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Social Security Benefits And The Means Test In Chapter 7

If your income is low enough, you will automatically qualify for Chapter 7 bankruptcy. However, many clients have income slightly above the median income level, and must pass The Means Test in order to qualify for Chapter 7. This is not uncommon. The Means Test is simply a comparison of your income to your debts—some actual, and some allowances by the bankruptcy code.

Fortunately, The Means Test focuses on your most recent six months of income. This allows you to take advantage of some timing, if you have inconsistent income or unusual income which will not continue into the future. Your bankruptcy attorney will discuss this in more detail with you.

Types Of Income Included In The Means Test

The safe assumption is that every dollar hitting your accounts each month will be considered income for the purpose of The Means Test. This includes spousal support, support from family members, W-2 income, 1099 income, retirement income, and 401k early withdrawals.

Types Of Income NOT Included In The Means Test

While Veterans’ benefits DO count as income for The Means Test, Social Security benefits DO NOT. This means you may pass The Means Test if a large part of your income each month is Social Security benefits.

Current Monthly Income

Current Monthly Income is different from The Means Test calculation. Once you pass The Means Test, you still have to complete a budget reflective of your current income for the month. This is different from your income from the past six months. Additionally, you get to compare your actual expenses to your actual income for the month, where The Means Test does not always allow you to take your actual expenses. Even though your Social Security benefits will be counted in your Current Monthly Income, if you passed The Means Test, you should have nothing to worry about when it comes to Current Monthly Income calculations.

Further Reading

Want to learn more? Read one of over 100 articles on our Bankruptcy Blog Articles.

Speak With A Charlotte Bankruptcy Lawyer Today

The easiest way to get a better idea of whether you qualify for Chapter 7 is to speak with a Charlotte bankruptcy attorney today. You can call us at 704.749.7747 or click for a FREE CASE EVALUATION. After a brief discussion with an attorney, we can usually give you a good idea as to whether you will qualify for Chapter 7. We can also help confirm if a Chapter 7 or a Chapter 13 is the best choice for you.

How Can I File Bankruptcy And Keep My Car?

Easily, that’s how. Whether you can file bankruptcy and keep your car is a question of the fair market value of the car at the time of the bankruptcy filing. That value is compared with any outstanding balance on the vehicle at the time. The difference between the fair market value and the outstanding loan balance is the equity. For example:

Vehicle: 2016 Toyota Camry
Fair Market Value: $15,500
Outstanding Loan: $13,000
Equity: $2,000

In the example above, we have a vehicle that is essentially worth $2,000 for bankruptcy purposes. The reason is that if you were to sell the vehicle, you would only end up with $2,000 after the loan was paid. For the purposes of your bankruptcy filing, this is a $2,000 asset.

Using Exemptions To Protect Your Car

If you’re wondering “How can I file bankruptcy and keep my car?” the federal bankruptcy code provides exemptions for each person filing bankruptcy which usually allow this. Some exemptions are specific to the type of property, while others can be applied to any property you choose. Each person filing Chapter 7 or Chapter 13 bankruptcy is entitled to use a vehicle exemption of up to $3,500, per N.C.G.S. Sec. 1C-1601(a)(3). Under the scenario above, you can keep the vehicle in a Chapter 7 filing.

What If My Equity Exceeds The Vehicle Exemption?

If the above example resulted in $4,000 of equity, you would exceed the exemption allowed under N.C.G.S. Sec. 1C-1601(a)(3) by $500. In that case, you could use some of the $5,000 exemption allowed under N.C.G.S. Sec. 1C-1601(a)(2). This is commonly known as the Wild Card exemption, and if it has not been applied to protect your primary residence, you can use it to protect any other property you own.

What If My Vehicle Does Not Have A Loan?

If your vehicle does not have a loan, the equation is still the same. In that case, the fair market value of your vehicle is the same as the equity. That amount would need to be protected or ‘exempted’ by using the NC bankruptcy exemptions. If the fair market value of your vehicle exceeds both the NC motor vehicle exemption and the NC wild card exemption, you may have ‘exposed’ equity, which would have to be addressed in the bankruptcy with the bankruptcy trustee. This is discussed below.

Addressing ‘Exposed’ Equity In Chapter 7

If you have additional equity which cannot be exempted with your NC bankruptcy exemptions, your attorney will negotiate an arrangement with the trustee by which you pay some or all of that exposed equity to the court. Typically, in order to avoid a sale of the property, which is costly and time consuming, the trustee will be flexible in reaching an agreement for a discounted amount. For example, if you have $2,500 of equity which cannot be exempted, you will list it as such on your bankruptcy filing.

