The benefits of filing for Chapter 7 bankruptcy

On Behalf of | Dec 16, 2020 | Chapter 7 Bankruptcy |

If you are struggling to pay medical, credit card or other types of debts, it may be in your best interest to file for Chapter 7 bankruptcy. In most cases, an automatic stay will be put into place after your bankruptcy petition has been presented to a North Carolina judge.

What to know about the automatic stay

The stay prevents creditors from making phone calls, sending letters or taking other steps in an effort to collect what they are owed. If a creditor engages in debt collection activities while it is in effect, you may be entitled to compensation or other forms of relief. Generally speaking, the stay remains in effect for the duration of your bankruptcy case.

Obtain debt relief in a matter of months

A typical Chapter 7 proceeding lasts for about six months. After the case is discharged, you are no longer required to make payments on unsecured debt balances. However, you can continue to make payments to your creditors on a voluntary basis. This may be a good idea if you borrowed money from friends or family members.

You might be able to keep most of your assets

Retirement assets such as an IRA, 401(k) or a 403(b) are exempt from being liquidated in a Chapter 7 proceeding. Furthermore, you may be able to retain any positive equity that you have accrued in a home or car. Finally, state law generally allows you to keep clothes, silverware or other possessions that don’t have a significant market value.

If you are planning on filing for Chapter 7 bankruptcy, it may be best to do so with the help of an attorney. Legal counsel may be able to explain the process of filing and ensure that you enroll in a credit counseling course prior to submitting your petition to a judge. An attorney may also be able to ensure that creditors abide by the terms of an automatic stay.