Debt affects almost all Americans in some form. Whether it’s student loans, starting a business, credit card bills, or an unexpected medical bill, it’s estimated that the average American holds over $90,000 in debt. Though debt is sometimes necessary to make big changes in our lives, such as buying a home, losing control of debt can cause problems that aren’t solved quickly. Where can you go when your debt gets out of hand? Who can you turn to?
You can contact Bradford Law Offices for help. We’ve helped thousands of North Carolina residents get their debt under control through chapter 7, chapter 11, or chapter 13 bankruptcy, and we can use that wealth of experience to help you and your family. Call us today at (919) 758-8879 for a free consultation, and let us explain how filing for bankruptcy can help you get control of your life. Don’t let your debt determine your future. Call Bradford Law Offices today.
How Filing for Bankruptcy Can Help Debtors
Losing the ability to pay off debt can affect your life for years to come. Your credit score drops, items purchased on credit may be repossessed, your wages may be garnished, and you’ll be hounded by creditors and collection agencies non-stop. You may even be sued by a creditor and have liens placed on your home or car. Regardless of the reason, losing control of your debt is a harrowing experience.
Debt is not only a strain on your finances; it’s a strain on your life. Debt causes stress, anxiety, and worry. The constant unease caused by debt can have physical effects on your body and overall well-being.
Most debtors are surprised to learn that filing for bankruptcy is even an option. Though stigmatized, bankruptcy can sometimes be the best choice for debtors to restructure or eliminate their debt and get their lives back on track. Your credit score may be negatively affected, you may have difficulty applying for credit in the near future, but in the long term, bankruptcy can actually help you in several ways.
It’s important to note that bankruptcy is not for everyone. You should speak to a qualified bankruptcy attorney before deciding to declare bankruptcy.
- An end to creditors and collection calls. When you file for Chapter 7 bankruptcy, a judge will put a stay on any collection activities, and any entity that attempts to collect on your debt after this point may be hit with a contempt charge. This doesn’t eliminate your debt, but it puts a stop to any collection activities until you can work out a plan to repay or discharge it. Any collection activities for credit cards, mortgage debt, and student loans are immediately stopped. Any foreclosures, wage garnishments, lawsuits, or repossessions are also stopped.
- Bankruptcy exemptions. North Carolina law allows debtors to retain ownership of a portion of certain items and property when they file for bankruptcy, such as a house, car, tools needed for work, and necessary medical devices. Talk to your attorney to see precisely what items you may retain during a bankruptcy proceeding.
- Discharging debt. Some debts may be discharged when filing for Chapter 7 bankruptcy, such as medical bills, unpaid utility bills, or mortgages. A discharge means the creditor gives up trying to collect on the debt, and you no longer need to pay it. There are several exemptions for debt discharges, so be sure to discuss them with your attorney before filing.
- Raise your credit score. Your score will take a hard hit when filing for a Chapter 7 bankruptcy, and the filing will remain on your credit report for 10 years. That said, if you work on rebuilding your credit by getting a secured credit card or a credit-builder loan, you can start rebuilding your credit score immediately and bring it back up in as little as a year.
Types of Bankruptcy for Businesses
The three main types of consumer bankruptcy we deal with are Chapter 7, Chapter 11, and Chapter 13 bankruptcy.
In Chapter 7 bankruptcy, rather than make a plan to repay the debt, a large portion of the debt is discharged, and you no longer have to pay it. Items like car payments, mortgage debt, foreclosures, credit card debt, and in some cases, student loans may be discharged. The catch is that because you’re not making any plans to repay the debt, creditors may try to collect on any collateral you used to secure loans, such as a car or house.
Chapter 11 bankruptcy is primarily for businesses under extreme financial strain. Under Chapter 11, you get to keep your business and assets, and creditors must stop collection activities. Still, you’ll be required to make a reorganization plan that must be approved by creditors and a North Carolina bankruptcy court. This reorganization plan must clearly show how you plan to bring the business back to profitability. Chapter 11 is a complex process that can be expensive and time-consuming, so it isn’t for everyone, but it can allow businesses in a temporary slump to return to making money.
Chapter 13 bankruptcy is usually best for those who still retain valuable property and have the ability to pay off their debt if given the time. Filing for Chapter 13 involves coming up with a repayment plan to satisfy all your creditors and paying off your debt over a set period, usually 3-5 years. The benefits of Chapter 13 are that, in most cases, you can retain ownership of items used as collateral for secured loans, like your car or your home, as long as you continue to make the planned payments.
Call Bradford Law Offices Today
If your debt is making your life difficult, contact the attorneys at Bradford Law Offices right away. We’ll review your case, discuss your options, and get you on the road to financial freedom. Call us at (919) 758-8879 for a free consultation. Get control of your debt, don’t let it control you. Call Bradford Law Offices today.