Tag Archive for: charlotte bankruptcy attorney

What Does Bankruptcy Do To Your Credit Score?

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What Does Bankruptcy Do To Your Credit Score?

Bankruptcy affects your credit score differently, depending upon what your credit score is just prior to filing. You can expect that your credit score will drop after filing bankruptcy, but it will also recover quickly if you take the right steps after bankruptcy to increase your credit score.

If your credit score is above 650 before filing bankruptcy, you can expect a significant drop in your credit score, according to Experian. However, you should remember that your purpose for filing bankruptcy is less related to your credit score and more related to being able to balance your budget. You can recover your credit score after the debt is gone.

If your credit score is below 650 before filing bankruptcy, you can expect your credit score to drop but not in a significant way. In fact, your credit score will bounce back within a year from filing the bankruptcy and go up from there.

Does Chapter 7 Affect My Credit Score Differently Than Chapter 13?

When it comes to your credit score, it does not matter what chapter of bankruptcy you file. Some clients feel better about filing a Chapter 13 than a Chapter 7 because in Chapter 13 you are paying back some of your debt. We encourage clients to file the chapter of bankruptcy that makes most financial sense for them. We help you to make that decision, of course.

Improving Your Credit Score After Bankruptcy

Keep in mind that while filing bankruptcy lowers your credit score, you will also get a bump up in your score when your debt to income ratio changes. While filing bankruptcy doesn’t change your income, it does change your debt. As a result, your “debt to income” ratio changes in your favor. This is one of the key factors used to calculate your credit score.

Once your bankruptcy case closes, the key to improving your credit score is to make payments to creditors who will report your payments to the credit reporting agencies. Most commonly, mortgage payments and vehicle loan payments are a way to do this. If you do not own a home or car, you can take out a secured credit card at a local credit union. This is a quasi-credit arrangement where you give the credit union a small amount of money. Then, each month, you spend or borrow against that money by making purchases on the card. When the monthly statement comes, you pay it off. In exchange, the credit union will report your payments as positive payments to the credit agencies and it will help build your credit.

Speak With A Charlotte Bankruptcy Lawyer Today

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article regarding “What does bankruptcy do to your credit score?” was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful.

 

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How Does Bankruptcy Work In NC?

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How Does Bankruptcy Work In NC?

The way bankruptcy works in NC is that you file either a Chapter 7, Chapter 11, or Chapter 13, and follow the rules provided by the bankruptcy code in order to obtain your Discharge in bankruptcy.

The Length Of Your Bankruptcy

Depending upon which chapter you choose, the length of your bankruptcy will differ. If you choose Chapter 7, you will have a 341 Meeting about 45 days after the filing of your bankruptcy. Your Charlotte bankruptcy attorney will attend the meeting with you, and you’ll answer questions from the trustee. Generally, creditors do not show up to this meeting.

About 60 days after your 341 meeting, provided there are no challenges to your bankruptcy, you will receive your Discharge. This means the court agrees that your bankruptcy filing is proper and your debts should be extinguished by way of your bankruptcy filing.

Sometime between the 341 meeting and the entry of your Discharge, your trustee will typically close your case as well. This means the trustee has reviewed the case and determined there are no assets to distribute to creditors. Once the trustee has closed your case, and the court has entered your Discharge, your Chapter 7 is complete.

Choosing Chapter 13 Bankruptcy

If you choose Chapter 13, the answer to the question “How does bankruptcy work in NC?” has a slightly different answer. Mainly, the difference is the length of your bankruptcy is much longer. However, there is good reason for this. Most people choose Chapter 13 to save a house or car if they are behind on payments. The Chapter 13 is typically 60 months long and allows you to get caught up on these payments while preventing your creditors from trying to take action against you. So long as you make your Chapter 13 payments, when you reach the final payment you will be caught up on the house and car, and you will also receive a Discharge for you unsecured debt (credit cards, medical bills, etc.).

Despite the length of a Chapter 13, provided you make your Chapter 13 payments on time, you should not have to attend court during your bankruptcy. If there is the need for a hearing, your attorney can often attend without you, which makes Chapter 13 quite convenient.

