Tax Refunds In Bankruptcy

Your tax refund is an asset in bankruptcy. This is true whether you file Chapter 7 or Chapter 13. Your refund is treated differently in each chapter, but generally you can keep your tax refund in bankruptcy.

Chapter 7

In Chapter 7, your bankruptcy assets are any assets you already own, or reasonably expect to own. A tax refund is a great example. If you have not filed your taxes yet, but you know that you will receive a refund, that refund is part of your bankruptcy estate. Because the refund does not represent income earned in the last 60 days, it cannot be exempted under N.C.G.S. 1-362. It can, however, be exempt under N.C.G.S. 1C-1601(a)(2). This is commonly known as your “Wild Card” exemption. It can be applied to any assets.

By claiming an exemption, you are exercising your right to protect certain assets. Your Wild Card exemption is available to cover up to $5,000 of assets. So, as long as your refund is $5,000 or less, you can use your Wild Card exemption to protect it. If you’re filing with a spouse, you both have a Wild Card exemption, for a total of $10,000 in Wild Card exemption available.

By protecting your tax refunds in bankruptcy with an exemption, your bankruptcy case can move forward without the bankruptcy trustee taking that asset. You will receive your discharge, and when you receive your tax refund, it’s yours to keep.

Another option is to receive and spend your tax refund in bankruptcy before you file. So long as you spend the refund on normal living expenses, you are not running afoul of the bankruptcy rules. Additionally, if you purchase household goods like furniture, you can still protect those new purchases with your household exemption under N.C.G.S. 1C-1601(a)(4).

Chapter 13

If you are in Chapter 13, the same rules apply as outlined above for Chapter 7. However, these rules are only applicable to the year in which you are filing your Chapter 13. Because a Chapter 13 case runs for three to five years, you need to be concerned about future tax refunds in Chapter 13.

If you receive tax refunds in Chapter 13 in a year beyond your first year, you must disclose this refund to the Chapter 13 bankruptcy trustee. Generally, you are allowed to keep $1,000 per debtor each year. Additionally, if you have any unused Wild Card you can apply it to your tax refunds received in subsequent years. Lastly, if your tax return shows that your refund is due to an earned income credit or a child tax credit, the refund is yours to keep.

If you cannot protect your tax refund in Chapter 13 in the above manner, you can also petition the court to keep your refund due to the fact it is necessary for living expenses. An example would be that you have been putting off repairs to your home or vehicle, and the non-exempt tax refund will be used for those repairs. Quite often, clients are making ends meet but putting off normal and routine household expenditures to do so. For this reason, the court entertains a request to use your tax refund in Chapter 13 to get ‘caught up’ on household expenses.

Adjusting Your Withholding In Bankruptcy

One allowable way to help insure you don’t lose any money in Chapter 13 is to adjust your tax withholding. This way, rather than receive a large refund in bankruptcy at the end of the year, you receive more income each month. Your Schedule I and J filings in Chapter 13 should reflect this, and your overall budget will change slightly; however, it will help you avoid an annual chore of trying to prove to the Chapter 13 court that you should be allowed to keep your tax refund.

Speak With A Charlotte Bankruptcy Attorney Today

Bankruptcy is a very powerful solution with long-lasting positive effects. If you’d like to speak with a lawyer about filing bankruptcy, we’re here to help. Consultations are free and answering questions is part of the job. Call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly.

Can I Keep My Bonus In Chapter 13?

You can keep your bonus in Chapter 13 provided you account for it in your Net Disposable Income allocated to creditors. When you file Chapter 13, your payment is partly based upon your “Ability to Pay” your creditors. Your ability to pay your creditors is determined by providing the court with a monthly budget: income minus expenses.

Generally speaking, additional funds that come into your ownership during Chapter 13 are property of the bankruptcy estate. As such, your Charlotte bankruptcy attorney will seek approval for you to keep those funds if possible. In the case of a bonus in Chapter 13, so long as you have already accounted for the bonus in your monthly income and expenses calculations, you can keep the bonus. Your Chapter 13 bankruptcy attorney will work with you to do this. Lastly, the way to account for the bonus is to simply take the average bonus, divide it by 12 (months in the year) and add that amount to your gross income calculations.

Can I Keep Tax Refunds In Bankruptcy?

