Chapter 7



One of the main purposes of Chapter 7 is to give an individual in debt a fresh start financially.


If you qualify to file Chapter 7, you need to be current on ongoing secured loans (property you wish to keep) and will need to continue to lenders after filing.


If you have secured debt on home/auto loans on property that has become too expensive for you to afford, Chapter 7 may be an advisable means of unburdening yourself from such loans, by filing Chapter 7.


Chapter 7 remains on your credit record for ten (10) years from the date of filing. But curiously, a successful Chapter 7 filing which results in a Court approved Discharge (forgiveness of unsecured debt) can often remove obstacles to obtaining credit after your Discharge.


Many people qualify under the rules to file Chapter 7, but based on their personal circumstances, would be better served by considering Chapter 13 as their solution for debt relief. Not every one qualifies under the Rules of Bankruptcy to file for Chapter 7 debt relief.




Chapter 13





Almost every individual (or married couple) in debt will qualify to file for Chapter 13 Bankruptcy and protection from their creditors.


From the day your plan is filed, a Court “Stay Order” prevents/forbids your creditors from harassing you, threatening you, calling you, or contacting you in anyway.  The Stay Order also stops foreclosures and repossessions. The Stay Order is the basis for restoring your peace of mind to your present circumstances.


Chapter 13 is essentially a court-approved debt consolidation plan for dealing with all of your debts, all the while being protected from creditor harassment.


In filing for Chapter 13, you voluntarily agree to pay a monthly portion of your monthly net income to the Chapter 13 Trustee’s office, to be used to pay your secured debts (home/auto loan etc), any taxes you may owe and whatever percentage of unsecured debt (credit card/medical bills etc) you qualify to pay under the court’s means test requirements.


The period of time you are paying your debts through the Chapter 13 plan can be for no less than 36 months and no longer than 60 months.


When you successfully complete your plan, and receive your final discharge, generally the only debt you still will have is any unpaid balance you may still owe on your long-term home loan. When you finish your plan, you will be current in your home loan, and will no longer be in danger of home foreclosure. Your car loans will be paid off.


In almost all Chapter 13 cases, one of the important benefits is that you have considerably more net income left (after your Chapter 13 payment is made) each month for usual monthly living expenses such as car insurance, gas, food, electric bill, clothing, etc.


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