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.

 

What Does Bankruptcy Cover?

A consumer bankruptcy comes in the form of Chapter 7 or Chapter 13. The goal of both bankruptcy filings is to obtain a Discharge. The discharge is your confirmation that the debts included in the bankruptcy filing are no longer your responsibility, and that creditors can no longer pursue you or your assets to try to collect on those obligations.

There are several types of debt which receive specific treatment in bankruptcy. Below, we will cover a few broad categories in hopes of giving you and understanding of what is covered when you choose to file bankruptcy.

Unsecured Debt – Unsecured debt is generally credit card debt, medical bills, and personal loans. Essentially, it is debt which is not secured by a specific piece of property. Unsecured debt is discharged in a Chapter 7. In Chapter 13, you may pay a small percentage to your unsecured creditors by way of your Chapter 13 plan. Then, when you make your final payment in Chapter 13, the remainder of that unsecured debt will be discharged.

Secured Debt – Secured debt is debt which is secured by property. Generally, this means that if you stop paying on the debt the creditor has the right to take the property. An example would be a home or a vehicle. In North Carolina, a home can be foreclosed upon if you stop paying debt. A vehicle can be repossessed. Again, this just means the lender’s loan is secured by property. In a Chapter 7, you can keep your secured property, but the debt comes with it. For example, if you have a vehicle with a loan balance and you file Chapter 7, you will get a chance to indicate if you want to keep the car (and the debt), or if you want to surrender the car to the lender. If you surrender the car to the lender, the debt  goes with it. Your bankruptcy attorney will help you decide which decision is best for you. The terms of your loan will not change if you decide to keep the car and the debt associated with it.

In Chapter 13, you have the same options. There are many instances where your car payment will lower in Chapter 13 because Chapter 13 spreads your car payment out over the 60-month repayment period (Your Chapter 13 Plan). This can provide great financial relief as you enter Chapter 13.

Secured Debt Arrears – If you owe or are ‘behind’ on payments to secured creditors, you cannot use a Chapter 7 to cure the arrears. You will need to get caught up on payments when filing your Chapter 7. However, a Chapter 13 is specifically designed to force your lender to allow you some time to get caught up on late payments. In fact, the amount you are behind on the day you file your Chapter 13 will be divided over the 60-month length of the plan. This gives you time to make your normal payment each month, while slowing getting caught up. When you finish your Chapter 13 plan, you will be caught up on your payments to the mortgage lender or vehicle lender.

Priority Debt – Some debt like tax debt or child support is categorized as priority debt. While there are exceptions, generally tax debt and child support debt are not discharged by Chapter 7. One exception relates to taxes which were filed at least 240 days before the bankruptcy, and which are at least 3 years old at the time of the filing.

In Chapter 13, priority debt like taxes or child support, must be paid in full over the life of the Chapter 13 plan. Assume you are behind $6,000 on taxes when you file your Chapter 13. Further assume the tax debt is less than 3 years old, which means it needs to be paid in full during the Chapter 13. With some exception, the tax debt will come to $100/month in your Chapter 13 plan. This can be a very manageable amount compared to what the IRS or NC DOR will offer you outside of bankruptcy.

You can still file a successful Chapter7 with priority debt; however, when you receive your discharge, the priority debt (except taxes older than 3 years old, etc.) will still exist. Some clients find that to be an OK solution—without the other unsecured debt burden, those clients can make payments on the priority debt which survives the bankruptcy.

Student Loans –Unfortunately, student loans are not discharged in bankruptcy except in the most limited circumstances. We are hopeful the rules on discharging student loans will change; however, our firm has litigated student loan issues in the past and the law is relatively settled now. We are happy to discuss it with you before you move forward with bankruptcy. The great news is that our clients with a good bit of student loan debt choose to move forward with bankruptcy despite the rules around student loans. Those clients find that once the bankruptcy closes out and the burden from their pre-bankruptcy debt is relieved, they are easily able to make their student loan payments, apply for income-based repayment, or use a forbearance.

Speak With A Bankruptcy Lawyer Today

If you would like more information about what is covered in bankruptcy, reach out to us. We love to help educate consumers, and we can help you understand your options. You can reach us at 704.749.7747 or click HERE to request a consultation via email. We are here to help.

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.

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.

Are Stimulus Funds Protected In Bankruptcy?

