How Bankruptcy Can Provide A Fresh Start For Consumers And Businesses
Is financial hardship keeping you up at night? Whether you’re a small business owner facing mounting debts or an individual struggling to make ends meet, bankruptcy might offer the lifeline you need to regain stability.
Understanding how bankruptcy works and its potential benefits can help you make informed decisions about your financial future.
What Is Bankruptcy, And How Can It Help?
Bankruptcy is a legal process designed to help individuals and businesses eliminate or restructure their debts. It offers a way to address overwhelming financial burdens while protecting assets and providing an opportunity to rebuild. Contrary to common belief, bankruptcy isn’t a sign of failure—it’s a tool for starting over.
Bankruptcy For Individuals: Chapter 7 And Chapter 13
There are two primary types of bankruptcy for individuals, Chapter 7 and Chapter 13.
- Chapter 7 Bankruptcy: This option allows individuals to discharge unsecured debts such as credit card balances, medical bills, and personal loans. It’s ideal for those with limited income and minimal assets.
- Chapter 13 Bankruptcy: This route involves creating a repayment plan to pay off debts over three to five years. It’s suited for those who want to keep their assets while catching up on missed payments.
Bankruptcy For Businesses: Chapter 11 And Chapter 7
- Chapter 11 Bankruptcy: This reorganization option helps businesses restructure their debts and operations to stay afloat while paying creditors. It’s commonly used by companies seeking long-term viability.
- Chapter 7 Bankruptcy For Businesses: When restructuring isn’t feasible, this option involves liquidating assets to pay creditors and formally closing the business.
Benefits Of Filing For Bankruptcy
Filing for bankruptcy offers both immediate relief and significant long-term benefits.
One of the most powerful tools is the automatic stay, which goes into effect as soon as you file. This legal protection halts collection efforts, including wage garnishments, foreclosures, and lawsuits, giving you the breathing room needed to regain control of your financial situation.
Bankruptcy also provides debt relief by either eliminating certain debts entirely or reorganizing them into more manageable payment plans, depending on the chapter filed. This process can make it easier to meet your financial obligations without the constant pressure of overwhelming debt.
Beyond immediate relief, bankruptcy also serves as a financial reset, offering a fresh start to rebuild your credit and establish a more secure financial future. This combination of benefits makes bankruptcy a valuable tool for individuals and businesses facing insurmountable financial challenges.
Common Myths About Bankruptcy
There are many misconceptions about consumers and businesses filing for bankruptcy. The top two that we hear are:
Myth #1: Bankruptcy permanently ruins your credit
While it impacts your credit temporarily, responsible financial habits can lead to recovery in as little as two years.
Myth #2: Bankruptcy means losing everything
Although you may think filing for bankruptcy means losing everything, exemptions in North Carolina can help protect essential assets like your home, car, and retirement accounts.
When Should You Consider Bankruptcy?
If you’re unable to meet your financial obligations despite your best efforts, bankruptcy might be a viable option. Warning signs include:
- Persistent calls from creditors.
- Using credit cards for basic expenses.
- Falling behind on mortgage or loan payments.
Consulting with one of our bankruptcy attorneys can help you assess your situation and determine the best path forward.
How We Can Help
At Biggs Law Firm, PLLC, we understand the complexities of bankruptcy law and how it impacts your life or business. With offices in Raleigh and New Bern, we are here to guide you through the process with compassion and clarity.
Whether you’re considering consumer bankruptcy or need business support with Chapter 11 bankruptcy, we can help you navigate the legal process and work toward a fresh start.
Start The Process Today
Schedule your consultation with one of our experienced attorneys.