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Four FAQ about bankruptcy in Fayetteville

On Behalf of | Oct 23, 2024 | Firm News |

Filing for bankruptcy can be a significant step for individuals and businesses facing financial challenges. If you are in Fayetteville and considering this option, it is crucial to understand the process. Below, we address some common questions about bankruptcy.

Types of bankruptcy

In Fayetteville, individuals typically file for Chapter 7 or Chapter 13 bankruptcy:

  • Chapter 7: this involves selling non-exempt assets to pay off debts. It is suitable for those with limited income and significant unsecured debts like credit cards or medical bills.
  • Chapter 13: this is a “reorganization bankruptcy” that allows individuals to keep their property and repay debts over time, usually three to five years. It is ideal for those with a regular income who can manage a repayment plan.

How does the bankruptcy process work?

The process begins by filing a petition with the bankruptcy court. This includes detailed information about your finances, including debts, income, assets, and expenses. Once you file, an automatic stop prevents most collections against you.

Then, the court appoints a trustee to oversee the case. In Chapter 7, the trustee may sell non-exempt assets to pay creditors. In Chapter 13, you will propose a repayment plan for court approval. After you complete the process, the court discharges most remaining debts.

Considerations before filing

Filing for bankruptcy can have long-term financial consequences. It is important to consider:

  • Credit impact: bankruptcy can affect your credit score. Making it challenging to get loans or credit in the future.
  • Asset protection: while bankruptcy can relieve debt, certain assets might be at risk, especially under Chapter 7.
  • Eligibility: not everyone qualifies for Chapter 7. Means testing will determine eligibility based on income and expenses.

Given the complexities of the process, consulting with a bankruptcy attorney is advisable. They can provide personalized advice and help you understand the legal requirements to make informed decisions.

Going bankrupt is a big decision that needs a lot of thought and planning. Understanding your options and the potential outcomes is crucial for making informed decisions. With proper guidance you can work towards a fresh financial start.