Chapter 7 bankruptcy is a legal option that can help people and businesses in North Carolina struggling with overwhelming debt. Knowing the pros and cons of filing for Chapter 7 bankruptcy is important for any person or business considering using it as a solution to deal with debt-related problems. If you are interested in pursuing Chapter 7 bankruptcy, contact a bankruptcy attorney to help make sure you can make an informed decision about your financial future. 

Pros of Chapter 7 Bankruptcy

1. Debt discharge – One of the primary benefits of Chapter 7 bankruptcy is that it allows eligible people in North Carolina to discharge most of their unsecured debts, such as credit card bills and medical expenses. This means you will not be legally obligated to repay those debts, giving you a fresh start. 

2. Immediate relief – Once you file for Chapter 7 bankruptcy, an automatic stay is implemented. This means all collection actions by creditors will be halted. This means no more harassing phone calls, wage garnishments, or legal actions against you. It provides immediate relief from the stress and pressure of debt. 

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Being in debt is a stressful situation, especially for those who have encountered financial difficulties that have affected their ability to pay what is owed while covering other ongoing expenses. If you are in this situation, you may be dealing with constant calls, letters, and threats from creditors and collection agencies, and you may feel helpless and overwhelmed as you attempt to deal with your financial issues and address your family's needs. Fortunately, there are legal measures you can take to stop creditor harassment, and in some cases, filing for bankruptcy may allow you to eliminate some or all of your debts.

Your Rights Under the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates how creditors can contact and communicate with debtors. Under this law, you are protected from harassment by creditors, and you can take steps to address any harassing behavior. The FDCPA allows you to:

• Address abusive practices - Creditors are not allowed to use abusive language, call you repeatedly in an annoying manner, make threats of violence, or speak to you without identifying themselves as debt collectors. If creditors take an aggressive or abusive approach when attempting to collect debts, you can file a complaint against them with the Consumer Financial Protection Bureau (CFPB).

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If you are like many people considering bankruptcy, the idea of losing your home is a major concern. While bankruptcy will allow you to eliminate some of your debts, the discharge of your home mortgage will allow the lender to foreclose on your home. You may be able to avoid this in certain situations, but if you also have a second mortgage on your home, you may be wondering how that debt will be treated in a potential bankruptcy case. The good news is that second mortgages can sometimes be eliminated or reduced through bankruptcy, depending on your individual circumstances and the type of bankruptcy you file.

Mortgage Loans in Chapter 7 Vs. Chapter 13 Bankruptcy

In a Chapter 7 bankruptcy, your first and second mortgages may be discharged entirely along with any other debts you owe. However, as mentioned, above, the lender or lenders may then pursue a foreclosure. Because of this, Chapter 7 is usually only an option if you do not plan to stay in your home.

In a Chapter 13 bankruptcy, your debts will be restructured, and you will be required to repay a portion of what is owed over a three-to-five-year period. If you choose not to discharge your mortgage debts, you can use this repayment plan to pay back missed payments and any applicable fees over time. This will allow you to become current on your mortgage loans and avoid the loss of your home.

There are many situations where individuals who are in financial distress will need to seek relief from their debts and receive a fresh financial start. This can be done by filing for bankruptcy. However, not all bankruptcy filings automatically lead to successful debt relief. A bankruptcy case can be dismissed if the debtor fails to comply with certain requirements or if the court determines that bankruptcy relief is not the right solution for the debtor's financial situation. By understanding the reasons why a bankruptcy case can be dismissed, debtors can prepare to complete the process successfully. These reasons may include:

Non-Compliance with Filing Requirements

To file for bankruptcy, the debtor must complete and submit a number of forms and provide supporting financial documents. Failure to file all required forms and documents in a timely and accurate fashion may result in the dismissal of the bankruptcy case. Additionally, if the debtor fails to attend the mandatory meeting of creditors (known as the "341 meeting"), the court may dismiss the case.

Failure to Comply with Court Orders or Requirements

In some cases, the court may issue orders to the debtor to complete certain tasks or provide additional documentation as part of the bankruptcy case. If the debtor fails to comply with these court orders, the case may be dismissed. Failing to complete the required credit counseling courses may also result in the dismissal of a bankruptcy case. The debtor must take any court orders seriously and respond promptly and accurately.

Filing for bankruptcy can be a difficult decision. Acknowledging that your debt has gotten out of control and that you need help to get your finances back on track is not always easy. However, bankruptcy can provide you with a truly fresh start. Eliminating your debts, including large credit card bills, medical bills, or other debts that have stacked up because of issues such as the loss of a job, can take away a huge burden and ensure that your family will be able to avoid serious financial problems in the years to come. Part of the fresh start following bankruptcy involves rebuilding your credit, which will help you qualify for loans or other benefits in the future. As you plan for your life after bankruptcy, there are steps you can take to improve your credit score.

Pay Your Bills On Time

One of the most important things you can do to rebuild your credit is to pay all of your bills before the monthly due date. In addition to making monthly payments on any loans you kept following your bankruptcy, such as a home mortgage or auto loan, you may want to set up reminders or automatic payments for other bills, such as utilities. Making prompt payments on a regular basis will show creditors that they can trust you and that you are responsible with money management—two qualities they look for when considering whether or not someone should receive loan approval. On the other hand, any late payments may cause your credit score to decrease further, affecting your ability to build your credit back up.

Get a Secured Credit Card

You may be hesitant to apply for a new credit card after filing for bankruptcy, since you will want to avoid racking up new debts that could cause future difficulties. However, credit cards can actually be beneficial in the long run if used responsibly. If you are unable to receive approval for a regular credit card because of the bankruptcy on your record, you may be able to receive a secured credit card. With this type of card, you must make an upfront deposit that serves as collateral for any purchases made with the card.