Tax refunds are not “income earned in the last sixty days,” and as such, they are not exempt assets under NC sec. 1-362. If you have exemptions remaining under NC sec. 1C-1601(a)(2), you can protect your tax refund with that exemption. That exemption is commonly known as the “Wild Card” exemption and can be applied to any assets.

In a Chapter 13, you must petition the court to keep your tax refund. Generally speaking, each debtor will be able to keep the first $1,000.00 of a tax refund. If your refund exceeds this amount, you will need approval from the court to keep it. Your Chapter 13 bankruptcy attorney will assist in notifying the trustee of your refund, and providing an explanation as to why you should be able to keep it. In most cases, if you have a list of home improvements or vehicle repairs which need to be done, you can allocate the funds to those items. It is quite common that you can keep your entire refund in Chapter 13, based on this analysis.

Bonus Not Yet Earned

You may be wondering if you can keep a bonus in Chapter 13, if you have not already earned the bonus.If you have a potential bonus which you have not yet earned, there is good case law which supports the contention that those funds are not part of the bankruptcy estate and therefore they will be yours to keep. Our firm, together with The Law Offices of Kevin Radey, won a case on this very issue, in the Western District of North Carolina. You can read that case summary on Bloomberg Law.

Speak With A Charlotte Bankruptcy Attorney Today

If you’re considering filing Chapter 7 or Chapter 13, speak with an attorney today. Bankruptcy is a powerful solution which immediately affects your life for the positive. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION and we will reach out to you.

Bankruptcy Or Consolidation?

If you are overwhelmed by the choice between bankruptcy or consolidation, there is great news: you have options. Most individuals wait much longer than they should before exercising their options regarding debt—do yourself a favor and act now. The solutions are powerful and the relief is immediate.

Debt Consolidation

Clients who have one looming debt, or smaller debts which are causing problems can consider bankruptcy or consolidation. Generally, debt consolidation combines your debts into one loan. You can accomplish this on your own with a personal loan or a home equity line. You can also hire a debt consolidation company to handle bundling your debt into one payment. If you enter into an agreement with a debt consolidation company, you will typically pay one party each month—the debt consolidation company. However, there are pitfalls associated with working with debt consolidation companies.

Pitfalls Of Debt Consolidation

Debt consolidation companies offer confusing, lengthy contracts which often promise very little to you. We consistently work with clients who believed their debt consolidation company had bundled all of their debt, only to find out it wasn’t true. Those clients make consistent payments and hold up their end of the deal. At the end, they find out there are still one or more credit card balances that remain unpaid. This is a horrible result! Finally, debt consolidation companies consistently remind you they are only estimating the arrangements they can reach with your creditors. In the end, their promises often go unfulfilled.

How Is Debt Settlement Different From Debt Consolidation?

One option in addressing debt is debt negotiation which leads to debt settlement. As a bankruptcy law firm, we have had success negotiating debt for our clients. Our strategy is to show the creditor that we are working with the client to file bankruptcy, which is true. However, in many cases the client would rather settle a debt than file a Chapter 7 or Chapter 13 bankruptcy. This is also true. In the end, the creditor is faced with the option of getting paid little to nothing in bankruptcy, or reaching a fair negotiated agreement with our firm.

The downside to debt settlement is that not all clients have the funds available to successfully engage creditors in negotiations. To reach your best negotiated agreement, the creditor will want the new lower balance paid off very quickly. They are not interested in lowering the balance AND accepting a series of monthly payments extending more than a few months.

Bankruptcy Is Often The Way To Go

If you’re trying to choose between bankruptcy or consolidation, let us help. Filing bankruptcy is one of the most powerful options a consumer has at their disposal. The amount of money you will spend to negotiate one credit card will often exceed the full bankruptcy fee to your bankruptcy attorney. Additionally, you address numerous debts at once. While clients have concerns about credit scores and keeping vehicles or homes, a free phone consultation usually puts the client at ease.

Final Thoughts On The Bankruptcy Or Consolidation Decision

First, we understand bankruptcy is foreign to most individuals. Second, we know there is stress and anxiety associated with debt and the mystery of filing bankruptcy. Lastly, we have seen over and over how our client’s lives change for the better simply by deciding to file bankruptcy. In fact, bankruptcy will change your life for the positive.Most bankruptcy filings usually end with the client giving the lawyer a hug—that should tell you a lot about the relief you will experience if you decide to file.