Choosing Chapter 11 Bankruptcy

A Chapter 11 bankruptcy is similar to a Chapter 13 bankruptcy; however, it is more suitable to corporations and small businesses that need to “reorganize” their debt. Whereas the trustee approves or recommends a Chapter 13 case for confirmation to move forward, your attorney must negotiate with each creditor in a Chapter 11. Despite this, the result is fairly similar—you enter into an agreement to pay back a percentage of your debt in exchange for protection of the bankruptcy court.

Speak With A Charlotte Bankruptcy Lawyer Today

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful.

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Bankruptcy And Car Loans

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Bankruptcy And Car Loans

This article will help address the concept of bankruptcy and car loans. One of the myths of bankruptcy is that you can’t keep a car when filing a Chapter 7 or Chapter 13. Another myth is that old car loans are not addressed by bankruptcy. There is good news regarding both of these situations.

Protecting The Equity In Your Car

When you file bankruptcy, the primary question you face regarding your car is related to equity. Equity is the difference between the fair market value of your car and the loan balance. If your car is worth $10,000 and you have a loan balance of $7,000, you have $3,000 in equity. Equity is an asset in bankruptcy and you must protect or “exempt” it by using the appropriate bankruptcy code exemption.

Generally, there are two exemptions you can apply to vehicle equity. First, there is a specific exemption under N.C.G.S. Sec. 1C-1601(a)(3). This allows for an exemption of $3,500 in equity in a vehicle. In the analysis above, claiming that exemption would protect your car. If you had additional equity above $3,500, you could also elect to use the Miscellaneous Property “Wild Card” exemption under N.C.G.S. Sec. 1C-1601(a)(2), which gives you another $5,000 to protect any property you like.

Keeping Your Car In Bankruptcy

If you want to keep your car in bankruptcy, after protecting any equity you have, you will then need to reaffirm your car loan. The general rule is if you want to keep the property, you need the keep the loan that comes with it. This is easy to do. When you file your bankruptcy, you simply elect to reaffirm the debt. Your vehicle lender will prepare a reaffirmation agreement at the same terms you currently have. You will sign and file this document as part of your bankruptcy process. As a result, your payments will resume and you can keep your car.

Surrendering Your Car In Bankruptcy

One upside to the analysis of bankruptcy and car loans is that you can also choose to surrender your car. You may choose to do this if you have negative equity or simply know the car needs repairs and you don’t want to keep it. By surrendering the property in bankruptcy, you are protected from your vehicle lender pursuing you for any loss they take on the sale of the vehicle.

Vehicle Repossessions In Bankruptcy

If you have prior vehicle repossessions, bankruptcy will address that lingering debt as well. If you’re filing bankruptcy and old car loans are still showing on your credit report, they will be discharged as part of the bankruptcy. This eliminates your exposure to these items.

Speak With A Charlotte Bankruptcy Attorney

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

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Should I File Bankruptcy?

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Should I File Bankruptcy?

We know this is a common question: “Should I file bankruptcy?” We know the idea of filing Chapter 7 or Chapter 13 bankruptcy can be daunting. The decision may bring up feelings of guilt or fear or even shame. Our very strong advice is to ignore those things and focus on you and your family. Bankruptcy is an extremely powerful form of relief that can dramatically change your life for the better.

Myths Surrounding Filing Bankruptcy

There are a few myths surrounding filing bankruptcy. It’s worth it to make sure you know the facts. Here are a few things that keep people from filing, when they deserve the relief of bankruptcy:

Nobody Else Files – This just isn’t true. In fact, statistics show us how many people have filed for bankruptcy between 2006 and 2017. All types of individuals file for bankruptcy, including lawyers, doctors, and politicians. Like you, they are often a victim of bad circumstances. Bankruptcy represents a solution.

Everyone Will Know I File – This is not true. While the filing is technically public knowledge, it is a federal filing. We get calls from lawyers every week asking us to use our login to access a bankruptcy filing. This should tell you that it’s not that easy to find a list of people who have filed for bankruptcy. Your neighbors won’t know.