Whether your stimulus funds are protected in bankruptcy is a function of two things: Current Monthly Income (CMI) calculations, and the Bankruptcy Estate. We can easily address both concerns, which will hopefully give you a better understanding of what happens to your stimulus funds in a Chapter 7 bankruptcy.

Current Monthly Income In Bankruptcy

Generally speaking, one way to qualify for a Chapter 7 bankruptcy is to calculate your CMI. The bankruptcy code takes a broad definition of income, and includes gifts, inheritance, W2 income, income from small business, etc. If you’re receiving stimulus funds during the 6-month period prior to bankruptcy, you want to know if those funds are added to your income averages. After all, it could mean the difference between qualifying for bankruptcy or not.

There’s good news regarding stimulus funds and CMI. Your stimulus funds are not included in your CMI calculations for Chapter 7. Accordingly, you also can not use anticipated stimulus funds when calculating your ability to re-pay creditors in a Chapter 13.

The Bankruptcy Estate

The second question to answer regarding stimulus funds is whether they are part of the Bankruptcy Estate. If an asset is part of the Bankruptcy Estate, then the bankruptcy trustee can pursue the asset in Chapter 7 unless you have a way to exempt it. If you have unexempt assets when filing a Chapter 7, you may decide to dispose of assets in an allowable way prior to filing, or to delay filing until the unexempt asset is otherwise addressed. Your bankruptcy attorney can assist with answering questions regarding reasonable planning prior to filing bankruptcy.

The Coronavirus Aid, Relief and Economic Security Act of 2020 (“CARES” Act) does not speak to the issue of whether funds received through the CARES Act are part of the Bankruptcy Estate. As a result, the safe approach is to assume the stimulus funds are part of the Bankruptcy Estate. This means you may be advised by your attorney to spend those funds on allowable expenditures prior to filing bankruptcy, or to use available exemptions to exempt the funds if you still have them in your possession at the time of your bankruptcy filing.

In Conclusion

While this may seem somewhat confusing, it is only one of many financial considerations your bankruptcy attorney will sort through with you prior to the filing of your case. Provided you’re aware of how the bankruptcy trustee will treat your assets, you can enter into bankruptcy without any surprises.

Speak With A Charlotte Bankruptcy Lawyer Today

Getting started with bankruptcy planning is easy. 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.

Emergency Bankruptcy To Stop Foreclosure

Yes, you can file an emergency bankruptcy to stop a foreclosure. If you’re behind on your mortgage and your mortgage lender is about to sell your home in foreclosure, a Chapter 13 bankruptcy filing will freeze the foreclosure proceeding. Then, as long as you make your Chapter 13 payments as scheduled, your Chapter 13 plan will allow you to get caught up on the mortgage over the Plan period (typically 60 months).

What If The Sale Already Took Place?

In North Carolina, after a foreclosure sale, you have ten days within which you can file a bankruptcy to stop the foreclosure. If you have a court paper showing a sale date of January 1st, you would have 10 days after that date to file your Chapter 13 bankruptcy. Weekends and holidays are included in the 10 days, and if your 10th day falls on a weekend or holiday, you have until the next business day to file your Chapter 13.

Will My Mortgage Lender Object To The Bankruptcy?

Most mortgage lenders have no objection to a Chapter 13 bankruptcy. After all, it’s a court-approved plan to get caught up on the mortgage. The mortgage lender will file documents with the court laying out the balance owed on the mortgage and the amount you are behind (The “Arrears”). Your Chapter 13 bankruptcy lawyer will calculate your plan payments for you based on these figures as well as your monthly income and expense figures.

Even if the mortgage lender does object to the Chapter 13, there objection will not survive provided your Chapter 13 plan proposes to pay the normal monthly mortgage payment each month and make up the arrears over the course of the plan.

How Quickly Can I File An Emergency Bankruptcy?

Whether it’s a Chapter 7 or a Chapter 13, an emergency bankruptcy can be filed very quickly. You’ll need to take the mandatory online course required by the statute (it takes an hour), and you’ll need to meet with our firm to sign your bankruptcy petition prior to signing.

When you file an emergency bankruptcy to stop foreclosure, providing the court with the required documentation is very important. Typically, our firm will prepare for quite some time with a client before filing their bankruptcy. When we file an emergency bankruptcy, we have fourteen days to provide the court with the remainder of the information required for a successful bankruptcy. So, getting it filed is the first step, but be prepared to work quickly together to fulfill the remainder of the court’s requirements.

How Do I Get Started?

Getting started with an emergency bankruptcy to stop foreclosure is easy. 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.