What Happens To My Car In Bankruptcy?

If you own a car or lease a car, you will need to decide what happens to your car in bankruptcy. You have the choice to keep your car and the debt associated with it, or you can choose to surrender the car in bankruptcy. This means the car goes back to the lender, and the debt goes with it. There are one or two exceptions, which we will address. In summary, you can either keep the car and the debt, or ‘get rid of’ the car and get rid of (discharge) the debt.

How Can I Keep My Car In Bankruptcy?

If you want to keep the car in a Chapter 7, you will need to be current on payments by the date of your 341 meeting. You will sign a Reaffirmation Agreement with the lender, which will contain the same terms you had prior to the bankruptcy. The reason for the agreement is the filing of your bankruptcy technically relieves you of the obligation to repay the loan; however, if you want to keep the car, you will need to renew the agreement. The Reaffirmation Agreement accomplishes that.

If you want to keep your car in Chapter 13, you can do so. Your interest rate may decrease due to the interest rate set by the bankruptcy court. Additionally, if you have had the vehicle for more than 910 days, you may be able to lower the balance on the loan in Chapter 13, which can be a tremendous benefit.

How Do I Surrender My Car In Bankruptcy?

If you want to surrender the car and the debt, it is easy. We file your bankruptcy and reach out to the car lender to make arrangements for them to pick up the car or have you drop off the car in the alternative.

You Have Options

The upside to addressing a car in bankruptcy is that you have options. Most clients are incredibly happy with the results of bankruptcy including the ability to have flexibility regarding vehicles. The rules of bankruptcy heavily favor the debtor—the person filing—and as a result, if you would like to keep a vehicle while discharging all unsecured debt, it is almost always an option.

Speak With A Bankruptcy Lawyer Today

If you would like to speak with us about what happens to your car in bankruptcy, you can request a free consultation. Just call 704.749.7747 or click HERE to request a time to talk. If you would like to watch a short video from Chris Layton, it may help you make a decision regarding working with us. We know you have choices. We hope you choose Layton Law.

When Does Bankruptcy Fall Off Your Credit Report?

This is a great question and shows an eye toward the future. The good news is that you will be extended credit much sooner than the date by which the bankruptcy will fall off your credit report. In this article, we will touch base on the timeline for when bankruptcy falls off your credit report, and also try to give some indicators as to when you can expect to be extended credit after filing bankruptcy.

Your Filing Date and Chapter Filed

If you filed Chapter 7, it will be 10 years after the filing date before the bankruptcy falls off your credit report. If you file Chapter 13 it will be 7 years after the filing date of your bankruptcy. One thing that may affect this timeline is your original delinquency date on the debt. If an account was delinquent upon filing, it will be deleted from your credit report seven years from the original delinquency date. It is noteworthy that filing bankruptcy does not extend the original delinquency date or change the date by which the account will remain on the credit report, per an article by Experian.

When Can I Get Credit Again?

The desire to know when you will be able to get credit again makes sense. We know you’re interested in getting credit after bankruptcy because you have a goal of rebuilding your credit score. If you filed a Chapter 7, you will typically be able to get credit again about three months after your discharge is entered. Interest rates will be high but if your goal is to build your credit score, you should focus on charging some items each month and paying the balance each month. This way, you are not paying interest.

If you filed Chapter 13, it will be about three to five years from the date of your filing. This makes sense, as Chapter 13 is typically a 36 or 60 month plan. Many of our clients qualify for new automobiles and refinances during an active Chapter 13. Hopefully this helps to demonstrate that you will continue to have access to credit even after filing bankruptcy.

When Can I Qualify For A Mortgage After Filing Bankruptcy?

According to Realtor.com you will need to wait two years after bankruptcy in order to qualify for mortgage lending. This matches with what we see over and over from our clients as well. Consider what an amazing solution this is—you file your bankruptcy, receive a discharge of thousands of dollars of debt, and two years later you are back in the home purchasing market. This gives us and our clients tremendous excitement for the future as we work together to prepare their bankruptcy filing.