My Employer Will Know – Generally, your employer is not made aware that you filed for bankruptcy. If you have a job that requires you to be bonded for handling large sums of money, we make sure to discuss that with you; otherwise, we have yet to have a client report back to us that they have had problems with their employer. If you are ever in a position to discuss your bankruptcy, your response is an easy one: I did the best thing for myself and my family, and things are much better now.

My Credit Will Be Ruined If I File Bankruptcy – Not true. For most individuals, your credit will drop about 75 points when you file. About a year after filing, your credit score will be back to what it was right before you filed. From there, it should only go up. We provide all of our clients with guidance regarding credit score repair as well.

I Won’t Be Able To Buy A Car – Not true. Within the first year after filing bankruptcy, you will receive offers for vehicle financing. Should I file bankruptcy if I could never buy a car again? Probably not. But you’ll find that’s just not true.

I’ll Never Have A Credit Card Again—Not true. You’ll receive plenty of credit card offers from the same banks whose debt went away in bankruptcy. Another reason why you shouldn’t lose sleep over banks not getting paid if you file bankruptcy.

Overcoming Feelings Of Guilt

We know guilt is a real feeling. If you listen to any motivational speakers, they would acknowledge guilt as an obstacle between you and your goal of financial freedom. Many motivational speakers tell you that in order to overcome an obstacle, you should focus on what happens if you DON’T take action. The fear of that will usually be enough of an incentive to help you overcome the obstacle. During conversations with our clients, we focus on the client, their family, and the future. If bankruptcy is going to provide the refresh necessary to kick start a great future, we encourage the clients to ignore the guilt.

Speak With A Bankruptcy Lawyer Today

If you’re considering filing bankruptcy, it helps to speak with someone. That’s why we’re here. Call us today at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly. The future is bright—bankruptcy could be a crucial step to making it a reality.

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Emergency Bankruptcy Filing

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Emergency Bankruptcy Filing

If you need an emergency bankruptcy filing, we can help. Most emergency bankruptcy filings are for the purpose of stopping a foreclosure in North Carolina. Provided you file your bankruptcy within 10 days after the official sale of the property, the emergency bankruptcy filing will halt the foreclosure due to the very powerful Automatic Stay in bankruptcy, governed by the Bankruptcy Code at 11 U.S.C. Sec. 362.

What Happens Next?

We don’t need much information to file an emergency bankruptcy filing; however, the clock starts ticking on our duty to provide the remaining information required to complete your bankruptcy. Typically, the list of documents we need is:

  1. Drivers License and Social Security Card.
  2. Most current statements for each the following: vehicles, home mortgage.
  3. SIX months of bank statement from ALL bank accounts.
  4. Full copies of tax returns (Federal and State) for 2016 and 2017– both should have already been filed. If you are filing a Chapter 13 you MUST have filed the last 4 years of tax returns prior to having your bankruptcy case filed.
  5. Registration cards for all vehicles owned.
  6. Six months of pay stubs (matching the info entered through the online questionnaire).
  7. Declaration pages for all life insurance policies. These must show the type of policy, the amount of the policy, the beneficiary and the current value.
  8. Balance statements on all retirement (401k, IRA, etc) accounts, showing they are in fact retirement accounts and therefore entitled to be excluded from bankruptcy.

Delivery Of Bankruptcy Documents

Our office will work with you to retrieve this documentation from you as easily as possible. We accept (and prefer) PDF or electronic copies. We also have an online portal where you can upload the documents.

Emergency Chapter 13 Bankruptcy Filings

Most of the time in order to stop a foreclosure, you’ll file a Chapter 13 bankruptcy. We’ve written extensively about Chapter 13 filings on our blog. A Chapter 13 gives you the chance to continue to make your normal mortgage payment, and use the 5 year period to ‘catch up’ on the amount you’re behind. There are also numerous other benefits to a Chapter 13, depending on the type of debt you have. They include:

Lower interest rate on vehicle loans (Can I Keep My Car In Bankrutpcy?)

