Bankruptcy in Lincolnton, North Carolina is a court procedure through which a person or business who is unable to pay their debt is able to have some of their debt legally cleared, 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 absolved of their requirement to pay their debts just because they don't want to. It is meant to serve as a lifeline, preventing uncontrollable 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 heavily damage a person's credit rating.
Therefore, it is advisable to consult with an experienced Lincolnton, 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 Lincolnton bankruptcy attorney cannot be replaced.
Types of Bankruptcy in Lincolnton, North Carolina
In Lincolnton, North Carolina, there are three basic bankruptcy schemes that are most often used. They are recognized as Chapter 7, Chapter 13, and Chapter 11. Being a product of federal law, the procedural rules governing bankruptcy in Lincolnton, 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 property, and use the funds to pay creditors. While this doesn't sound like much of a relief at first glance, the upshot is that once the qualifying property is sold, and the proceeds directed to the creditors, all of the debtor's eligible debts are deemed paid in full, regardless of how much the creditors actually ended up getting. Not all of the debtor's property has to be sold off - the debtor will normally be allowed to keep things like a house, at least one car, some types of personal property, retirement accounts, and insurance policies. It should be noted that some debts are not dischargeable, and will have to be paid in full even if the debtor files for bankruptcy. This includes student loans, taxes, and criminal fines.
Under Chapter 13 bankruptcy in Lincolnton, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over a prolonged period of time, thus theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Though accessible to individuals, Chapter 11 bankruptcy is generally 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 presented, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
One major advantage of Chapter 11 bankruptcy is that it allows businesses to continue their operations while the process plays out. Additionally, their stock can still be bought and sold.
How Can a Lincolnton Bankruptcy Lawyer Help?
The need to consider all the options and consider the costs and benefits of applying for bankruptcy in Lincolnton cannot be overstated. If you are considering filing for bankruptcy, it would be a good idea to speak with a Lincolnton bankruptcy attorney beforehand.