Speak With A Bankruptcy Lawyer Today

As you can see, even if your focus is when bankruptcy fall off of your credit, the truth is you will have access to credit much sooner than the number of years it takes for bankruptcy to no longer show on your credit report.

If you’d like to speak with an attorney about filing bankruptcy, call us at 704.749.7747 or click HERE to request a consultation. If you’d like to hear a little bit more about our firm, you can watch Chris Layton in a one minute introduction video. We know you have choices. We hope you choose Layton Law.

Bankruptcy And Keeping Your Home

If you are considering filing bankruptcy with the goal of keeping your home, there is good news. There are numerous ways in which you can keep a home in bankruptcy even when you have equity in that home. You can also prevent a foreclosure with a Chapter 13 bankruptcy, and we have written more extensively about that in our article Emergency Bankruptcy To Stop Foreclosure.

The Homestead Exemption

Under N.C. Gen. Stat. sec. 1C-1601(a)(1), you can exempt up to $35,000.00 in equity of any real or personal property used as a residence. If you own the property with your spouse, this amount doubles to $70,000.00. Your equity is generally calculated as your fair market value minus obligations (mortgages). While there are costs of sale to be considered as well, the bankruptcy court is most interested in the sales value minus the amounts owed on the mortgage(s).

As part of pre-bankruptcy planning, you will want to have a real estate broker give you a written opinion as to what they think your home would sell for. Most real estate agents provide this service free of charge, and it will be used as evidence as to the value of the home, when the bankruptcy case is filed.

Tenancy By The Entirety

Another way for keeping your home in bankruptcy is by utilizing Tenancy By The Entirety to protect your equity. You have a Tenancy By The Entirety when you purchase property in North Carolina as a married couple, and both of your names appear as Grantees on the deed. Property owned as Tenants By The Entirety is afforded an unlimited exemption except as to joint creditors of both husband and wife.

A common instance when Tenancy By The Entirety is utilized is when one spouse has the majority of debt, and is filing bankruptcy without the other spouse joining in on the filing. Provided the unsecured creditors of the filing spouse are his creditors only—and not joint creditors of both spouses—those creditors will not have access to the equity in the home in a bankruptcy filing.

Unexempt Equity In Bankruptcy

In the event you have ‘too much’ equity to protect all of it in your bankruptcy filing, you are not precluded from filing. You and your attorney will simply have to assess the amount of unexempt equity  and decide whether Chapter 7 or Chapter 13 is the right chapter for you.

If you have unexempt equity in a Chapter 7 and you want to keep your home in bankruptcy, you will need to be prepared to pay the Trustee the amount of unexempt equity, or some negotiated amount based on the unexempt equity. This is not an option for all individuals, but it is worth noting the Trustee will typically allow a six to nine month repayment period in such instances.

It is not uncommon to move forward with a Chapter 7 despite having a small amount of unexempt equity. Your bankruptcy lawyer will prepare you for the negotiation with the Trustee and make sure your expectations are in alignment with the rules of bankruptcy.

The Chapter 13 Equity Option

If you have a significant amount of unexempt equity in your home, and you are unable to pay the Trustee over a six month period, you can certainly consider filing Chapter 13. In a Chapter 13, so long as you pay the court the unexempt equity over a five year (60 month) period, you have met your burden to unsecured creditors and the home is yours to keep. We have written more about Chapter 13 payment calculations in our article How Much Will My Chapter 13 Payment Be? Your unexempt equity is only one factor which will ultimately determine your monthly Chapter 13 payment.

Speak With A Bankruptcy Lawyer Today

If you are considering filing bankruptcy and you are concerned with whether you will be able to keep your home, we’re here to help. You can call us at 704.749.7747, or click HERE for a free consultation. If you’d like to meet Chris Layton, you can watch a one minute introduction video to see if you might want to work with us. We know you have choices. We hope you choose Layton Law.

