In North Carolina and across the United States, people experiencing heavy debt may file for bankruptcy as a way to cope with their financial problems. However, bankruptcy is not the ideal solution for every person. Whether a person files Chapter 7 or Chapter 13 bankruptcy, he or she may need to relinquish his or her vehicles or expensive jewelry. Nevertheless, one important thing to remember is that bankruptcy offers people with high credit card debt a legal path to a fresh financial start.
In the 1800s, debtors’ prisons were banned. Since that time, bankruptcy laws have changed. Many Americans do not earn enough money to pay back their creditors. Applying for bankruptcy via a federal bankruptcy court can help a person with a serious financial challenge. Due to official reforms, today’s legal system offers better methods for handling debt. Private individuals who owe more money than they earn may want to explore their bankruptcy options.
People who find it impossible to cope with debt can file Chapter 7 or Chapter 13 bankruptcy. The latter type provides a debtor with a method for handling debt while offering lenders a way to receive payment. Chapter 7 bankruptcy offers complete debt relief and a fresh financial start. Chapter 7 is designed to help debtors who owe more money than they earn. People who owe tens of thousands of dollars no longer need to pay back any of the money. A Chapter 7 means test determines whether the debtor qualifies.
Chapter 13 bankruptcy helps people who earn substantial incomes but are unable to pay back their creditors. Chapter 13 bankruptcy enables the debtor to create a payment plan approved by the court. Paying off debts typically takes approximately three to five years. A bankruptcy attorney may provide guidance during the complicated bankruptcy process.