Deciding to file for bankruptcy is a significant step, but choosing the right type—Chapter 7 or Chapter 13—can be just as crucial. Each option has distinct benefits and eligibility requirements, and understanding which is best for your situation can help you regain financial stability. At the Law Office of Calvin Craig, we are dedicated to assisting the Raleigh public in navigating this decision with confidence.

Understanding Chapter 7 and Chapter 13 Bankruptcy

Chapter 7 Bankruptcy
Often referred to as "liquidation bankruptcy," Chapter 7 is designed to eliminate unsecured debts like credit card balances, medical bills, and personal loans. In exchange, certain non-exempt assets may be sold to repay creditors.

Chapter 13 Bankruptcy
Known as "reorganization bankruptcy," Chapter 13 allows you to keep your assets while creating a court-approved repayment plan to pay off debts over a period of 3 to 5 years.

Key Factors to Consider

1. Eligibility

• Chapter 7: You must pass a means test, which compares your income to North Carolina’s median income. If your income is below the threshold, you may qualify.
• Chapter 13: There is no income limit, but your secured and unsecured debts must fall within specific limits (currently around $2.75 million combined).

1. Type of Debt

• Chapter 7 is ideal for eliminating unsecured debts quickly.
• Chapter 13 is better for individuals with secured debts, like mortgages or car loans, who want to avoid foreclosure or repossession.

1. Asset Protection

• Chapter 7 may require the sale of non-exempt assets to repay creditors. However, North Carolina offers various exemptions to protect essential property, such as your home and car.
• Chapter 13 allows you to keep all your assets while catching up on missed payments through a structured plan.

1. Repayment Ability

• Chapter 7 is a good option if you have little to no disposable income to repay debts.
• Chapter 13 is suited for those with a steady income who can afford regular payments over time.

1. Impact on Credit

• Chapter 7 remains on your credit report for 10 years.
• Chapter 13 stays on your credit report for 7 years, which may be a consideration if you’re looking to rebuild credit sooner.

How the Law Office of Calvin Craig Can Help

Deciding between Chapter 7 and Chapter 13 can be complex, but you don’t have to face it alone. At the Law Office of Calvin Craig, we provide personalized guidance to help Raleigh residents choose the best path for their financial future. We’ll assess your situation, explain your options, and guide you through every step of the bankruptcy process.

Contact us today to schedule a consultation and take the first step toward financial relief.