Individuals in North Carolina who file a bankruptcy petition are requesting a federal court to protect them from creditors. The court will oblige this request by putting a hold on collection activity and lawsuits. The petitioner will also enjoy a repayment plan that will help them achieve a fresh financial start.
How Chapter 13 works
Petitioners who choose the Chapter 13 bankruptcy format will make payments to a repayment plan that is supervised by a trustee appointed by the court. But there are situations where payments outside of the plan are allowed.
Individuals who opt for Chapter 13 bankruptcy agree to submit a lump-sum payment to their trustee each month. Three to five years is the length of a typical repayment plan, and the trustee will use the money to pay on debts like mortgages, auto loans, and others. Debtors who fulfill all obligations of their repayment plan then become eligible to have some debt discharged.
Debt relief for various loans
For individuals with mortgages who file for Chapter 13, the circumstances of the mortgage debt will determine whether payments outside of the repayment plan are possible. Any portion of a mortgage that is in arrears at the time of the bankruptcy filing is only eligible for payments through the court-appointed trustee. It is possible to pay on a current mortgage balance through the trustee or straight to the lender.
Debtors can petition to the court for permission to make additional direct payments on secure debt like auto loans and house furniture. These payments are normally made through the trustee, but the court will usually not have a problem with direct payments if the creditor does not object to the arrangement.
Bankruptcy laws restrict the ability of petitioners to make new debt after a filing. It is possible to borrow money after filing for bankruptcy, but the court will have to give its approval. This new debt will not become part of a Chapter 13 agreement, and payments happen outside of the repayment plan.
Legal help for bankruptcy
Bankruptcy can represent an excellent choice for debtors who need a fresh start once debt becomes unmanageable. Individuals considering a bankruptcy filing may benefit from a conversation with an attorney.