Debt Consolidation For Credit Cards

If you are considering debt consolidation for credit cards, you need to read this blog post. First, it is important to know there are a few ways to consolidate your credit card debt. Each program being offered will be different. In any case, first we will quickly go over the different types of debt consolidation, and then discuss a few pitfalls and other options.

Types Of Credit Card Debt Consolidation

Balance Transfer – When you do a balance transfer you are essentially transferring several credit card balances to one credit card. It could be due to a low introductory rate, or some other special terms, which are more favorable than the prior card or cards.

Debt Consolidation Loan – Some banks will offer you a loan which you can use to pay off your credit card debts. You will be left with one balance on the loan, and usually at a lower interest rate than the credit cards you paid off.

Debt Management Program – This is the most traditional form of debt consolidation. In this instance, you work with a credit management company. They establish a payment structure for you and a timeframe. The credit management company negotiates with your creditors to lower your balances. Usually, the negotiated amount is contingent upon you completing the consolidation plan.

Three Common Pitfalls To Credit Card Debt Consolidation

Fees And Costs – Whether the fees come in the form of high interest or third-party fees charged by your credit card management company, it is important to understand what fees you are being charged. The lengthy contracts consolidation companies provide you with can be difficult to sort through. The point is you are paying for a service. You are entitled to know how much the service is costing you. This way, you can comparison shop and set your bottom line for how much it is costing to eliminate your debt.

Dropping Out Of The Consolidation Program –

Many debt consolidation agreements are contingent upon your completion of the term. The term may be for three or more years. During that timeframe, anything could happen which might prevent you from being able to make your payment on time. You want to be aware of the penalty for late or missed payments, and get confirmation that you will not lose the progress you made along the way by making consistent on time payments in the program.

Worrying Too Much About Your Credit Score –

It is important to be concerned about your credit score. You should think carefully before spending thousands of additional dollars for the sole purpose of sparing a few credit score points. As a bankruptcy attorney, I speak with clients every day who are worried about their credit score. I do my best to help them see the full picture. Often, those clients already have a reliable vehicle and own a home. If that is the case, I encourage them to look at the upside to eliminating the debt—no matter how they choose to do it—instead of obsessing over how it will affect their credit score.

What Other Options Are There?

Bankruptcy is worth considering. Both Chapter 13 and Chapter 7 are options in consumer bankruptcy. Every bankruptcy attorney I know in Charlotte, North Carolina will give you an honest answer as to whether you should file bankruptcy or not. This means you should consider having a free consultation with a bankruptcy lawyer to make sure you understand the cost of bankruptcy versus the cost of debt consolidation. If a client can eliminate $25,000 of unsecured debt by filing a bankruptcy for under $3,000, it is going to be difficult to justify a debt consolidation program which charges $525 a month for 36 months.

Debt settlement is another option. Because we are bankruptcy law firm, we obtain good results for clients attempting to settle debt. When you are settling a debt with a creditor, you are proposing to pay them a small portion of the debt in 90 days or less, in exchange for forgiveness of the remainder of the debt. To accomplish this, you must have access to a lump sum of money to pay the creditor. It is not uncommon to receive a dramatic reduction from the outstanding balance in exchange for timely payment of a small percentage of the debt. In a prior post, we have discussed how a debt settlement affects your credit score.

Speak With A Bankruptcy Lawyer Today

If you are considering consolidating credit card debt, you deserve to understand all your options. We would be happy to discuss bankruptcy, debt settlement, and credit card consolidation with you. Then, we can help you make the decision that will work best for you. Sometimes, just one phone call is all it takes to discover you have more control over the situation than you thought.

If you would like to speak with a bankruptcy attorney, call us at 704.749.7747 or click HERE to request a phone consultation. Consultations are free and answering questions is part of our job. We are here to help.

Does Bankruptcy Ruin Your Credit?

No, bankruptcy does not ruin your credit. In fact, bankruptcy may ultimately be the reason you are finally able to restore your credit. We understand your credit score is an important factor in deciding whether to file bankruptcy. While the initial filing of a bankruptcy will temporarily lower your credit score, most debtors find that their score recovers within a year from filing bankruptcy.

