Bankruptcy in Hickory, North Carolina is a court proceeding through which a person or business who is unable to pay their debt is able to have some of their debt legally absolved, or "discharged." This theoretically allows the debtor to move on with a clean slate. Of course, one should never view bankruptcy as a "get out of debt free" card, allowing someone to be relieved of their obligation to pay their debts just because they don't want to. It is meant to serve as a lifeline, preventing unmanageable debt from resulting in complete financial ruin. Accordingly, it is best treated as an option of last resort, because it can carry with it significant negative consequences, which must be weighed against the possible benefits. For example, filing for bankruptcy can severely damage a person's credit rating.
Therefore, it is prudent to consult with an experienced Hickory, North Carolina bankruptcy attorney, who can advise you of the costs and benefits of bankruptcy. Because the decision to file for bankruptcy depends very heavily on the facts of each individual case, the advice of a Hickory bankruptcy attorney cannot be substituted.
Types of Bankruptcy in Hickory, North Carolina
In Hickory, North Carolina, there are three basic bankruptcy schemes that are most commonly used. They are known as Chapter 7, Chapter 13, and Chapter 11. Being a product of federal law, the procedural rules governing bankruptcy in Hickory, North Carolina will be very similar to those in any other part of the United States. Chapter 7 bankruptcy requires the debtor to liquidate some of his or her assets in order to pay off as much debt as possible. Once the sale of the assets is complete, and the proceeds handed over to the creditors, the debt is viewed as discharged. Liquidation is basically selling assets to the highest bidder. Not all of the debtor's assets will need to be sold, and many types of property are totally or partially exempt, including homes, cars, retirement accounts, and insurance policies. This means that the debtor can keep them. It should be noted that some types of debts are not dischargeable in Chapter 7 bankruptcy, including student loans, criminal fines, taxes, and child support payments. Even when the bankruptcy process is complete, these debts will have to be paid in full.
The other popular bankruptcy system in Hickory is Chapter 13 bankruptcy. Under this system, the debtor's debts are restructured, instead of discharged. This involves creating a new repayment plan that the debtor will find manageable, given his or her income, and that will result in the creditors being paid in a reasonable amount of time. When a repayment plan is approved by a court, creditors are legally barred from attempting to collect under the original terms of their agreement with the debtor. Though available to individuals, Chapter 11 bankruptcy is mostly used by businesses. Like Chapter 13, Chapter 11 requires the restructuring of debts. Under this system, the debtor must come up with a plan to reduce debt, cut costs, and improve operations. Once this plan is proposed, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
One main advantage of Chapter 11 bankruptcy is that it allows businesses to continue their operations while the process plays out. Furthermore, their stock can still be bought and sold.
How Can a Hickory Bankruptcy Lawyer Help?
The decision to file for bankruptcy in Hickory is not one to be made lightly, and it certainly should not be made without first obtaining the advice of an experienced Hickory bankruptcy attorney.