The trustee assigned to the case will negotiate with our firm to have you pay an agreed upon amount to the trustee over time. A reasonable agreement in this scenario would be a payment of $1,500 (payments of $250 each) due in equal installments over the next six months. When the payments are complete, you will receive your discharge in bankruptcy and of course this means you get to keep your car. While this is not the best answer to the question “How can I file bankruptcy and keep my car?” it does provide a solution where there’s too much equity for bankruptcy purposes.

Speak With A Charlotte Bankruptcy Attorney Today

We’re here to answer the question “How can I file bankruptcy and keep my car?” Hopefully this article helped. Filing Chapter 7 can be a powerful relief, but certain rules must be followed to insure you get the result you desire. Your Charlotte bankruptcy attorney can identify the challenges associated with your case prior to filing, and discuss them with you. Once you have an agreed upon plan of action, you can file your case with the confidence that you’ll get the result you desire. If you’d like to speak with an attorney today about Chapter 7, call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will call you today. We know you have choices. We hope you choose to Recover With Us.

Bankruptcy And Gifts

This article will discuss both the giving of and the receiving of gifts in bankruptcy. If you’d like to speak with a bankruptcy attorney today, call 704.749.7747 or click to request a FREE BANKRUPTCY CONSULTATION and we will reach out to you.

Receiving Gifts In Bankruptcy

Most gifts you receive can be kept. The key to a successful bankruptcy is disclosure. If you receive a gift prior to filing bankruptcy, you should disclose that gift. Generally, that gift will either be an asset (Diamond Ring), or income (Cash). When it comes to bankruptcy and gifts, you can generally use your Bankruptcy Exemptions to protect your assets from the bankruptcy trustee. If the gift is considered income for bankruptcy purposes, it will need to be counted and included in the Means Test calculations.

Gifts received after you file bankruptcy are typically not part of the bankruptcy estate, and therefore not a problem. A general exception would exist if you became entitled to the gift before you filed bankruptcy. In that case, the gift should be disclosed in your bankruptcy filing, and an exemption can be used to protect it—this, even though you haven’t received the gift yet at the time of filing.

Giving Gifts In Bankruptcy

If you give gifts to others before you file bankruptcy, there are instances where those gifts can be deemed Fraudulent Transfers. Fraudulent transfers are subject to being ‘undone’ by the bankruptcy trustee. In that case, the trustee can pursue the person who received the gift in order to have them turn it over to the court. Or, in the alternative, you can offer to pay the value of the gift to the trustee to settle the issue. As it relates to bankruptcy and gifts, this is obviously a horrible outcome, so the key to avoiding a situation like this is disclosing all gifts to your bankruptcy attorney before you file. Your bankruptcy attorney may recommend you wait a certain time to file, so that the gift is no longer an issue. Lastly, your bankruptcy attorney may recommend disclosing the gift with an explanation to the trustee as to why it should not be considered a fraudulent transfer.

Bankruptcy and Gifts Are Not Usually A Problem

For most people, filing bankruptcy is done out of necessity. It’s very infrequent that a client is giving away assets just before filing bankruptcy. Typically, clients have very few assets to their name when they file bankruptcy. If you’re in doubt about a transaction, simply tell your bankruptcy attorney and you can discuss how to address the item in your bankruptcy filing. Remember, if you’re filing bankruptcy and gifts are a concern, disclosure is the key.

The Statement of Financial Affairs is the part of the bankruptcy petition where you disclose gifts. The safe assumption is to disclose any gifts exceeding $600 (total) over the past 4 years to any individual. The same is true of charities, though the threshold for charitable allowances is much greater and again, typically not a problem.

Speak With A Bankruptcy Lawyer

If you’d like to speak with a bankruptcy attorney today, call 704.749.7747 or click to request a FREE BANKRUPTCY CONSULTATION and we will reach out to you. We know you have choices. We hope you choose to Recover With Us.

The answer is NO, you can’t keep credit cards in bankruptcy. But there’s good news, too. Keep reading.

When you file your bankruptcy, you’re only required to notify your creditors with whom you carry a balance. However, even credit card companies you have a zero balance with will be notified of the bankruptcy filing. They receive that notice through credit reporting agencies. When they receive the notification they will typically freeze and close the account. They do this as a policy, and it has more to do with bankruptcy than it has to do with their relationship with you. So, don’t take it personally.

