How bankruptcy can help
When a bankruptcy case is filed, an order called the automatic stay goes into effect. In most cases, it stops creditors from calling, suing, garnishing wages, repossessing a car, or moving forward with a foreclosure while the case is open. There are exceptions, and the stay can be lifted in some situations.
Depending on the chapter, bankruptcy may:
- Discharge, or wipe out, many unsecured debts such as credit cards and medical bills
- Give you time to catch up on a mortgage or car loan
- Let a business keep operating while it reorganizes its debts
The main types of bankruptcy
- Chapter 7 is often called liquidation. A trustee may sell property that is not protected by exemptions, and many debts are discharged. Many people who file keep all or most of their property.
- Chapter 13 sets up a repayment plan over several years for people with regular income. It is often used to save a home from foreclosure.
- Chapter 11 lets a business, and sometimes an individual, reorganize. Subchapter V is a simpler version for many small businesses.
What bankruptcy does not do
Some debts usually survive bankruptcy, including child support and alimony, most student loans, many taxes, and criminal fines and restitution. Liens on property can also survive, which means a lender can still take the property if the loan is not paid. Bankruptcy also does not erase a criminal case.
Before filing, you must complete a credit counseling course, and before a discharge, you must complete a financial management course.
Alternatives to bankruptcy
Bankruptcy is not the only answer. Depending on your situation, other options may include negotiating directly with creditors, a payment plan, a loan modification, selling an asset, or, in some cases, doing nothing if your income and property are protected from collection. We will talk through these options with you honestly.
Life after bankruptcy
A bankruptcy stays on your credit report for years, but many people begin rebuilding credit soon after their case ends. Keep your discharge papers, pay remaining debts on time, use credit carefully, and check your credit report for debts that should show as discharged.
How we help and next steps
We tell clients the hard truth, including when bankruptcy is not the right choice. We explain our fee in writing before you hire us.
Call (336) 281-2008 or request a consultation online. Bring a list of your debts, recent pay stubs, tax returns, and any lawsuit or foreclosure papers. Hablamos español.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
This page is general information about North Carolina law, not legal advice. Every case is different, and no lawyer can promise a result.
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Questions people ask us
Will bankruptcy stop a foreclosure or wage garnishment?
In most cases, filing triggers the automatic stay, which stops foreclosure sales, garnishments, and most collection while the case is open. There are exceptions, and the stay can be lifted. Chapter 13 is often used to catch up on a mortgage over time.
Will I lose my house or car if I file?
Not necessarily. North Carolina exemptions protect some property, and many people keep their home and car. You must still keep up with secured loans to keep the property.
What debts cannot be discharged in bankruptcy?
Child support, alimony, most student loans, many taxes, and criminal fines and restitution usually survive bankruptcy. A lawyer can review your debts to see which may be discharged.
Are there alternatives to filing bankruptcy?
Yes. Negotiating with creditors, payment plans, loan modifications, or selling an asset may work for some people. We will talk through these options before you decide.