Speak With A Bankruptcy Lawyer Today

If you’d like to speak with a Charlotte bankruptcy lawyer today, we’re here to help. We are happy to discuss bankruptcy, debt consolidation, or debt negotiation. Part of the job is answering questions. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION. We know you have choices. We hope you choose to Recover With Us.

How Much Will My Chapter 13 Payment Be?

Your Chapter 13 payment is a combination of a few factors. We discuss these factors in this post. If you have questions please call 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out today.

Priority Debts

There are some debts which must be paid in full during the course of your Chapter 13 bankruptcy. A list is below:

IRS Tax Debt

State Tax Debt

Mortgage Arrears

HOA Arrears

Spousal or Child Support Arrears

Car Arrears

If you owe any of the above items at the time of your Chapter 13 filing, you must pay them through your Chapter 13 plan. If your plan is 60 months, you can divide the totals above by 60 to get your estimated monthly amount applicable to these items. If you do not owe any of the above items, you should discuss Chapter 7 with your bankruptcy attorney.

Ongoing Car and Mortgage Payments

Your mortgage on your primary residence will also be paid through the Chapter 13 plan. This is known as a Conduit Payment because it flows through the Chapter 13 trustee. This is to insure your mortgage creditor is protected in the Chapter 13 plan, ongoing.

Your ongoing vehicle payment will also be built into your Chapter 13 payment plan. In some cases, your interest rate can be lowered in the Chapter 13. Additionally, your vehicle loan balance may be lowered—your attorney can assist with this equation. Lastly, if you surrender your vehicle in Chapter 13, any loan balance above and beyond the blue book value will simply be treated as unsecured debt, discussed below.

Unpaid Attorney Fees

The Chapter 13 fee is set by the court at $4,500.00 plus the filing fee. Your attorney will require some of that to be paid up front. Any remainder will be built into your Chapter 13 plan payment.

Unsecured Debt

Your unsecured debt will typically be paid back at a very low percentage in your Chapter 13. First, you must present a budget to the Chapter 13 court. Then, you must propose that any remaining funds after all of your ongoing monthly expenses, be paid as part of your Chapter 13 payment. This amount varies depending upon your income and expenses, of course. Essentially, the remainder is used to pay the items above, and to pay a small amount to unsecured creditors.

One example of a Chapter 13 plan would be to propose to pay 10% to unsecured creditors. This means if you have $50,000 in unsecured debt (credit cards, medical bills, etc.), you would pay a total of $10,000 to those creditors during the course of the plan. Over  a 60 month plan, this equates to roughly $80 a month.

What Is Your Ability To Pay?

Ultimately, your Chapter 13 payment is a function of your Ability To Pay. In the end, you must show the court that your payment includes the mandatory items above, plus a small amount to your unsecured creditors, and lastly, that it also represents the most you can afford each month.

Changes To Your Chapter 13 Payment

If you income changes (up or down), your Chapter 13 plan payment may also change. This is because the plan payment is based on your ability to pay. As a result, you may be required  to update the court or your attorney periodically, as to your income.

The Trustee Fee

Lastly, remember the trustee receives roughly a 4% fee for every dollar that flows through the plan. If your Chapter 13 plan calculation comes to $1,000 a month, it will need to be increased to roughly $1,040 a month in order to pay the trustee fee.

Speak With A Charlotte Bankruptcy Attorney Today

If you have questions about Chapter 13 and would like to speak with a Charlotte bankruptcy attorney today, call us at 704.749.7747 or click for a FREE CASE EVALUATION. Consultations are free and we’re here to help.

Bankruptcy “Expertise” And The Layton Law Firm

We are happy to have been chosen by Expertise.com as one of the top 25 Bankruptcy Lawyers or Bankruptcy Law Firms in Charlotte for 2019. Their listing of bankruptcy attorneys in the top 25 can be found HERE. This is our second year on their list!

Yesterday, we also received a call from a bankruptcy attorney in Baton Rouge, LA wanting to know the details of our successful case regarding Bank of America bonuses for a Chapter 7 bankruptcy client. It’s always a compliment to be asked to discuss a case or a particular situation. We know, because often we are seeking advice from other attorneys for similar aspects of a case they handled. The bankruptcy community in Charlotte and throughout the country is very helpful to one another in that way. We are proud to be part of it.

