Excessive debt and the looming threat of foreclosure is the worst nightmare of many homeowners. While many think bankruptcy is their only way to relief, it is important that homeowners understand the basic facets of bankruptcy law before they make the final decision to file.
When you file for bankruptcy, you must tell either a judge or bankruptcy trustee how you got into your current financial situation. Then, the court will ask you to provide them with a list of all your assets and debts. Your assets will be divided into two categories:
- Non-exempt assets. These can be used to repay your debts.
- Exempt assets. These assets cannot be taken and used to pay off your existing debts.
In addition to this, your debts will also be divided into two categories:
- Non-secured debts. These debts, like medical bills and credit card balances, are not secured with property.
- Secured debts. This type of debt includes things where you have a loan with an item secured as collateral. For example, a car or boat may be considered a secure debt.
Another important aspect of bankruptcy law is the difference between chapter 7 bankruptcy and chapter 13 bankruptcy. Chapter 7 bankruptcy discharges you from most of your debts while Chapter 13 sets up a payment plan for you to pay off a portion of your debts within a specified time frame. Due to the complexities of bankruptcy law, it is essential that you consult with an attorney before you file to determine whether Chapter 7 or Chapter 13 bankruptcy is the right option for you.
If you are looking for a bankruptcy lawyer in Asheville, NC, contact us at Leonard and Moore, PLLC.