Your Debt To Income Ratio

One important aspect of your credit score is your debt to income ratio. The filing of a bankruptcy changes your debt to income ratio in your favor. This immediately serves to help you re-build your credit. Additionally, as a result of your bankruptcy, your credit report will show fewer debts. You become an attractive client to creditors when your debt to income ratio is healthy. This means you will be considered for credit cards, automobile loans, and other extensions of credit.

How Quickly After Bankruptcy Will My Credit Score Recover?

Most of our clients tell us that their credit score bounces back at the one year mark from filing bankruptcy. However, this will fluctuate depending upon how high your score was before filing bankruptcy, and depending upon the steps you take to rebuild your credit after bankruptcy. If you are making payments on a secured credit card or a vehicle after bankruptcy, those positive payment reports will serve your credit score well.

Free Yourself From The Chains Of Credit Card Debt

Credit card companies want you to fear bankruptcy. They would rather you give them every extra penny you have, to keep them from taking further action against you for non-payment. This is true regardless of whether your monthly payment to them makes even the slightest dent in the balance owed.

The bigger picture when deciding whether to file bankruptcy involves regaining your financial freedom. The relatively small price to pay for that financial freedom is the time it takes to rebuild your credit. When bankruptcy clients call us two years after their bankruptcy to tell us they have gotten approved for a home mortgage, they usually tell us the same thing: I never should have waited as long as I did to file my bankruptcy.

Speak With A Charlotte Bankruptcy Lawyer Today

If you have questions about how bankruptcy can help your credit, we are here to help. Once a client decides to file bankruptcy, we advise you stop paying on any debt which will be discharged by the bankruptcy. If you would like to speak with a bankruptcy lawyer, call us at 704.749.7747 or click HERE to request a free consultation by phone or in person.

 

Should I File Bankruptcy Or Just Not Pay?

If you are overwhelmed by credit card debt or medical bills, you may be considering Chapter 7 or Chapter 13 bankruptcy. Or, you may be considering simply not paying. Here’s why bankruptcy is the best long-term approach to managing overwhelming debt.

What Can Creditors Do If I Do not Pay?

If your debt is secured by a vehicle, the creditor can repossess the vehicle. In North Carolina, this is a contractual agreement between the creditor and the vehicle owner and does not typically require court approval.

If your debt is mortgage debt or home equity line of credit debt, the lender can use the North Carolina statutory provisions under N.C.G.S. Sec. 45 to begin the foreclosure process. Essentially, if you cannot ‘catch up’ on the mortgage with the lender, your home can be sold to pay the mortgage creditor.

If your debt is unsecured debt like credit card debt or medical debt, the creditor’s primary recourse is to contact you in attempts to collect. Many unsecured creditors will use this method for months before resorting to taking legal action against you. Keep in mind, an unsecured creditor can file a lawsuit against you to prove the amount you owe, and secure a judgment. Once a creditor has a judgement against you, they can pursue your assets with the backing of the judicial system. Additionally, if you own a home, the judgement will attach to the home. This means when you sell the home the judgment will need to be paid in most cases.

Creditors And The Writ Of Execution

Once a creditor obtains a judgment, they can file a writ of execution with the sheriff to pursue your assets. This includes your home, vehicles, cash in bank accounts, etc. For the most part, you can protect the same property you would be able to protect or exempt in a bankruptcy. The remainder of your property is available to the creditor. When a creditor is pursuing your assets, you may receive a Notice of Right To Claim Exemptions. This puts you on notice that you must report your assets to the creditor. It also lets you know the creditor is pursuing your assets.

Bankruptcy Stops All Collection Attempts

By filing a Chapter 7 or Chapter 13 bankruptcy, you put your creditors on notice that they are no longer allowed to attempt to collect on debts. This is a function of The Automatic Stay in bankruptcy. Additionally, you pay a fixed amount of money to your bankruptcy attorney or the bankruptcy court, in exchange for discharging the entire balance of the debt. If you have unsecured debt more than $10,000, it makes sense to consider bankruptcy. If your debt is $20,000 or more it will almost always make sense to file bankruptcy as compared to attempting to pay the debt.