Lastly, we are also proud of the Client Reviews our clients have chosen to leave for us. It’s a sign we’re not only doing good work. It’s also a sign we’re making clients feel good about their choice to use The Layton Law Firm, PLLC.

Considering Filing Bankruptcy?

If you’re considering filing bankruptcy, you deserve to find out more about your options. First, one conversation with a bankruptcy attorney will help you decide. Second, by finding out more about your options, you may discover there’s another way to address your debt concerns outside of filing bankruptcy. An example would be Debt Settlement.  Lastly, the peace of mind that comes with taking action is not to be overlooked.

Protecting Clients Is What We Do

Whether we are working on a personal injury settlement or a bankruptcy, our job is to protect our clients. As a result, we have very close relationships with our bankruptcy clients. Those relationships are necessary to make sure we are disclosing full and accurate information to the  court. Full disclosure is required, in exchange for the powerful relief of bankruptcy.

If a creditor challenges your bankruptcy filing, we will be there to defend you. If a trustee objects to any aspect of your filing, we will be there to defend you. Our negotiation skills and ongoing relationship with the bankruptcy court combine to help you get the best results possible.

Speak With A Charlotte Bankruptcy Attorney Today

If you are considering filing bankruptcy, you should speak with someone. A phone call or in-person meeting is often the best avenue for gaining real clarity about your options. Consequently, we conduct phone consultations every day. If you’d like to request a consultation, simply click for a FREE CASE EVALUATION. You can also call 704.749.7747 to speak with a Charlotte bankruptcy lawyer today. The consultation is always free and we’re here to help.

Can Creditors Take Your Property?

The short answer is yes, creditors can take your property. However, they have to go to great length to do so. Below, we ask a few questions, and then provide some answers. Call us if you have questions—we’re here to help! 704.749.7747.

Is There A Valid Debt?

The first question when deciding the answer to the question “Can creditors can take your property?” is whether there is a valid debt. In most cases, the answer is yes. As a result, the creditor is entitled to be re-paid, per the contract you signed with them.

Do They Need A Judgment?

Except for the repossession of motor vehicles, in most cases the creditor will need a judgment in place in order to take your property. A judgment is not that difficult to obtain. As a result, most creditors are successful in procuring a judgment. One thing to keep in mind is that a judgment requires a lawsuit. If you have not been served a lawsuit, this means there is no judgment. Once a creditor files a lawsuit, you have a chance to defend against it. However, if the debt is valid there is no reason to spend time and energy fighting the judgment. One thing you might consider is responding to the Complaint (lawsuit) with an Answer, and ask for a hearing. At the hearing, you can ask the judge for an extension of time to consider filing bankruptcy or pay the creditor. This will buy you 30-90 days before a judgment is entered.

The Creditor Has A Judgment—What’s Next?

After a creditor receives a judgment against you, their next step is to try to enforce that judgment. First, the creditor must send you a Notice of Right to Claim Exemptions. It’s very important you complete this form. As a result of completing this form, you will disclose your assets and also invoke the protection of your State Exemptions. These exemptions protect you in Chapter 7, Chapter 13, and in a situation where a creditor is trying to take your property.

Second, the creditor will need to obtain a writ of execution. This is a court order from the Sheriff to take possession of property. Consequently, you may now be facing the loss of property. Communicating with the Sheriff’s office about your writ of execution is a very good idea. The Sheriff will understand if you tell them you are requesting some time to file bankruptcy—they may even tell you they will give you 30 days before executing on the writ of execution.

Lastly, the Sheriff will carry out the writ of execution to seize property to be turned over to the creditor in satisfaction of the debt. Or, the Sheriff will order the sale of property to liquidate it in order to pay the creditor.

Foreclosure Is Slightly Different

All of the above is true for foreclosure, except the process differs slightly. A mortgage creditor does not need a judgment against you to file foreclosure. They must simply show in court that you are behind on mortgage payments. You will receive notice of a preliminary foreclosure hearing. You should attend this hearing and ask for an extension to file bankruptcy or get caught up on your mortgage payments. Ultimately, if you don’t get caught up, the court will set a foreclosure date. You have until 10 days after the foreclosure sale date to file a Chapter 13 to save your house.

