Bankruptcy Attorney | Weik Law Office | Serving Raleigh, Durham, Cary, Chapel Hill, and Wake Forest, North Carolina

If you are thinking about filing a Chapter 7 bankruptcy, individuals who have retired file quite often. Many times, people think that they have enough money in savings to survive after retirement, but after a period of time, they find out that they have fallen short on their plans. Often, a medical problem or an unforeseen situation causes individuals in retirement to experience financial difficulty.

In a Chapter 13, a wage earner is defined as an individual with a steady, monthly income and retirement income, pension or social security is often used to help retired folks qualify to consolidate all of their debt.

A Chapter 13 is a better option when you have a mortgage that is behind in payments. A Chapter 13 allows you to consolidate the arrearage in mortgage payments and pay the amount back over an extended period of time. If you file for straight bankruptcy (Chapter 7) and want to keep your home, you must be current on the payments on the date of the filing of the Chapter 7. The same is true with an automobile. Chapter 13 is a better option when you have a car note that is behind in payments. A Chapter 13 allows you to stop the repossession of the automobile and pay the car note back over an extended period of time.

Our website offers a detailed section on this exact question.  Please go to the home page and click on “Types of Relief”.

Basically, a Chapter 7 is designed to allow you to wipe-out or eliminate your unsecured bills, such as credit cards, hospital bills, and personal loans.  There are certain types of debt that can’t be wiped out.  The most common are taxes, child support and student loans.  Secured debt, like debt secured by a house or car, can be reaffirmed or kept if you are current on the payments.

Under Chapter 7, an equity analysis is performed to see if there are items that you may lose if you file.  For example, in North Carolina, an individual is allowed to keep a car if the car has less than $3,500 worth of equity.

A Chapter 13 is a consolidation that allows you to set up a plan to pay off your creditors over an extended period of time.  Unsecured debt, such as credit cards, hospital bills and personal loans are often paid back at only pennies on the dollar, and it eliminates the interest and penalties that you are paying each month.  You are finally able to pay down the balances and you can see the light at the end of the tunnel.

Chapter 13 often lowers the monthly payments on your automobile and other secured debt and usually lowers the interest rate.

Chapter 13 stops foreclosure, repossession, garnishments, lawsuits and all creditor harassment.

When you file for Chapter 13, you are usually able to keep all of your property.