Here at Huggins Law Firm, P.C., we know the exact feeling that brought you to this page. You’re stressed out, maybe terrified, and the phone won’t stop ringing. You’ve lost sleep worrying about your bills and whether you’ll lose your house in Greensboro or your car in Winston-Salem.
The stress of mounting debt and non-stop creditor calls can make it feel impossible to breathe, much less see a stable path forward.
We want you to know two things right away: First, you are not alone. Second, filing for bankruptcy is not a punishment; it’s a legal tool created by the U.S. government to give honest people a fresh start. Our experienced lawyer team is here to help you figure out if it’s the best tool for your family.
What Are the Top Reasons People Near Me File for Bankruptcy?
When we look at why good people in places like High Point, Graham, or Kernersville file for bankruptcy, it’s usually not because they bought too many big toys. It’s often due to one or two major life events that they couldn’t control.
- Medical Bills: This is a huge factor. An unexpected illness, a long hospital stay, or a terrible accident can create massive debt overnight. In fact, many national studies show that medical issues are consistently one of the top reasons people file for personal bankruptcy. (Source: Debt.org).
- Job Loss or Income Drop: Many Americans have jobs but may not be earning enough because of reduced hours or a layoff. Losing a job, even for a short time, can make it impossible to keep up with mortgage or car payments.
- High Interest Rates: In 2024, the amount of bankruptcy filings increased by about 14% over the previous year. (Source: Congress.gov). Experts say this spike is largely because high interest rates and inflation make basic costs—like groceries and housing—too expensive, pushing people over the edge.
Filing bankruptcy is often the best way to stop foreclosure, stop repossession of your car, and get total relief from medical bills and credit card debt.
Which Chapter of Bankruptcy Is the Best for Your Family in North Carolina?
There are two main types of bankruptcy that most individuals use. The experienced lawyers at Huggins Law Firm can determine which one is right for you:
1. Chapter 7 (The “Quick Restart”)
- How it Works: Chapter 7 is often called liquidation. It allows you to wipe out most of your unsecured debts—like credit cards, medical bills, and personal loans—in just a few months.
- Who Qualifies: To file Chapter 7, you must pass the Means Test. This test looks at your income over the last six months. If your income is below the North Carolina median income for a family of your size, you might qualify.
- The Big Question: Will I lose my house or car in Asheboro? The answer is often no! North Carolina has special laws called exemptions that protect your most important property.
2. Chapter 13 (The “Repayment Plan”)
- How it Works: Chapter 13 is a reorganization plan. Instead of wiping out debt immediately, you pay off a portion of your debts over a long time, usually three to five years. (Source: U.S. Courts).
- Best for: This is the best choice if you have a job and regular income but are behind on your mortgage or car payments. Chapter 13 can stop a foreclosure on your house in Burlington and give you time to catch up.
- The Length: If your income is higher than the state median, your plan generally has to be five years long. You must stick to the payment plan for the full time.
You can learn about how we protect assets in court on our Business Litigation page at https://www.micahhuggins.com/business-litigation.
What Are North Carolina’s Little-Known Exemption Laws That Protect Your Stuff?
This is the key piece of information that separates a good bankruptcy filing from a bad one. When you file, you have to list everything you own. But North Carolina law provides a legal shield called exemptions to protect your stuff from being sold by the bankruptcy trustee.
Hidden Rule: You Must Use North Carolina’s Exemptions. North Carolina is what’s called an “opt-out” state. This means you cannot use the federal exemptions; you must use the North Carolina state exemptions.
Here are some of the most important exemptions that protect families near you:
| North Carolina Exemption Law (Source: NC General Statutes § 1C-1601) | What It Protects | The Amount Protected |
| Homestead Exemption | The equity you have in your primary residence (house, condo, burial plot). | Up to $35,000 |
| Motor Vehicle Exemption | The equity you have in one car or truck. | Up to $3,500 |
| Wildcard Exemption | Money or property not covered elsewhere, like cash in the bank or extra equity. | Up to $5,000 of unused homestead or burial exemption. |
| Personal Property | Household goods, clothes, furniture, appliances, books, etc. | Up to $5,000 total, plus an extra $1,000 per dependent (up to $4,000 total). |
A Crucial Tip: The amounts above protect the equity—which is the value of the property minus any loan you still owe on it. An experienced bankruptcy lawyer knows how to apply these rules perfectly to make sure you keep the best assets you own.