How Can You Stop A Creditor From Taking Your Property?

Bankruptcy is the most secure way to stop a creditor from taking your property. The filing of a bankruptcy invokes The Automatic Stay in bankruptcy. This prevents creditors from attempting to collect a debt in any manner. If necessary to save an asset, you can file an emergency bankruptcy petition with the court, and our firm can help with this.

What If The Creditor Is Threatening To Take My Car?

This video about Vehicle Repossession by attorney Ian Lyngklip gives great instruction on how to protect your car from a lender who is aggressively attempting to take it. Again, the filing of a bankruptcy will stop this process altogether and we’re here to help.

Speak With An Attorney Today

If you have questions about “Can creditors take your property?” please call us at 704.749.7747. Filing bankruptcy will dramatically change your life for the better—we’ve seen it over and over with our clients. You can also click for a FREE CASE EVALUATION and we will reach out to you today. We know you have choices. We hope you choose to Recover With Us.

Does Bankruptcy Include Car Loans?

If you’re wondering, does bankruptcy include car loans, the answer is yes it does. When filing bankruptcy, you actually get a choice when it comes to car loans. This article addresses a few scenarios regarding car loans in bankruptcy, and we hope it’s helpful. If you have further questions or would like to take next steps to file, call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly.

Repossessed Vehicle Car Loans

If you have an old car debt still lingering on your credit report, a Chapter 7 or a Chapter 13 bankruptcy will address the debt. You will not have to pay the face value on the debt and there’s nothing the creditor can do to keep you from discharging the debt. As long as the property (the car) has been returned to the lender, or totaled out by your insurance company due to an accident, the bankruptcy filing will address the old car debt.

Can I Keep The Car I’m Driving?

If you currently have a car with a loan, you can choose to keep the car and the loan, when you file bankruptcy. Nothing will change between you and your vehicle lender. The general rule is if you want to keep the car, you have to keep the debt. However, you can also surrender your car to the lender and force them to take the debt with it. Bankruptcy puts you in a powerful position in this regard.

What If I’m Behind On Car Payments?

If you’re behind on car payments you’ll need to file a Chapter 13 to allow you to catch up on the payments. This is a great solution which allows you to keep the car, and forces the lender to give you some time to catch up. You can file a Chapter 7 if you’re behind but by the time your 341 meeting comes, you’ll need to be current on payments. You can also choose to Redeem Your Vehicle in a Chapter 7.

What Happens When I Surrender A Vehicle In Bankruptcy?

If you choose to surrender the vehicle in bankruptcy, you simply need to make arrangement with the lender to deliver the car to them, or allow them to pick up the car at a location you designate. This can be your house, work, or some other location. You will most likely be able to drive the vehicle a few weeks after the bankruptcy filing, but arrangements will need to be made to physically deliver the car to the lender quickly.

What If I Need A New Car?

Most clients in need of a new car, purchase one right before filing bankruptcy. Then, when the bankruptcy is filed, the client indicates they want to keep the new car and the new car loan. They also indicate they want to surrender the old car and the old car loan. It’s tougher to get a loan right after filing bankruptcy, which is why this order of things tends to work. Again, the new car lender relationship is not complicated by the bankruptcy filing. You’ll continue to make payments on the new car through the bankruptcy and after.

Speak With A Charlotte Bankruptcy Lawyer Today

Does bankruptcy include car loans? YES. If you have questions about whether bankruptcy includes car loans, please feel free to call us at 704.749.7747 or click for a FREE CASE EVALUATION. We know you have choices. We hope you choose to Recover With Us.

Does Bankruptcy Clear Federal Tax Debt?

Bankruptcy does clear federal tax debt in some instances. This article will discuss the conditions you need in order to have your federal tax debt discharged when you file bankruptcy. If you’d like to speak with someone about federal tax debt and whether bankruptcy can help, you can also just call 704.749.7747 and we’d be happy to discuss it with you. Or, you can click for a FREE CASE EVALUATION and we will reach out to you.

Not sure how much tax debt you have, or from which years? Click to order a Federal Tax Transcript.