We have written many articles about using bankruptcy to stop a foreclosure and recover if you are behind on mortgage payments. We hope those are helpful.

Speak With A Charlotte Bankruptcy Lawyer Today

If you have questions about whether to stop paying on debt, we are here to help. Once a client decides to file bankruptcy, we advise you stop paying on any debt which will be discharged by the bankruptcy. If you would like to speak with a bankruptcy lawyer, call us at 704.749.7747 or click HERE to request a free consultation by phone or in person.

 

When Is The Right Time To File Bankruptcy?

The short answer is that most people wait too long to file bankruptcy. The right time to file is before you have thrown thousands of dollars away on large debt. The right time to file bankruptcy is before you have eaten through your retirement funds to make good on mounting credit card debt. A consultation with a Charlotte bankruptcy attorney can often put all your fears about bankruptcy to rest, and help you decide if the time to file is right now.

Foreclosure And The Right Time To File Bankruptcy

There are a few matters which can force your hand in a bankruptcy filing. If you are facing a foreclosure and you want to use bankruptcy to save your home, you will need to file bankruptcy within 10 days after the foreclosure sale date. Additionally, you can only use Chapter 13 bankruptcy to save a home from foreclosure. As a result, the right time to file bankruptcy to stop a foreclosure sale is any time before the 10th day after the foreclosure sale. Then, your Chapter 13 plan will schedule the mortgage arrearages to be paid over a 60-month period. In many cases, we are able to file an Emergency Bankruptcy for clients as this deadline approaches.

Retirement Funds And The Right Time To File Bankruptcy

All retirement income is exempt in bankruptcy under 11 USC Sec. 522. This protection includes 401k, IRA, and most pension plans. This means that regardless of when you choose to file bankruptcy, whatever funds you have in a qualified retirement account will be exempt or protected from creditors.

Because of this “super exemption” on retirement funds, it does not make sense to withdraw your exempt retirement funds to pay creditors. Additionally, as soon as you take funds from an exempt retirement account those funds are no longer exempt assets. This means $10,000 in a 401k is exempt while the same $10,000 once withdrawn and placed in your checking account is no longer exempt by 11 USC Sec. 522. Potentially, these funds will need to be turned over to the bankruptcy court if they are in your possession at the time of your bankruptcy filing.

Income And The Right Time To File Bankruptcy

When attempting to qualify for a Chapter 7 bankruptcy filing, you must meet the income requirements. The bankruptcy court looks at your most recent six months of income in determining whether you qualify. This is done through what is known as The Means Test. Your bankruptcy attorney will apply the rules of bankruptcy to determine if you pass The Means Test.

The Means Test starts with a calculation of Current Monthly Income (CMI). Your CMI is your average monthly income from all sources, for the six months prior to filing. The bankruptcy definition of income differs from the definition of income used by the IRS. If you receive a cash gift from a family member, it will be included in your income calculations. As a result, your bankruptcy attorney may advise you to wait to file, if you have income from the past six months in excess of the allowable amount. The good news is that by waiting a few months to file, your six-month average income will change. For example, if you received a bonus at work for $10,000 in February, it would be included in your income calculations if you file in March, April, May, June, July, or August. However, if you wait to file until September, your February income is no longer relevant.

Speak With A Charlotte Bankruptcy Attorney Today

If you would like to have a consultation with a bankruptcy attorney, you can call us at 704.749.7747 or click HERE to request a consultation. Consultations can be done over the phone or in person, and they are free. The goal is to help you understand your options, and answer any questions you may have about the process.

What Are The Chapter 13 Income Limits?

Generally speaking, there are no income limits in Chapter 13. A Chapter 13 bankruptcy is commonly referred to as a reorganization of your debt. More simply stated, Chapter 13 is an arrangement where you commit some portion of your income to pay your creditors. Provided you honor that commitment for 60 months, the remainder of the debt is discharged.