How Does Bankruptcy Impact Your Home in Greensboro or High Point?
The thought of losing your home is the reason most people hesitate to file. In cities like Greensboro (Guilford County) and High Point, where homes are valuable, it’s a huge worry.
- If you are current on your mortgage payments: In a Chapter 7 case, if your equity is fully covered by the $35,000 Homestead Exemption, you usually keep the house as long as you continue to make the payments.
- If you are behind on your payments: Chapter 13 is often the best option. It automatically stops foreclosure (this is called the “automatic stay”) and gives you a 3 to 5-year plan to catch up on all the missed payments.
If you are dealing with other property concerns, like divorce or child support that relates to your home, you can read more on our Family Law page at https://www.micahhuggins.com/family-law.
Key Takeaways for Bankruptcy in North Carolina
- The Automatic Stay is Power: As soon as you file, the automatic stay immediately stops foreclosure, repossession, lawsuits, and creditor harassment near you.
- Chapter 7 vs. Chapter 13: Chapter 7 wipes out unsecured debt quickly but requires passing a test. Chapter 13 requires a 3–5 year repayment plan but can save your house from foreclosure.
- North Carolina Exemptions: You must use the state’s exemption laws to protect your home and car. An experienced lawyer ensures you claim the best protection available.
- No More Harassment: Once debts are discharged (wiped out), creditors are permanently forbidden by the court from ever trying to collect that money from you again.
- Don’t Wait Until It’s Too Late: If you wait until the day before a foreclosure or repossession, it limits your options. The best time to act is the minute you know you can’t keep up.
Common Questions Asked About North Carolina Bankruptcy
1. Q: How long does bankruptcy stay on my credit report, and when can I get credit again?
A: Chapter 7 stays on your credit report for 10 years, and Chapter 13 stays on for 7 years. However, you can often start rebuilding your credit right away. After bankruptcy, your debt-to-income ratio is much better, which makes you a lower risk for new loans. Many people find they can get a new car loan or credit card surprisingly soon.
2. Q: If I file bankruptcy, will I lose my retirement savings like my 401(k)?
A: No, in almost every case, your retirement accounts, 401(k)s, and IRAs are fully protected under North Carolina and federal law. These assets are usually completely safe from the bankruptcy trustee.
3. Q: Can filing bankruptcy wipe out tax debt or student loans in North Carolina?
A: Most tax debts are not wiped out, especially recent income taxes. Student loans are also very difficult to wipe out; you have to prove an “undue hardship,” which is a very high legal bar to clear. However, filing bankruptcy can stop collections and help you focus your money on those debts by wiping out all the rest.
4. Q: Do both spouses have to file bankruptcy in cities near me, like Burlington or Graham?
A: No. One spouse can file alone. However, if you and your spouse have a lot of joint debt (debts where both names are on the account), filing together is usually the best way to wipe out all of that joint debt for both of you.
5. Q: If I file Chapter 7, will I have to go to court and face my creditors?
A: You must attend one meeting called the Meeting of Creditors (341 Meeting), which usually lasts only 5 to 10 minutes. It’s often held in a simple meeting room, not a formal courtroom. Creditors rarely attend these meetings. Your experienced lawyer will be right there with you the whole time.
Source Citations:
- North Carolina General Statutes § 1C-1601 (Exempt Property). (Used for Homestead, Motor Vehicle, and Personal Property exemptions).
- United States Courts / Chapter 13 – Bankruptcy Basics. (Used for the 3-to-5-year Chapter 13 plan length rule).
- Debt.org / Consumer Bankruptcy Project Data. (Used for the top reasons why people file, specifically medical debt).
- Congress.gov / Bankruptcy Filing Trends, 2024. (Used for the 14% national increase in filings).
NC General Statutes § 1C-1601(a)(12). (Used for alimony/child support exemption rules).