Tax Debt In Chapter 7

If you have federal or state tax debt and are considering a Chapter 7, your bankruptcy filing will discharge the tax debt if the following conditions are true:

  • The federal tax debt is income tax debt
  • The federal tax debt is at least three years old
  • You filed a tax return related to the debt

As it relates to the filing of a return, the return related to the tax debt must be filed at least two years before the filing of the bankruptcy. Additionally, the income tax debt you seek to discharge, must be at least 240 days old. This means the IRS must have assessed the debt more than 240 days prior to filing bankruptcy.

Any tax debt that does not meet the criteria above, or fails to qualify because you were guilty of tax evasion, will survive the bankruptcy filing. The taxes won’t keep you from an otherwise successful bankruptcy filing, but when your bankruptcy case finally closes, you will still have the tax debt which does not meet the above requirements.

Tax Debt In Chapter 13

The same rules apply for taxes in Chapter 13. However, any tax debt which survives in Chapter 13 must be paid in full during the duration of your Chapter 13 plan. For example, if you have tax debt which is only one year old at the time of the bankruptcy filing, that debt will be paid in full throughout the Chapter 13. This is not necessarily bad news—your Chapter 13 filing forces the federal and state government to allow you to schedule your payback of taxes on a 3 or 5 year plan in Chapter 13. Additionally, penalties and interest are limited during your Chapter 13.

Federal Tax Liens In Bankruptcy

If you have a tax debt which has been recorded as a lien, that lien will not be addressed by the bankruptcy. While your bankruptcy may eliminate the personal obligation under the tax debt, if the lien attached to real property (real estate, your home, etc.), that lien would survive the bankruptcy. This means that when the real property is eventually sold, the tax debt will need to be paid at that time.

Further Reading

Need help with an Emergency Bankruptcy Filing? Call us to take steps today to get filed quickly– end foreclosure or judgment collection immediately.

Speak With A Bankruptcy Attorney Today

We know that financial stress is overwhelming. One phone call can change your life. Call us today to find out answers to questions, and decide if filing a bankruptcy is the right step for you. You can reach us at 704.749.7747 and we’d be happy to discuss it with you. Or, you can click for a FREE CASE EVALUATION and we will reach out to you. We know you have choices. We hope you choose to Recover With Us.

Emergency Bankruptcy Petition

If you need an emergency bankruptcy petition filed, you will need to move quickly. Using a bankruptcy lawyer is highly recommend, especially when filing an emergency petition. Bankruptcy can be a powerful tool to stop foreclosure, prevent judgments or collection of judgments, and discharge credit card debt, medical bills, and other debt. When you file an emergency bankruptcy petition, you usually use it to stop a foreclosure.

Chapter 13 Bankruptcy

If you’re using an emergency bankruptcy petition to stop a foreclosure, most likely you want to keep the house. If that’s the case, you’ll need to consider a Chapter 13 bankruptcy filing. A Chapter 13 allows you to stop the foreclosure, and propose a three to five year plan for repaying the mortgage payments you’ve missed. Provided your Chapter 13 plan is based on your disposable income each month, and proposes to pay back the full missed payments over the plan period, you should receive confirmation of your plan.

How Quickly Can I Get An Emergency Bankruptcy Filed?

Depending upon the situation, an emergency bankruptcy petition can be filed within a day or two. You will have to take the required pre-bankruptcy credit counseling course, which can be done on the computer and takes about an hour and a half. You’ll also have to pay a fee to your bankruptcy attorney in order to get the petition filed. Click here for a quick BANKRUPTCY FEE QUOTE from us.

Will An Emergency Bankruptcy Petition Stop Foreclosure?

Yes, the filing of an emergency bankruptcy petition will stop foreclosure. A notice of the filing will be sent to the county courthouse as well as the mortgage lender and their attorney. The automatic stay in bankruptcy will prevent the lender from moving forward with the foreclosure, provided your bankruptcy attorney follows the rules for Chapter 13. After the filing, provided your plan is confirmed and you continue to make on-time payments, you should continue moving in the direction of being paid and current on the mortgage.

Is There A Downside To Filing An Emergency Bankruptcy Petition?

The only downside to filing an emergency bankruptcy petition is the risk that you and your attorney were not able to be completely thorough in examining your financial picture prior to the filing. This could result in a Chapter 13 payment which is more than you can ultimately afford. This might also become an issue if you’ve made large transfers of assets in the months leading up to the emergency bankruptcy petition filing. This is not an issue for most clients, and the benefits of the emergency filing outweigh any potential downsides.