What Percentage Of My Income Do I Have To Commit?

The answer to this question is different for each individual or married couple entering Chapter 13. While a Chapter 13 plan may ultimately be referred to by the percentage you are paying your creditors, the analysis does not begin there. Your Chapter 13 bankruptcy attorney works with you prior to filing, to determine your monthly net disposable income. If your income (after taxes) is $10,000 per month, and your ongoing expenses each month (not including unsecured debts) are $9,575, then your net disposable income would be roughly $425. This would be the amount the court would require you to commit to your Chapter 13 monthly payment.

If your Chapter 13 plan is 60 months long and you commit $425 a month to unsecured creditors in the plan, you will pay a total of $25,500 to unsecured creditors over the course of 5 years. If you have $100,000 of unsecured debt when you enter the plan, your plan is roughly a 25% plan. This is true because you are proposing to pay roughly 25% of your unsecured debt over 5 years, in exchange for a complete discharge of the remaining 75% of the debt when you finish the plan.

Consider another debtor with the exact same income and monthly expenses, yet that debtor has $200,000 of unsecured debt. That debtor would pay the same $25,500 over 5 years; however, his or her plan would be a 12 or 13% plan, simply because their unsecured debt is greater than that of the debtor in the first example.

Are There Debt Limits In Chapter 13?

Yes, there are debt limits in Chapter 13. As of April 2019, you can have $419,275 in unsecured debt, and $1,257,850 in secured debt at the time of filing. Your bankruptcy attorney will perform a debt analysis with you to determine both the nature of your debt and the amount of your debt.

Speak With A Bankruptcy Attorney Today

Getting started with bankruptcy planning is easy and we are happy to discuss income limits in Chapter 13 and debt limits in Chapter 13 with you. You can call us at 704.749.7747 for a free consultation or click HERE to request a phone call. A lawyer will call you today.

SBA Loans In Bankruptcy

Small business loans or SBA loans are generally eliminated or discharged by a bankruptcy. One exception to discharging SBA loans in bankruptcy, is when the SBA loan is secured by collateral of the debtor. In that event, depending upon its position relative to other secured creditors, your SBA loan may survive your bankruptcy filing.

What Is An SBA Loan?

An SBA loan is a loan granted by the Small Business Administration. These loans are given to individuals to assist with opening a business or continuing to operate a business. You may choose an SBA loan because it is difficult to get financing as a small business, or perhaps because the terms of the SBA loan are more favorable than other types of financing available.

Personal Guarantees For SBA Loans

In almost all cases, you will be required to personally guarantee your SBA loan. This means that if the business defaults on the loan, the lender’s recourse is not only the business assets but also your personal assets. You can generally tell if you have personally guaranteed an SBA loan if you sign the loan documents once for the business and a second time in an “Individual” capacity. If you did personally guarantee your SBA loan or any other loan for your business, do not feel bad—most lenders will not give you the loan without the personal guarantee.

Does A Bankruptcy Address A Personal Guaranty?

Yes. Consumer bankruptcy comes in the form of Chapter 7 and Chapter 13. Both bankruptcy chapters address your personal debt as well as your personal obligation on business debt. The goal of the bankruptcy is to receive a discharge of the debt as to you, the individual. If you own a business which obligated itself on debt, typically you will dissolve the business with the NC Secretary of State in conjunction with filing bankruptcy. This serves to eliminate the business obligation on the debt, while the bankruptcy serves to eliminate the personal obligation.

Secured SBA Loans In Bankruptcy

Secured debt in bankruptcy is treated differently than unsecured debt. This is true whether it is a mortgage, a vehicle loan, or an SBA loan. If you want to keep the property, you must keep the debt associated with the property. For instance, if you own a vehicle worth $14,000 with a loan balance of $13,000, you can choose between surrendering the vehicle (and the debt) to the lender, OR you can retain the vehicle after bankruptcy and continue to make payments on the vehicle loan.

