North Carolina Bankruptcy Law
North Carolina Chapter 7 Bankruptcy Information
In a Chapter 7 bankruptcy you wipe out your debts and get a "Fresh Start". Chapter 7 bankruptcy is a liquidation where the trustee collects all of your assets and sells any assets which are not exempt. (see North Carolina Exemptions) The trustee sells the assets and pays you, the debtor, any amount exempted. The net proceeds of the liquidation are then distributed to your creditors with a commission taken by the trustee overseeing the distribution.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged. (see North Carolina Exemptions) Usually, large credit card debt and other unsecured bills coupled with few assets typify a Chapter 7 bankruptcy filer. In the vast majority of cases this type of bankruptcy is able to completely eliminate all of the filers debts.
You may keep certain secured debts such as your car or your furniture or house by reaffirming those debts. To do so, you must sign a voluntary "Reaffirmation Agreement". However, you cannot wipe out that debt (or discharge the debt) for another six years. In other words, if you decide that you want to keep your house or your car or your furniture, and you reaffirm the debt, you cannot bankrupt (or wipe-out) that debt again for six years. You will still owe that debt and you must continue to pay it just as you were to continue to pay it before you filed the bankruptcy. In order to reaffirm the debt, you must also bring it current. In other words, if you are three or four months behind, then you must pay the back payments which are due in order to reaffirm it. You can selectively reaffirm your debts - you can state that you wish to keep the house and the furniture, but that you want the car and the jewelry to go back to the respective Creditors.
Reaffirmation agreements can be set aside during the earlier of 60 days after the agreement is filed with the Court, or upon the Court's issuance of an Order of Discharge.
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Bankruptcy Law from North Carolina Bankruptcy