What Type Of Bankruptcy Is Right For Me? :: Charlotte Bankruptcy Lawyer

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What are the pros and cons of bankruptcy ?”

Though it may surprise many people, the U.S. Constitution discusses the right of individuals to relieve themselves of debts in certain cases where they are no longer able to meet their obligations to creditors. The U.S. Bankruptcy Code has clarified this more general right and said that individual debtors have two mechanisms for getting out from under crushing personal debt: Chapter 7 or Chapter 13 bankruptcy. So what are these two different approaches and how do they work? keep reading to find out.


Maze Charlotte Bankruptcy Lawyer North Carolina Chapter 7 Chapter 13 Bankruptcy AttorneyChapter 7


Chapter 7 bankruptcies are known as liquidation bankruptcies. The reason is because anyone who files for Chapter 7 bankruptcy protection will have his or her nonexempt assets liquidated to pay off creditors. Once these assets are sold to repay your debt the remainder of your dischargeable debts are wiped away. When this happens you are no longer obligated to pay any debt that has been discharged.


To qualify for a Chapter 7 bankruptcy, debtors must first pass a means test. This means test must show that your income is less than the median income for a family of your size in your state. Here in North Carolina that means that a family of one must earn less than $40,710 to qualify. If you fail the means test you will not be allowed to file for Chapter 7.




Chapter 7 bankruptcies are seen as good options for those who have large amounts of unsecured debt such as medical bills or credit cards. However, due to the means test, it is only useful for those struggling with debt who also have relatively low incomes. 

Chapter 13


Chapter 13 bankruptcies are known as reorganization bankruptcies because they allow debtors to reorganize all their debt into a payment plan, typically lasting between three and five years. When a suitable plan is arrived at, the debtor then begins making payments to the bankruptcy court, which is in charge of distributing money to the creditors. Once you have completed the court-approved payment plan, all debts that remain will be discharged and you will no longer be liable for them.




Chapter 13 bankruptcies can be good in certain cases where a debtor has secured debts, such as a car loan, and wants to hold onto that asset rather than have it seized by the creditor. Chapter 13 bankruptcies also work well (and may be the only option) for those with incomes above the median for their state.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.



“Bankruptcy Information Sheet,” published at Justice.gov.

See Our Related Blog Posts:

Rapper DMX Gets Bankruptcy Case Tossed Due To Financial “Inconsistencies” :: Charlotte Bankruptcy Lawyer

 Yet Another City Moves Towards Bankruptcy :: Charlotte Bankruptcy Lawyer