When Will My First Chapter 13 Payment Be Due?

The filing of your Chapter 13 case sets the payment due date going forward. If you file in the 15th of February, your first Chapter 13 payment will be due on or before the 15th of March. Each payment thereafter will also be due on the 15th.

Speak With A Bankruptcy Attorney Today

Are you facing a foreclosure and want to keep your home? An emergency bankruptcy petition filing may be the answer. Call us at 704.749.7747 or reach out for a FREE CASE EVALUATION and we will be in touch today. We know you have choices. We hope you choose to Recover With Us.

Filing Bankruptcy While Married

If you’re considering filing bankruptcy while married, you’re not alone. Thousands of married couples are in your situation, and the bankruptcy filing statistics are easily found online, showing you that you’re not alone. The good news is one spouse can file bankruptcy without affecting the credit of the non-filing spouse. This article contains an examination of a few scenarios where you may want to file bankruptcy while married—even if your spouse isn’t filing with you.

One Spouse’s Debt Can Cause Anxiety In A Relationship

If one spouse brings debt to a marriage, despite best intentions, the other spouse may feel resentful of the pre-marriage debt. At the very least, as a couple, you deserve a ‘fresh start’ together and that includes being free of debt you did not decide to incur together.

Computing The Means Test In Bankruptcy

If you’re filing bankruptcy while married, you will need to disclose the income of both spouses. This is done for the purpose of passing The Means Test in bankruptcy. The reason is that the federal bankruptcy code uses household income as the starting point for determining whether you qualify for bankruptcy. If you live with your spouse, you’ll need to count their income. The good news is most couples still qualify even when counting the income of their spouse.

Lastly, there is an option to take a Marital Deduction on The Means Test. This option allows you to more accurately show the court the amount of the household income which is being used by the non-filing spouse. Ultimately, this deduction reduces your income for The Means Test. The deduction is easy to calculate and your bankruptcy attorney will walk you through it.

Protecting Your Spouse’s Credit In Bankruptcy

Your spouse’s credit will not suffer due to your bankruptcy. Your bankruptcy will not show on their credit report, nor will it come up when applying for credit of any kind. When one spouse files for bankruptcy, the bankruptcy only affects the debts of the spouse who is filing. In other words, the marriage does not change the effect of the bankruptcy from a credit standpoint.

Protecting Your Spouse’s Assets In Bankruptcy

None of your spouse’s own assets will be affected by your bankruptcy. If you have joint assets such as a house or a jointly owned vehicle, those assets can typically be protected in bankruptcy. The good news is only half of their value is counted for your bankruptcy filing when married. Lastly, if your spouse has a 401k or savings account in their name only, those assets are not part of the bankruptcy filing.

Joint Debt In Bankruptcy

If you have joint debt with your spouse, you may want to consider filing together. However, it is still perfectly fine to file without your spouse. One thing to consider is the obligation on joint debt. Most marital debt obligations are “joint and several” liability. This means that both spouses are obligated for the full balance of the debt. If one spouse file bankruptcy, that spouse will no longer be responsible for the debt; however, the non-filing spouse will still be responsible for the entire balance of the joint debt. If the non-filing spouse decides to file at a later date, that would of course eliminate their obligation on the debt.

Your non-filing spouse may choose to attempt Debt Settlement instead of filing bankruptcy. This is a common way to successfully address a small amount of joint debt or debt that belongs only to the non-filing spouse.

Vehicles In Bankruptcy When My Spouse Isn’t Filing

The only vehicles which must be disclosed as assets are those vehicles which are titled in the name of the individual who is filing. If you transferred title to a vehicle from one spouse to another within four years of filing bankruptcy, that transfer should be disclosed in your bankruptcy filing. The transfer most likely will not negatively affect your bankruptcy filing, but disclosing it is in alignment with the court’s requirements for full disclosure of all transfers to family members and “insiders” (family and friends) within a four year period preceding your bankruptcy filing.

Further Reading

You can read hundreds of articles like this one on our Bankruptcy Blog.

Speak With A Bankruptcy Lawyer Today

If you’d like to set up a free consultation about filing bankruptcy while married, you can call us at 704.749.7747 or click to request a FREE CASE EVALUATION and we will reach out to you. We know you have choices, and we hope you choose to Recover With Us.