liability on debts. Old credit card debts, medical bills, personal loans, old taxes, judgments, and repossession balances are among the debts frequently eliminated.

What Happens to Property in Chapter 7 Bankruptcy?

Bankruptcy filers are entitled to a set of property allowances called exemptions. These exemptions provide protection for items such as a homestead, car, household goods, and wages. However, they are limited in amount. Many people can protect all of their property in a chapter 7 bankruptcy; other times, some property is surrendered to the chapter 7 trustee to be sold for benefit of creditors. Typically, one knows going into the bankruptcy if particular property is at risk of sale.

How long does a Chapter 7 take?

A bankruptcy case immediately stops collections activity via the automatic stay. A typical chapter 7 when all property is exempt and there is no controversy will take between 3-4 months to complete in Raleigh NC.

What does Chapter 7 Bankruptcy not do?

Chapter 7 has a limited toolbox for fixing problems with secured loans (loans with collateral). Past due mortgages and past due car loans aren't going to be caught up in a chapter 7. Current secured loans don't pose such problems.

Certain kinds of debts aren't discharged in a chapter 7 bankruptcy, including most student loans, recent taxes, alimony and child support obligations.

Are there Limits on Chapter 7?

The most notable limitation on availability of chapter 7 is the means test. Required by Congress, one has to evaluate if an arbitrary statutory test indicates an ability to repay creditors in a chapter 13 bankruptcy.

More Information

On our other site, we have more extensive chapter 7 bankruptcy information.