Most SBA loans are secured by real property, or real estate. If you own a home with a fair market value of $450,000 with a mortgage balance of $300,000, the mortgage is fully secured. This is because the balance of the mortgage is less than the FMV of the home. You may have an SBA loan with a balance of $50,000 which is also secured by the real property. While the SBA loan is in second place as a creditor behind the mortgage lender, but the SBA loan is still fully secured.

SBA Loans After Bankruptcy

If your SBA loan is discharged by your bankruptcy, you will have no further obligation to pay it. The SBA loan is treated like all other unsecured debt. If your SBA loan is secured, it will survive the bankruptcy and you will be obligated to continue to pay on it after bankruptcy. Most clients find that if they can discharge all other unsecured debt by way of bankruptcy, they can manage to pay the monthly amounts due on their secured debt. In many ways, when simply looking at the numbers, the discharge of debt in bankruptcy translates into giving yourself a raise.

Speak With A Bankruptcy Attorney Today

Getting started with bankruptcy planning is easy and we are happy to discuss SBA loans in bankruptcy. You can call us at 704.749.7747 for a free consultation or click HERE to request a phone call. A lawyer will call you today.

How Does Unemployment Affect Bankruptcy?

Many individuals are currently seeking advice regarding unemployment and bankruptcy. Prior to filing bankruptcy, when individuals are fighting off creditors, there are often questions as to whether unemployment can be garnished. We answered those questions in a previous post and the news is mostly good news. However, if you are tired of fending off creditors and want a permanent solution to cash flow, a Chapter 7 or Chapter 13 bankruptcy may be the answer.

Can I Qualify For Bankruptcy If I Receive Unemployment?

Yes. When qualifying for bankruptcy, the Chapter 7 court looks at your income for the 6-month period prior to your bankruptcy filing date. If your income is lower than the Median Income for a household of your size, you can qualify automatically for bankruptcy. Below you will find totals for household size, monthly income, and annual income:

HOUSEHOLD SIZE                             MONTHLY INCOME                         ANNUAL INCOME

1                                                                  $3,992.00                                             $47,904.00

2                                                                 $5,078.83                                             $60,946.00

3                                                                 $5,660.92                                             $67,931.00

4                                                                 $7162.33                                              $85,948.00

 

Remember, the bankruptcy court is looking at the most recent 6 months of income. If you have been collecting unemployment, chances are you are well below these totals. Even if your income or your combined household income exceeds these totals, you may still pass The Means Test in bankruptcy. The Means Test looks at your overall income vs. your overall ongoing expenses. It represents an equitable approach to providing bankruptcy relief for those who make more than the Median Income, yet who still deserve debt relief.

Do Stimulus Funds Hurt My Bankruptcy Filing?

If you have received stimulus funds from the federal or state government related to the Coronavirus, the funds will not be counted as income for the purposes of determining whether you qualify for Chapter 7. However, those funds are part of the Bankruptcy Estate. This means that if you still have some of your stimulus funds on hand when you file bankruptcy, you will need to exempt them or risk losing them to the court. In most cases, the funds can be exempted, and your bankruptcy lawyer will explain how this works.

Do Stimulus Funds and Unemployment Affect Bankruptcy In Chapter 13?

Unfortunately, if you are receiving unemployment income only, it may not be enough to show that you qualify for Chapter 13. If you are considering a Chapter 13 for the purpose of getting current on a mortgage or car loan, your incoming monthly unemployment will have to exceed your monthly expenses in order to successfully enter Chapter 13. Additionally, while the stimulus funds are helpful to your budget, they can not be factored in when considering your anticipated ongoing disposable income in a Chapter 13 filing. Again, these concerns are only for a Chapter 13.

Speak With A Charlotte Bankruptcy Lawyer Today

Getting started with bankruptcy planning is easy. We are happy to discuss further with you how unemployment can affect bankruptcy. You can call us at 704.749.7747 for a free consultation or click HERE to request a phone call. A lawyer will call you today.