North Carolina And South Carolina Bankruptcy Laws And Creditor Rights Factorial

NORTH and SOUTH CAROLINA NEW BANKRUPTCY LAWS: Bankruptcy is a federal court process designed to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as liquidation or reorganization. Under a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under a reorganization bankruptcy (Chapters 13), a claimant files a plan with the bankruptcy court proposing how to repay creditors.

As of October 17, 2005, the requirements in which a debtor may file Chapter 7 bankruptcy have changed under the Bankruptcy Abuse Prevention and Consumer Protection Act. Debtors are required to seek budget and credit counseling six months prior to filing, financial "testing"is required to determine the debtor's capacity for debt repayment, Chapter 7 cannot be filed if the household income is greater than the median household income as deemed by the state, and state exemptions cannot be applied unless the debtor has resided at current residence for over two years.

Due to the imposed requirements for Chapter 7 bankruptcy as set forth by the new laws, debtors who are presently eligible to file under Chapter 7 will have to file under Chapter 13 bankruptcy instead, in which individuals and creditors agree to a court-imposed plan that requires some or all debts be repaid over five years, with an appointed trustee assigned to monitor the repayment process. Bankruptcy filings will continue to be recorded on an individual's credit report for seven years in the case of Chapter 13, and up to ten years for Chapter 7. For additional information related to New Bankruptcy Laws, contact creditor bankruptcy lawyer William "Bill"Ellison of the McIntosh Law Firm, P.C.


The following information is based upon general creditor bankruptcy guidelines and should not substitute the competent legal counsel of an experienced creditor rights attorney. Please contact North and South Carolina creditor bankruptcy Attorney William "Bill"Ellison of the McIntosh Law Firm, P.C., for further information regarding your specific creditor claim.

Upon a debtor filing for bankruptcy, a creditor should now:

1. Cease any collection action - including telephone calls, billing or law suits that might be pending against the debtor. The automatic stay protects the debtor and his property from all forms of collection during the bankruptcy. In Chapter 13, the stay also protects co-debtors on consumer debts.

2. File a claim with the court. The notice of the bankruptcy sent by the court clerk tells you where to file a proof of claim and the deadline for doing so. Act promptly since deadlines are strictly enforced in bankruptcy case.

Attach a copy of any contracts or judgment concerning your claim, or a summary of the claim, if the supporting documents are voluminous to the proof of claim form. Get the claim form online if the court did not send one to you.

3. Consider whether your claim is dischargeable. Certain kinds of claims are non dischargeable in an individual's Chapter 7 bankruptcy case. Examples of non-dischargeable claims are certain obligations arising in divorce, debts incurred by fraud or willful and malicious acts by the debtor, or damages arising from drunk driving.

Consult a lawyer promptly if your claim arguably falls in one of those categories where you must file an adversary proceeding in the bankruptcy case to preserve your claim after bankruptcy: the time lines are very short in bankruptcy. The complete list of debts not dischargeable in Chapter 7 is found in 11 U.S.C. 523.

4. Determine whether your claim is secured by the debtor's assets. Secured creditors have a lien giving them specific rights to the property which is the collateral for their claim. Most often, those rights are created by, and described in, a deed of trust on real property, a security agreement on personal property, or a judgment lien.

Secured creditors have the best chance of getting relief from the automatic stay or "adequate protection payments" to prevent a decline in the equity available to secured their claim.

5. Share information with the trustee. If you suspect that the debtor's schedules aren't telling the whole story, which assets are concealed or have been transferred, contact the trustee and provide any documents or facts that might help the trustee recover money for the estate, or challenge the debtor's right to a discharge.

Creditor vigilance is the best deterrent to abuse of the bankruptcy system. Creditors are entitled to question the debtor under oath about assets, liabilities and financial history at the first meeting of creditors or by separately scheduled examinations under Rule 2004 of the Federal Rules of Bankruptcy Procedure.

6. Monitor the progress of the case. Some bankruptcies are dismissed for the debtor's failure to comply with the requirements of the Code. When that happens, creditors are free to pursue collection according to state law. Sometimes cases originally classified as "no asset" cases blossom into asset cases from which a dividend may be paid.

If you or someone you know in North Carolina or South Carolina would like further information regarding creditor bankruptcy rights and creditor collections, contact creditor bankruptcy Attorney William "Bill" Ellison of the McIntosh Law Firm at (877) 835-6645, or use the contact form provided on this site to schedule a free consultation with an experienced South Carolina creditor bankruptcy lawyer.

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