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When Can a North Carolina Bankruptcy Case Be Dismissed?
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.
How Can I Improve My Credit After Filing for Bankruptcy?
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.
5 Common Myths and Misunderstandings About Bankruptcy
With the rising cost of living and high levels of consumer debt, bankruptcy is becoming a more popular option for Americans who are struggling to make ends meet. However, there are still many misunderstandings related to bankruptcy laws and procedures that can lead people to jump to conclusions and make uninformed decisions. In situations involving large debts, you will want to understand your rights and options, and with the help of an experienced bankruptcy attorney, you can take steps to avoid further problems and regain financial stability. Here are some common bankruptcy-related myths and the truth about how issues related to debt may be handled before, during, and after the bankruptcy process:
Myth 1: Bankruptcy Is a Sign of Failure
The truth is that receiving debt relief through bankruptcy is not an indication that you are irresponsible with your finances or that you have failed to properly account for your income, assets, and debts. Most people who pursue bankruptcy do so because of financial issues they have encountered through no fault of their own, such as unexpected medical bills or debts that occurred due to the loss of a job. Bankruptcy offers you the opportunity to get back on track financially. It provides relief from debts you cannot pay and gives you the chance to start fresh. With careful planning, it can be an effective tool in your overall financial strategy and provide much-needed relief in difficult times.
The Means Test: Do I Qualify for Chapter 7 Bankruptcy?
People with significant debts may qualify for multiple types of debt relief, and in many cases, bankruptcy is the best option. Those who plan to file for bankruptcy will often choose to file under Chapter 7, since this will allow most types of debts to be discharged/eliminated within just a few months. However, debtors will need to meet certain requirements to qualify for debt relief under Chapter 7. One of the most important criteria is the means test, which measures a person’s financial situation to determine whether they have the ability to repay some of their debts.
What Is the Means Test?
The means test is used to determine if you have enough disposable income left over after paying essential expenses related to housing, food, transportation, etc. By looking at your income and expenses, the means test measures whether you have enough money in your monthly budget to repay at least some of what is owed to your creditors. If not, then you may be eligible for a fresh start through Chapter 7 bankruptcy.
What Are the Most Common Reasons People File for Bankruptcy?
Though no one wants to have to file for bankruptcy, it may sometimes be the best option available. Many Americans face situations where debts become overwhelming, and paying back what is owed while also being able to meet a family's ongoing needs may become impossible. Bankruptcy can be the ideal way to receive relief in these situations, and it can often help resolve debt-related issues before they get worse. By understanding some of the most common reasons people pursue bankruptcy, you can realize that you are not alone and that you have options.
Financial Issues That Often Lead to Bankruptcy
The need for debt relief can arise in a variety of situations, including:
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Job Loss or Reduction in Income - One of the most common reasons people file for bankruptcy is due to a loss of income. This can come in the form of a job loss or a significant reduction in salary. If you lose your job, it can be difficult to make ends meet, especially if you have a family to support. If you have exhausted all other options, such as borrowing money from friends or family or selling possessions, filing for bankruptcy may be your best option.
When Can the Automatic Stay Be Lifted in a Bankruptcy Case?
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long with the ability to eliminate certain types of debts, one of the key benefits of bankruptcy is the automatic stay. This is an order that is put in place by a bankruptcy court immediately after a debtor files for bankruptcy, and it will force creditors to cease all collection actions during the case. This means that creditors cannot call, email, send letters, or otherwise communicate with a debtor. They cannot proceed with a legal judgment against a debtor, garnish their wages, freeze or seize their bank accounts or other property, or take any other actions in an attempt to collect a debt.
The automatic stay can provide a debtor with protections and give them some "breathing room" as they address their debts during the bankruptcy process. However, there are some situations where the automatic stay can be lifted. By understanding when a creditor may request an exception to the automatic stay, a debtor can make sure they are prepared to address these issues as they proceed with bankruptcy.
How Long Will Bankruptcy Affect My Credit Score?
