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Chapter 7 Bankruptcy

FAQs — Chapter 7 Bankruptcy

Raleigh bankruptcy attorney Douglas Q. Wickham and his staff at Hatch, Little & Bunn, LLP understands the stress and frustration faced by individuals and businesses in the current economic downturn. Lost or reduced income, unexpected medical expenses, and a host of other circumstances can leave financially responsible people and businesses suddenly unable to repay outstanding bills. Where Chapter 13 bankruptcy and Chapter 11 bankruptcy may be appropriate for individuals or businesses with sufficient income, others may prefer the quicker fresh start offered by Chapter 7 bankruptcy.

With over three decades of experience helping clients resolve their debt issues, attorney Douglas Q. Wickham offers a free initial consultation to answer all questions. But the following frequently asked questions can help introduce individuals and businesses to the basics of Chapter 7 bankruptcy.

Chapter 7 bankruptcy frequently asked questions

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Hatch, Little & Bunn, LLP has provided comprehensive legal services to individuals and businesses in Raleigh, Durham, Chapel Hill, Research Triangle Park, Wake County and throughout North Carolina from offices by the state capitol for over half a century. Our attorneys are licensed to practice before all North Carolina state and federal courts. Call (919) 899-9827 today, or contact us online to schedule a consultation with one of our attorneys about your concerns.

How does Chapter 7 bankruptcy work?

Also known as liquidation, individuals and businesses typically undergo a process whereby a trustee arranges for the sale of many assets to repay creditors partially, who then forgive the remainder of outstanding debt. Of course, all individuals and businesses have unique situations. They cannot eliminate certain types of debt, and they can protect certain types of property from liquidation. Furthermore, businesses that choose Chapter 7 can no longer continue operations. Bankruptcy attorneys can help clients know what to expect based on their specific circumstances.

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What is a discharge?

Under bankruptcy law, this term refers to the elimination of debt. It essentially means that creditors consider a debt as repaid after some form of negotiated settlement, even if an individual or business fails to repay the full value. While Chapter 7 can provide full discharge for unsecured debt such as credit card balances, individuals with secured debt like mortgages or car payments may need other alternatives to achieve financial freedom. The Raleigh bankruptcy law firm of Hatch, Little & Bunn, LLP, helps clients work toward the most complete discharge possible for their unique situations.

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Can anyone file under Chapter 7 bankruptcy?

Both individuals and businesses seeking the discharge of debt by filing Chapter 7 bankruptcy must meet certain qualifications, known as a means test. The test largely compares current earnings to expenses to determine if an individual or business has the means to meet expenses and repay outstanding debt. If they do not have extra funds after paying basic expenses, they may qualify for Chapter 7. Bankruptcy law firms assess the qualifications of each client and guide them toward other debt relief options when they do not qualify under Chapter 7.

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Can anyone emerge debt-free under Chapter 7?

You cannot discharge all types of debt in bankruptcy. The law prohibits the discharge of specific debts, including taxes, most student loans, and child and spousal support. Experienced bankruptcy lawyers can help determine if bankruptcy makes sense for your type of debt, and they can often provide alternative types of debt relief support to help individuals and businesses get their situations under control.

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Can I keep all my property?

Both federal and North Carolina law provide certain exemptions, each with its own set of rules, but individual filers must choose which set of exemptions to use.  In all cases, individual filers can retain the full value of retirement accounts. And the law protects some personal property, owned primary residences, wages, and certain optional items. An experienced bankruptcy lawyer from our firm can help analyze your specific financial circumstances to determine the best available options for retaining property.

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Do I have to go to court?

You need to attend at least one hearing to answer trustee questions under oath regarding your financial status. Creditors may also attend this hearing to ask questions. But if the trustee or one or more creditors file a motion or an adversary action, you may need to go to court with an attorney.

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If Chapter 7 is simple, do I really need Bankruptcy lawyers?

The law permits individuals and businesses to file a bankruptcy petition without the support of a lawyer. But even Chapter 7 bankruptcy law has many complexities that can cause rejection of your filing or even the loss of property that you might be able to keep. A Raleigh bankruptcy lawyer at Hatch, Little & Bunn, LLP helps ensure you have an advocate dedicated to getting your finances back on track with as little loss of property as possible.

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