Lowering the balance on vehicle loans to the Fair Market Value of the vehicle

Paying pennies on the dollar to unsecured creditors

Painless voiding or exiting of contracts you do not wish to continue

Paying off taxes to the IRS or Department of Revenue (Taxes In Bankruptcy)

How Much Will My Chapter 13 Payment Be? (Chapter 13 payment factors)

Your Chapter 13 payment will be a function of how far behind you are on your mortgage, together with your ability to pay. Your ability to pay is based on your budget. Don’t worry, we work with you to present a budget to the court. Before you file, you’ll know your estimated Chapter 13 payment and should feel comfortable that you’ll be able to make the payment.

Speak With A Charlotte Bankruptcy Attorney Today

If you’re facing a foreclosure or even a wage garnishment, an emergency bankruptcy filing may be a great choice for you. Call us at 704.749.7747 to speak with an attorney today, or click for a FREE CASE EVALUATION and we will reach out shortly.

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Charlotte Bankruptcy Attorney Reviews

Charlotte Bankruptcy Attorney Reviews

Charlotte bankruptcy attorney reviews should be an important part of your decision to hire a bankruptcy lawyer. Often, reviews are less specific as to the results the bankruptcy attorney achieved and more specific as to the experience the individual had with the law office. This will help you make a decision between two attorneys or law firms that you think would be good choices for you.

Can I Rely On Charlotte Bankruptcy Attorney Reviews?

Generally speaking, you should be able to rely on attorney reviews on Google. Google has a trustworthy process for making sure reviews are genuine, and not just “made up” by the company trying to sell itself. You may also want to check facebook.com to see if the Charlotte bankruptcy attorney reviews on Facebook are similar to those on Google.

What If A Charlotte Bankruptcy Attorney Has A Bad Review?

Studies have shown that a law firm or business is actually more trustworthy if they have one or two bad reviews. In other words, you might be suspicious if the bankruptcy law firm had nothing but perfect reviews. It makes sense that after years of practicing bankruptcy, a law firm might have a few bad reviews from unhappy clients—unfortunately, it’s just a part of life for any business trying to serve the public.

Attorney Comments On Reviews

One thing you might look for in a bad review is whether the company or lawyer responded to the poor review. If they did respond, was their response one of regret that the person had a bad experience? Did the business blame the individual for the poor experience or outcome? The company’s response is a good way to judge how the company interacts with its clients or patrons.

Speak With A Charlotte Bankruptcy Attorney Today

Once you’ve read a law firm’s website to see if their material is relevant, and checked out their reviews, we recommend you call the firm. You should be able to speak with the bankruptcy attorney on the phone—not just a staff person. If the attorney is not available, you should expect a call back within 24 hours unless there are circumstances preventing it. If it takes a bankruptcy lawyer three days to return your call, you might predict that it will be tough to get your calls returned and your concerns addressed if you choose to work with that bankruptcy lawyer.

Request A Consultation

If you’d like to speak with a Charlotte bankruptcy attorney, give us a call. Part of our job is answering questions. We are happy to analyze your bankruptcy case, whether you end up filing with us or with another firm. What’s most important is that you find the right attorney for YOU. If we can help, we would love to. If we think another Charlotte bankruptcy attorney is a better fit, we can certainly recommend a few to you. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will be in touch shortly.

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Bankruptcy For Unsecured Debt

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Bankruptcy For Unsecured Debt

If you are considering bankruptcy solely for unsecured debt, you will still have to pass The Means Test in bankruptcy. Typically, if the debt you wish to discharge in bankruptcy is unsecured, our goal will be to qualify you for a Chapter 7 bankruptcy filing. Whether your bankruptcy filing contains secured debt or is a bankruptcy for unsecured debt only, the process is very much the same. Lastly, you’re not alone– between 2005 and 2017, over 12 million individuals filed bankruptcy. Of those, over 8 million were Chapter 7.

Types Of Unsecured Debt

There are numerous types of unsecured debt which will be included in a Chapter 7 bankruptcy. Below is a list of the primary categories:

Credit Card Debt – Most credit card debt is unsecured

Line Of Credit – Most lines of credit are unsecured, though some banks use your checking and savings accounts as security for these debts. Your credit agreement will govern this.

