#1 Instant and meaningful debt relief
The moment your attorney files your Chapter 7 bankruptcy case, an automatic stay goes into effect. As a result, all debt collection activity must cease. If a debt collector calls before they get the notice that you filed, you just tell them you filed, give them your case number and your attorney's name. If they contact you again after the filing, they can be fined for harassing you. That's a welcome change.
#2 Most unsecured debts will be wiped out for good
Medical bills, credit card bills, past due balances on utility bills and old collections accounts should all be discharged in a Chapter 7 bankruptcy, and you won't have to pay back a penny on them. This can free up much of your disposable income and make it easier for you to keep up with your rent or mortgage payments, save for retirement and have breathing room in your budget. That's instant peace of mind.
#3 You should not lose any of your assets
North Carolina offers very reasonable exemptions for personal property. Your retirement accounts can't be touched during your bankruptcy. A reasonable amount of equity in your home and auto are also protected and – if you file with your spouse – the exemptions are doubled. No one will come and take your furniture, computer or personal items. Unless you have a house full of treasures, you'll be fine.
#4 Secured debt may not be affected
If you are current on your mortgage or car loan, filing Chapter 7 should not impact these arrangements. If you're behind on your mortgage and can't afford the home any longer, Chapter 7 can help you surrender the home. The mortgage debt will be wiped out, and you can get a fresh start with a rental you can afford and start saving for a better mortgage in the future. The same goes for your car loan.
#5 The process is fast and convenient
It doesn't take a lot of time to complete a Chapter 7. You go in for an initial consultation with your attorney to prepare your petition that is usually filed electronically. You then attend one or two short hearings and, within three to four months, you get notice of discharge and the entire process is done and over with, and you have permanent debt relief. It's the easiest and fastest debt relief program.
#6 You can rebuild credit quickly
Once you have your Chapter 7 discharge, you can start rebuilding your credit immediately. Your credit score will take a short-term hit from the initial filing but, if you are behind on your bills, your credit is already taking monthly hits. Those dings will stop, and you can get to work reestablishing credit and making the most of the fresh financial start offered by Chapter 7 bankruptcy.
#7 You can qualify for a Chapter 7 even with high income
Those with lower earnings will qualify more easily for Chapter 7 because they won't have to pass the Means Test. But even those that have high earnings can qualify for Chapter 7 debt relief. The key is that your debts must greatly outweigh your ability to pay them back on your current income. If you have both high income and high debts, you may easily qualify for a Chapter 7 bankruptcy.
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