One reason that many people are hesitant to consider bankruptcy is because they do not want their credit score to be negatively affected. This score can play a significant role in your ability to obtain credit or loans in the future, so if you are planning to buy a home or car or make other large purchases, you may worry that bankruptcy will prevent you from doing so. However, if you are considering bankruptcy, it is likely that you are already encountering issues that may significantly lower your credit score, such as missed payments on credit card debts or other bills. Rather than trying to dig your way out of the hole you are in, bankruptcy can provide you with a fresh start, and while your credit score may take a hit, you can begin rebuilding your credit after wiping out some or all of your debts.
Time Needed to Rebuild Credit After Bankruptcy
What Are the Bankruptcy Exemptions in North Carolina?
For people who are struggling with debts, bankruptcy can be a good option. However, many people are hesitant to consider bankruptcy because they worry that they will lose some or all of the property they own. This may be the case in a Chapter 7 bankruptcy, which may require some of a person’s assets to be liquidated so that as much of their debts as possible can be paid off before the debts are discharged. However, when pursuing a Chapter 7 case, there are a number of exemptions that will apply, and they may be able to keep most or all of their assets.
Exemptions to Liquidation in Chapter 7 Bankruptcy
If a person has lived in North Carolina for at least 730 days (two years) before filing for bankruptcy, they will be able to claim the exemptions defined in the state’s laws. These include:
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Homestead exemption - In most cases, up to $35,000 in equity in a person’s home will be exempt. However, an unmarried person who is at least 65 years old may claim up to $60,000 of a house or property that they formerly owned together with a spouse who is now deceased.
What Are the Types of Debts That Can Be Addressed Through Bankruptcy?
There are many different types of debts that can cause a person or family to experience financial difficulties. In many cases, these difficulties occur because of circumstances that are out of a person’s control. For example, a person who suffers a serious injury or illness may have received multiple different forms of medical treatment, resulting in high medical bills that they are unable to pay. These problems can become even more serious if a person has been unable to work and earn enough income to cover their living expenses while also repaying the debts they owe. Fortunately, different forms of debt relief may be available, including filing for bankruptcy. Those who are considering bankruptcy will need to understand how different debts may be handled and how different types of bankruptcy may be used to provide financial relief.
Dischargeable and Non-Dischargeable Debts
Filing for bankruptcy can provide some immediate relief from debts through what is known as the “automatic stay.” After a bankruptcy petition is filed in court, this stay will go into effect, and it will prevent creditors from taking any actions to collect debts. Any collection activities will be halted during the bankruptcy case, and creditors will be prohibited from contacting the debtor in any way. The debtor will then be able to determine how to handle different types of debts throughout the bankruptcy process.
An Overview of the Means Test
Chapter 7 is used commonly for personal bankruptcies. Chapter 7 is a liquidation bankruptcy. Nonexempt assets of yours will likely be seized to pay creditors, and most of your unsecured debts (debts with no collateral) will be discharged within a matter of months.
Based on these benefits, you can see why Chapter 7 is attractive for many debtors. At its best, bankruptcy gives you a clean financial slate from which you may work diligently to rebuild your credit and finances on a solid foundation. However, not everyone is eligible for a Chapter 7 bankruptcy. To be eligible, you must first pass what is called the means test.
What is the Means Test?
The means test is a formula that figures your monthly income against your debts to determine if your situation warrants a Chapter 7 bankruptcy. The basic tenet is that if you do not bring in enough money per month to even make a dent in your debts, then Chapter 7 is the way to go.
From our office in Charlotte, we serve clients throughout Mecklenburg County, Union County, and Gaston County, including Concord, Gastonia, Huntersville, Belmont, Davidson, Cornelius, Harrisburg, Matthews, Monroe, Fairview, Stanley, and Bessemer City, as well as other communities across North Carolina.
301 S. McDowell Street, Suite 1103, Charlotte, NC 28204
704-256-7766