Store Cards – Store card debt (Belk, Best Buy, Gap, etc.) is unsecured; however, the store can claim a security interest in the items you purchased. Most stores will not attempt this, but an example would be purchasing a large ticket item at Best Buy. The store may claim a security interest in the television or other electronics you purchased. This is not usually an obstacle in bankruptcy.

Pay Day Loans – Pay day loans are unsecured.

IRS Tax Debt – The IRS may have a lien related to your tax debt. In most cases they do not. IRS debt is typically treated as priority debt for bankruptcy. This means it survives the bankruptcy for unsecured debt. However, if your IRS debt meets the requirements for being treated as unsecured debt, we may be able to discharge the IRS debt with your bankruptcy filing.

State Tax Debt – The same is true of state tax debt.

Can I Use Credit Cards Before I File Bankruptcy?

If you use your credit cards within 90 days of filing bankruptcy, there is a presumption of abuse. This means that the court will presume you knew you were going to file bankruptcy and continued to use the cards without the intention to pay back the debt. As a result, any charges placed on the cards within 90 days of filing bankruptcy will survive the bankruptcy. While this will generally not interfere with your bankruptcy filing, it will mean you carry a balance after the bankruptcy.

It is best to wait 91 days from the last purchase on a card, before filing bankruptcy. After the 91st day, the presumption shifts in your favor. This means that your creditors would have the burden of proving you knew you were going to file bankruptcy and continued to use the card(s) leading up to bankruptcy. They would also have to prove you had no intention of paying back the debt. This burden is time consuming and expensive for the creditor, and they usually lose the argument. For this reason, debt which is 91 days old or older at the time of filing your bankruptcy will typically be included in the discharge.

How Long Does Filing A Bankruptcy For Unsecured Debt Take?

We have previously written about the time frame for a Chapter 7 from start to finish, and you can read that post: How Long Does Bankruptcy Take? Generally, our firm is ready to file when you are. For most clients, the ability to pay for the bankruptcy is what poses a delay in filing. Supposing you are ready to file bankruptcy and ready to pay for your bankruptcy, our firm can typically prepare your bankruptcy within two weeks.

Speak With A Charlotte Bankruptcy Lawyer Today

If you have questions about filing a bankruptcy for unsecured debt, call us today to get started. The phone call is free and part of our job is answering questions. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will call you back today. We know you have choices. We hope you choose to Recover With Us.

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Tax Refunds In Bankruptcy

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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 protect42those new purchases with your household exemption under N.C.G.S. 1C-1601(a)(4).

Tax Refund Already Received—A tax refund you have already received prior to filing, but have not yet spent, is part of the bankruptcy estate and treated like cash. You may be able to use exemptions to protect the money.

Tax Refund Expected—A tax refund expected but not yet received is also part of the bankruptcy estate to the extent it relates to income earned prior to the date you filed your Chapter 7 bankruptcy. As a worst-case scenario, you will be required to turn over the return to the trustee. However, your bankruptcy attorney can also use exemptions to protect the expected tax refunds in bankruptcy, the same way you can protect the money that is in a savings account. The important thing is to disclose the expected return and exempt it in the bankruptcy filing.

Tax Refund For Years After The Filing—A tax refund received for income earned during a tax year after the year you filed bankruptcy (and all future returns) is yours to keep. They are not part of the bankruptcy estate.

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.

Tax Refund Already Received—A tax refund you have already received will be treated as an asset. While the trustee may not take the tax refunds in bankruptcy, any assets you own play a role in determining the amount you will ultimately pay to creditors in Chapter 13. The refund, if it can not be exempted, may bump up your Chapter 13 payment.

Tax Refund Expected—The safe assumption regarding tax refunds in an ongoing Chapter 13 is that they will become the property of the trustee. While you may use exemptions to protect an expected return, the typical Chapter 13 plan is 36 to 60 months.

Tax Refund For Years After The Filing—The same answer as directly above applies here. The tax refund is yours to keep and is not part of the bankruptcy estate.

Adjusting Your Withholding In Bankruptcy

One allowable way to help ensure 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 the annual chore of trying to prove to the Chapter 13 court that you should be allowed to keep your tax refund.

