The following information was published by the North Carolina Bar Association as a public
service

Bankruptcy is a federal court procedure governed by federal
laws. When individuals cannot pay their creditors, they may seek
a fresh start through a “straight” bankruptcy liquidation under
Chapter 7, or may seek to restructure their debts through a
Chapter 13 payment plan which is approved by the bankruptcy
court and monitored by a trustee. A company can also file for
bankruptcy and seek either to restructure its debts or to liquidate
its assets and have those proceeds used to pay its creditors.
Careful consideration should be given before filing a bankruptcy
petition. Filing a bankruptcy petition normally has an adverse
effect on your credit rating and a bankruptcy filing can be reported
on your credit record for up to 10 years. North Carolina is
divided into three federal districts which administer bankruptcy
cases. Normally, you should file for bankruptcy in a district
where you live. In all bankruptcy cases, the person filing the
bankruptcy petition is called the “debtor,” and a person to whom
the debtor owes money is called a “creditor.” There are several
types of bankruptcy. One is a
Chapter 7, or straight bankruptcy,
under which most or all debts may be canceled and the debtor
retains a certain amount of “exempt” property. Another type of
bankruptcy is a
Chapter 13 under which debts may be restructured
and repaid, in whole or in part, over a three to five-year
period. The court must approve the
Chapter 13 repayment plan
which is administered by a trustee. Another type of bankruptcy is
Chapter 12 which is similar to Chapter 13 but is restricted to
family farmers. Another type of bankruptcy reorganization is
Chapter 11 in which the debtor (usually a company) continues to
operate under the supervision of the Bankruptcy Court. Chapter
11 also might be helpful to individuals where the amount of the
debt is extremely large. Because Chapter 11 and 12 bankruptcy
cases are so complex, and because consumers rarely use them,
they will not be discussed in this pamphlet. Bankruptcy cases
begin when a “petition” is filed with the bankruptcy court. The
debtor is also required to file schedules and a statement of financial
affairs listing all of the debtor’s assets, liabilities, income,
and expenses. The petition, schedules and statement of financial
affairs are court-authorized forms which must be completed,
signed under penalty of perjury, and filed with the bankruptcy
court, along with the payment of the filing fee. All debts owed by
a debtor must be listed on the schedules. There is no such thing
as leaving a debt outside of bankruptcy and it is impermissible to
attempt to do so. During the bankruptcy case, creditors generally
are “stayed,” meaning they are not allowed to collect prebankruptcy
debts or recover collateral from the debtor unless
they have the permission of the bankruptcy court. However, there
may be limitations on this stay if the debtor has filed a previous
bankruptcy case.
It is always advisable to consult with an attorney before filing
for bankruptcy.

Contact David R. Huffman about your Free Consultation
DAVID R. HUFFMAN   Attorney and Counselor at Law
David R. Huffman has many years of
experience helping people with the sensitive
subject of whether or not to file bankruptcy.
Our office offers free consultations to help
you to decide whether or not bankruptcy is
the best option for you. You can call (336)
229-4466 or use our
contact us form to
schedule your
free consultation.  

Please get a headstart by downloading
and completing our
Bankruptcy
Worksheet
For more helpful
information, watch these  
bankruptcy basics videos
provided by uscourts.gov

Bankruptcy Basics

Types of Bankruptcy

Limits of Bankruptcy

Filing for Bankruptcy

Creditors' Meeting

Court Hearings

The Discharge

Legal Assistance