Throughout the history of North Carolina, the United States of America, and western civilization itself (and, depending upon the definition of bankruptcy, even beyond), governmental protection from consumer debt burdens has long been respected as a fundamental principle of democratic capitalism. Individuals who have demonstrated troubles meeting their financial obligations that wish to regain their bearings and who dearly wish to find a fresh start for their family deserve some degree of leniency, we all should agree, but, in response to our citizenry’s ever growing dependence upon credit cards and an arguable abuse of the bankruptcy system by reckless spendthrifts, North Carolina consumers newly concerned about their rapidly escalating debt balances have found that Chapter 7 bankruptcy protection no longer represents the same guarantee of shelter from mercenary collection agents and the lending conglomerates. Traditionally, though the bankruptcy system has become rather backed up from the recessionary struggles affecting North Carolina and the rest of the nation, Chapter 7 debt elimination programs lasted only about three months before the eventual discharge of various credit card bills and the associated other debts. Many of the more troublesome financial lodestones – back taxes, student loans, and unpaid familial assistance such as child support or alimony – won’t be affected, however, and the potential for even the most seemingly necessary or sentimentally prized household objects to be seized by North Carolina court authorities has grown exponentially over the past few years. Every bankruptcy case, no matter how closely or personally the borrower may know the North Carolina county clerk receiving the petition and three hundred dollar money order, will be technically a federal matter, after all, and the federal courts retain jurisdiction over the whole of North Carolina consumers angling for Chapter 7 or Chapter 13 bankruptcy protection. Happily, though, the United States Bankruptcy Code does let each state legislature decide for themselves a separate list of safeguards with which residents may shield their possessions, and the exemptions that North Carolina provides their citizens may well lead the nation in fairness and efficient resolution of the bankruptcy process.
Specifically, once consumers enter the Chapter 7 program and implicitly agree to have their holdings picked through by a trustee chosen by the North Carolina judicial system, there will be a homestead exemption for any North Carolina residence that the appropriate court officials have determined to be estimated at the time of appraisal as containing less than eighteen thousand and five hundred dollars worth of equity: that is, the amount that the domicile is considered to be worth minus the existing mortgage. The North Carolina homestead exemptions only refers to the borrowers’ primary residence, true, but the exemption can nevertheless yet be a powerful tool with which families struggling against debts and threats of legal action can hope to guarantee the safety of their homes. Once again, borrowers who are fairly convinced that they have appreciably more equity than would be deemed appropriate by the North Carolina statutes would have no other choice – beyond simply surrendering to foreclosure proceedings enacted by the lender or, much as the currently flailing North Carolina real estate market should prove troubling, attempting to sell the property – but to then enter Chapter 13 bankruptcy protection so that they could invoke the Automatic Stay guideline which effectively precludes any law suits or threats of forbearance and wage garnishment and allows even secured debts (those debts tied to real property) to be renegotiated under the oversight of the North Carolina trustee and the federal guidelines outlined in the United States Bankruptcy Code.
Family vehicles boasting loans equal to or greater than the current blue book value of a primary car or truck purchased over three months prior to the bankruptcy declaration shan’t risk seizure by the North Carolina authorities. However, should the court officials find that the automobile be worth more than thirty five hundred dollars above and beyond the obligations currently held against the auto (a relatively minor risk given the instantaneous and oft storied depreciation that occurs once the car or truck leaves the dealership), the North Carolina family may have to convince the trustee that they could come up with the funds for dispersal among the affected creditors in order to maintain ownership. In any event, should even the merest amount of funds still be owed against the automobile, North Carolina borrowers filing for Chapter 7 or Chapter 13 bankruptcy must either purchase the vehicle in one balloon payment at blue book value or formally reaffirm said obligation within forty five days following the meeting with the trustee chosen by the county courts or else, under stipulation specified within the United States Bankruptcy Code and the North Carolina legislature, the consumer would be forcibly disallowed from continuing to send out their payments absent an official reaffirmation with the lender that has been approved and recorded by the bankruptcy trustee. Presuming every household residing within North Carolina would do whatever was necessary to maintain their vehicle, the eventual liability for the automobile loan and, should the motor vehicle risk repossession by agents of the lender after bankruptcy discharge, the borrowers alone will be required to make good upon the debts owed without further recourse to governmental aid.
Traditionally, as well, the North Carolina consumer filing for Chapter 7 bankruptcy protection would also need to be wary about the potential that their property may be liquidated alongside the unsecured debts. Once again, in ordinary cases, the vehicles and larger household goods and, for that matter, the entire household or primary residence should rightly be guaranteed some degree of safety from the North Carolina legislature, and, through exemptions purely granted citizens of North Carolina who could prove their legal residency, consumers within our state shall fare far better than other Americans filing for bankruptcy who must depend upon the handful of exemptions begrudgingly offered by the federal guidelines. Even beyond the previously mentioned homestead guarantee for primary residences, North Carolina borrowers enmeshed in Chapter 7 bankruptcy will also be able to hold on to at least thirty five hundred dollars of their equity within additional properties bought more than ninety days prior to the submission of the bankruptcy petition to the county clerk. Public pensions, most individual retirement accounts, injury compensation following criminal trials, life insurance benefits, medical equipment judged to be necessary for the health of members living within the borrower’s household, most forms of social assistance (disability benefits, unemployment compensation, workers’ comp, and the like), and equity within a business partnership or multi partner corporation are all strictly outside the threat of forfeiture. Presuming the ninety day rule (it’s just a good rule of thumb to refrain from spending money on anything that the North Carolina trustee could rule to be an asset of any kind) is obeyed, tools of trade – which can diverge so greatly depending upon the borrowers’ career or vocation; one man’s library or clothing or hobby equipment could be quite fairly be considered integral to the earnings of another – should be rendered invulnerable to seizure so long as the estimated monetary worth combines would have less than two thousand dollars’ replacement value.