What Can I Do To Plan Around This?

In Chapter 7, you can spend your tax refund prior to filing. Or, make sure to put your attorney on notice that you expect to receive a return and be sure to exempt it or postpone filing until the asset has been spent on allowable items.

In Chapter 13, tax refunds in bankruptcy represent an ongoing issue, and the easiest way to manage it is to reduce your withholdings so that you’re receiving more in your paycheck on an ongoing basis rather than ‘storing’ up money with the IRS which will result in a large return.

If you do receive a refund in Chapter 13, disclose the return each year to the trustee. Each trustee’s policies (in different districts) differ. If you can show that you need some or all of the return for necessary expenses like home repairs or vehicle repairs, you may be able to keep some or all of the return. Your bankruptcy attorney should assist you in making this disclosure to the court, together with the argument that you have a need to use the return vs. it going to the trustee.

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.

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Bankruptcy And Mortgage Payments

Bankruptcy And Mortgage Payments

If you’re wondering how bankruptcy and mortgage payments work together, there is good news. Most bankruptcy clients are pleasantly surprised to find out they can keep their home in bankruptcy. After all, for most of us our home is our largest investment.

Chapter 7 And Mortgage Payments

If you are filing Chapter 7, you can keep your home if your equity in the home does not exceed the allowable exemptions in bankruptcy. Generally speaking, this is $35,000 per spouse or owner. Your equity is defined as the fair market value minus the total debt securing the home. We can also make adjustments for cost of sale (realtor fees, etc.) as well as repairs that you might expect a home purchaser to request. You can find one estimate of the fair market value of your home at Zillow.com.

When you file Chapter 7, you should be current on your mortgage payments, or less than 30 days behind. By the time you have your 341 meeting (about 45 days after filing), you’ll want to be sure you are current.

Chapter 7 And Your Mortgage Obligation

By filing Chapter 7, your mortgage debt is discharged. This means you technically no longer owe it. However, if you want to keep the property, you’ll need to keep the debt that goes with it. You will be given the option to sign a Reaffirmation Agreement in Chapter 7. This agreement renews the contract terms between you and the mortgage company, to be exactly what they were before you filed Chapter 7.

There are instances where you can keep the home and avoid signing a reaffirmation agreement, and your Charlotte bankruptcy attorney can discuss those instances in detail with you. In summary, you can keep your home in Chapter 7 and you may sign a reaffirmation agreement to go with it.

Chapter 7 And Surrender Of Your Home

You can also surrender your home in Chapter 7 if the mortgage payments are too much for you, or if the home is “upside down” (mortgage balance is higher than the fair market value). By doing this in bankruptcy, you avoid a situation where the mortgage lender can pursue you for any loss they take on the property. Your Chapter 7 filing protects you. You simply give the lender the home, and walk away from the debt.

Chapter 13 And Mortgage Payments

If you want to keep your home in Chapter 13, you can do so. This is true even if you are behind on mortgage payments at the time you file. Chapter 13 is unique in that it allows you to continue to pay your normal mortgage payment while slowly making up the amount you were behind at the time of filing.

Provided your Chapter 13 plan is approved and you follow the rules of Chapter 13, there is nothing your mortgage lender can do to prevent a successful filing. In fact, your mortgage lender is probably happy they are being paid in Chapter 13. When your Chapter 13 ends, you will be current on your mortgage and all of your pre-petition back payments will be caught up.

Speak With A Charlotte Bankruptcy Lawyer Today

If you have questions about bankruptcy and mortgage payments, call us at 704.749.7747 to discuss your situation. You’ll get answers to your questions, and you’ll understand your options. You can also click for a FREE CASE EVALUATION and we will reach out to you to discuss your case.

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Can I Keep My Bonus In Chapter 13?

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This video helps you understand how a bonus works in Chapter 13. The Layton Law Firm PLLC routinely represents bankruptcy clients who receive annual bonuses or commissions. We have been able to successfully assist clients in keeping those bonuses and commissions in Chapter 13. If you are considering filing bankruptcy, we are here to help.

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 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 that 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 that you have not yet earned, there is good case law that 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 that 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.

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