How Chapter 7 works

Chapter 7 deals with debt by selling off most of your property and dividing the proceeds among your creditors. The law provides several exemptions, allowing you to keep a house, car and personal property below a particular value. You may be able to keep secured property by signing an agreement to keep paying the debt on it even after the discharge of the rest of your debts. The entire process typically takes between three and six months.

You may not file a Chapter 7 petition until at least six years have passed since your last one. To petition, you need an income under a legal standard, which usually falls around the state’s poverty line.

Chapter 13 repayment plan

Chapter 13, on the other hand, is a repayment plan. The trustee adds up your debts and comes up with a three-to-five-year repayment plan. Once the plan is complete, it discharges the remainder of your debt. The chief advantage of a Chapter 13 proceeding is that you get to keep secured property that North Carolina’s Chapter 7 exemptions do not cover.

In order to qualify for a Chapter 13, you need enough regular disposable income to make payments every month. Disposable income is the money you have left over after you pay for life necessities such as rent, food and transportation. North Carolina also has an upper limit on how much you can owe when you file a Chapter 13 petition.

How Chapter 7 works

Chapter 7 deals with debt by selling off most of your property and dividing the proceeds among your creditors. The law provides several exemptions, allowing you to keep a house, car and personal property below a particular value. You may be able to keep secured property by signing an agreement to keep paying the debt on it even after the discharge of the rest of your debts. The entire process typically takes between three and six months.

You may not file a Chapter 7 petition until at least six years have passed since your last one. To petition, you need an income under a legal standard, which usually falls around the state’s poverty line.

Chapter 13 repayment plan

Chapter 13, on the other hand, is a repayment plan. The trustee adds up your debts and comes up with a three-to-five-year repayment plan. Once the plan is complete, it discharges the remainder of your debt. The chief advantage of a Chapter 13 proceeding is that you get to keep secured property that North Carolina’s Chapter 7 exemptions do not cover.

In order to qualify for a Chapter 13, you need enough regular disposable income to make payments every month. Disposable income is the money you have left over after you pay for life necessities such as rent, food and transportation. North Carolina also has an upper limit on how much you can owe when you file a Chapter 13 petition.