Similar to the vocational exemption, household goods ranging from appliances and furniture to animals and crops to pianos and portraiture are preserved to a combined value of five thousand dollars for a single member household with another thousand dollars worth of the assembled property allowed each additional family member to a total, for five member North Carolina households suffering through Chapter 7 debt elimination proceedings, of nine thousand dollars all told. While the North Carolina slate of exemptions may again be far less hazardous to consumers then what their compatriots around the nation must brave (the ordinary household across America endeavoring to eliminate debts through bankruptcy, according to the horror stories filtered through the media and mentioned by distressed borrowers, may genuinely be forced to cede their most precious keepsakes and heirlooms passed down through the generations to agents of the court for auction to satisfy creditors), nine thousand dollars still isn’t actually that much to replace the tangible estate of a five member household all things considered. Every North Carolina resident interested in potentially investigating bankruptcy should look around their domicile and quickly add up the replacement costs of the possessions that, right or wrong, had been gathered over a lifetime before they literally risk near everything that they own for a temporary peace.
North Carolina borrowers with a substantially greater standard of living should find the consequences of bankruptcy to even be more treacherous for the security of their household, but, unfortunately, the Chapter 7 debt elimination bankruptcy declaration of any North Carolina wage earner who happened to have made more than the precise average of heads of households within their state during the earliest part of the year prior to filing for bankruptcy protection would be summarily dismissed. According to, at least, the February, 2008 United States Census Bureau statistics (which, as every consumer should expect, changes greatly by the season though no financial specialist cognizant of the North Carolina economy and the corrosive touch wrought by our global recession believes the numbers should dramatically jump up any time soon), individuals filing for bankruptcy in North Carolina would have had to demonstrate an income below thirty six thousand dollars: two member families would have to earn below forty nine thousand dollars; three member families would have to earn below fifty five thousand dollars, four member households would have to earn below sixty three thousand dollars with an additional sixty nine hundred dollars excepted for the other family members.
If the North Carolina consumers attempting Chapter 7 debt elimination bankruptcy discover that – regardless of the decline of their earnings of late or, from ill fated investments or the elevated debt loads resulting from medical procedures and hospitalization which could cripple even the healthiest family finances, vaunting burdens impossible to repay – their tax returns would prevent bankruptcy consideration as formally determined by the North Carolina trustee and the federal bankruptcy code, they’d have no choice but to investigate some of the other alternative methods of erasing their burdens. The Consumer Credit Counseling and debt consolidation (which almost always, once borrowers have attained sufficient debts that they would be interested in reading through this article, would only be possible for home owners willing to surrender equity in exchange for a refinanced mortgage or new loan against their primary residence; a devil’s bargain to be shunned at all costs) initiatives should hardly seem unfamiliar to any North Carolina household whose eyes have glazed over through enduring the barrage of advertisements and telemarketing assaults these industries have unfurled over the past few years: generally at the expense of the dimly understood bankruptcy solution ever supposed to represent the worst possible scenario for reasons never fully articulated. Any service whose theoretical aim should be the debt relief of aggrieved families but somehow still manages affords a continual sales pitch over the airwaves should be viewed with all due suspicion, and North Carolina borrowers could do far better than to put their family’s future in the hands of such companies.
Mortgage lenders specializing in debt consolidation home loans and the Consumer Credit Counseling firms paid off by the lenders so that their North Carolina patrons continue to float minimum payments essentially charge outrageous fees to merely forestall actual debt elimination while interest continues to build, but one different approach has evolved that meets the credit card companies’ challenge with marked effectiveness. Primary among the relatively recently forged tactics has been debt settlement negotiation. Within the settlement process, trained negotiation experts try to lower their North Carolina clients’ existing unsecured debt balances by threatening – subtly or not, depending upon the situation – representatives of the lenders with the potential for Chapter 7 debt elimination bankruptcy as well as holding out the promise of a swift and essentially guaranteed repayment schedule of whatever debts would remain: meaning, should things go well, the North Carolina borrowers signed on for this program would liquidate all of their unnecessary and unsecured debt accounts in less than sixty months. Given that so much of the success of the debt settlement negotiation strategy essentially depends upon the nature and identity (corporate methodology differs, and some older companies may refuse to barter) of the creditors and (settlement company appraisal based largely upon both the potential clients’ income and credit history) the financial prospects of the North Carolina family, the outcome of any debt settlement maneuver should be assumed to be far from certain. In many ways, for that matter, settlement negotiation may even be more difficult to garner than Chapter 7 bankruptcy protection itself with many North Carolina borrowers failing to be admitted despite their available funds and sincere motivation, but, as with every aspect of the evolution of family fortunes, heads of household within North Carolina must never lose heart and continue to passionately but intelligently seek out a proper resolution to their assembled burdens.
The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.
Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?
