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North Carolina Bankruptcy

North Carolina Bankruptcy


North Carolina Bankruptcy Laws


North Carolina bankruptcy laws that closely follow the procedures and laws of other states around the country.  Although NC bankruptcy laws can be strict, the laws aren’t in place to prohibit you from filing bankruptcy.  In fact, North Carolina bankruptcy can often help you in the long run—even if your credit score suffers in the short term.  


Like most other states, North Carolina requires a person to attend a credit counseling course six months before filing for NC bankruptcy.  Additionally, a person involved in a North Carolina bankruptcy case must provide proof of attending a debtor education course before a settlement can be reached.  


North Carolina Bankruptcy : Personal and Corporate


Individuals, families, and corporations can file North Carolina bankruptcy under different chapters.  A person or family usually files bankruptcy under Chapters 7 and 13 and qualifies for either measure under a number of circumstances.  A corporation or business can file bankruptcy under Chapter 11 if it is faced with a tough economic condition and needs time to fix its finances.  


NC Bankruptcy Chapter 7


In the state of North Carolina, there is no limit of debt required for filing bankruptcy.  If the unsecured debt is large enough and the person doesn’t own property, they may consider filing Chapter 7 bankruptcy.  A person’s income must fall below the state average—which is $37,892—and the judge must conclude (in collaboration with the IRS or other creditor) that the person cannot afford to lower their debt over the next three to five years. 


If a person qualifies to file under Chapter 7, they may be entitled to the following exemptions:


• Homestead of $125,000 if the property was bought in the last 3.3 years

• Homestead of $35,000 otherwise

• $5,000 in personal household items

• Pensions

• Life insurance

• Trust accounts


NC Bankruptcy Chapter 11


If a business or corporation is in a tough economic situation, they may file for Chapter 11 bankruptcy.  This type of bankruptcy allows a business a time period to reorganize their finances, employees, and other logistics in order to accommodate for more profit and reduce expenses.  The owner of the company often oversees the reorganization in “good faith” and is required to report back to a judge and/or creditor.  


NC Bankruptcy Chapter 13


If a family or individual has a steady income that falls above the state average and can afford to make payments for the next three to five years, they may file Chapter 13 bankruptcy.  The main advantage in filing for Chapter 13 involves a family being able to keep their house—even if the house is in danger of foreclosure. 




If a person files for Chapter 7 bankruptcy, a creditor may be able to receive their tax returns as an asset.  Normally, a creditor isn’t entitled to receive tax returns if the person files under Chapter 13.  Regardless of the type of North Carolina bankruptcy, backed taxes and other expenses owed to the IRS or other collection agency can’t be waived.  


Filing for North Carolina Bankruptcy


There are multiple files, documents, and fees associated with filing for North Carolina bankruptcy.  It is best to hire a lawyer so there are no confusions or mistakes when filing.  Your lawyer will be able to help you gather the right documents and advise you when you are speaking with a creditor.  A lawyer will try their hardest to get you the proper type of North Carolina bankruptcy and best settlement.