Your credit card debt is discharged in bankruptcy. This means without a reaffirmation agreement in place, the debt is no longer your responsibility. This is part of the powerful relief of Chapter 7 bankruptcy. Reaffirming or re-entering into credit card debt is typically not a wise choice, and most courts frown upon it. So, when a credit card company realizes someone has filed bankruptcy, the safest thing for them to do is close down the account. This doesn’t mean you won’t be able to do business together again in the future.

Credit Cards After Bankruptcy

It’s reasonable to wonder whether you will be able to obtain credit cards after bankruptcy. Some clients want a credit card for emergency purposes, or to rebuild their credit score. others simply want to know when things will return to “normal” in terms of relationships with credit card companies.

There are two types of credit cards: Unsecured and Secured. An Unsecured credit card is the type of credit card most of us are familiar with. The bank loans you money, and you repay that money with a monthly payment. If you fail to re-pay, the bank can sue you for the outstanding amount. A Secured credit card works a little differently. You start off by depositing money into an account at the bank (typically a credit union). Then, you’ll be allowed to charge against those funds. Each month, you’ll receive a monthly statement and a minimum payment. This arrangement is beneficial to the bank because your ‘debt’ is secured by your deposit. For someone with a low credit score of just coming out of bankruptcy, this is a great option because it allows you to build your credit score—your monthly payments to the bank will be reported to the credit agencies and your score will build accordingly.

Credit Card Offers After Bankruptcy

After you receive your discharge in bankruptcy, you may be surprised at how many offers for credit cards you receive. Clients are always surprised to hear this. The reasons make sense, though. First, by filing bankruptcy you have eliminated a lot of debt. Individuals without debt are good candidates for credit cards. Second, your debt to income ratio has improved. While your income has not changed, your debt has gone down. Again, you look like a good candidate for extending credit. Lastly, banks know you can’t file bankruptcy again for several years. This means that you’re more likely to re-pay any credit card debt you incur after bankruptcy.

Speak With A Bankruptcy Lawyer Today

If you have questions about bankruptcy, we’re here to help. Most of the answers are surprisingly better than you think. If you’d like to speak with a bankruptcy lawyer call us at 704.749.7747 today. Or, click HERE to request a call from us. We know you have choices. We hope you choose to Recover With Us.

The purpose of this article is to explain the effect of a writ of execution, and help you understand your options which include filing bankruptcy.

Your Pain

If you’ve received a writ of execution, it’s because a creditor has a judgment against you and is trying to collect on that judgment. The writ of execution will be served or delivered on you by the Sheriff. Essentially, it gives the Sheriff the power to take assets which you own, in an attempt to pay off the judgment.

Prior to the writ of execution, you should have received a Notice of Right To Claim Exemptions, which is important to complete and submit in a timely manner. This notice allows you to exempt some or all property so that a Writ of Execution will not later harm you.

If the Sheriff shows up with the Writ of Execution, the best thing you can do is communicate with them. If you plan to file bankruptcy shortly, you should tell them that. You can even give them your bankruptcy lawyer’s name and phone number. Usually, the Sheriff will want to know if you have a bankruptcy case number—you don’t get one of those until you file; however, the Sheriff may also give you an extension to allow you some time to get your bankruptcy filed.

How We Help

As Charlotte bankruptcy attorney, my job is to keep creditors from seizing your assets. We can confirm that you are working with our firm to file a bankruptcy, and even tell the Sheriff’s office when we expect to file the bankruptcy. Additionally, we can help you understand the effect of a Writ of Execution, a Judgment or a Notice of Right To Claim Exemptions.

Mainly, if creditors have a judgment against you or are pursuing judgments, it’s time to talk to a Charlotte bankruptcy attorney about whether filing a Chapter 7 is the right choice for you. Whether you file with our firm or another firm, part of our job is helping you understand the options.

Next Steps

If you are having trouble with creditors and would like to know more about the option of filing a bankruptcy, give us a call. Phone consultations are free and we’re here to help. Most consultations can be done over the phone. You’ll get the guidance you deserve and you’ll be empowered to take next steps. Call 704.749.7747 or click HERE to request a consultation. We hope you choose to Recover With Us.

Our firm can ONLY assist with unemployment benefits questions in North Carolina. If you are not located in North Carolina, you should contact a law firm or attorney in your state.

Generally, North Carolina unemployment benefits are exempt from garnishment. Like everything else, there are exceptions. Orders for garnishment may be granted for priority debts like child support or taxes, for example.

Protect The Status Of Your Unemployment Benefits

If you believe someone may be attempting to garnish your wages, you should speak with an attorney. If you’re looking to take action immediately, in addition to speaking with a bankruptcy lawyer consider where you are depositing your unemployment benefits.

If you’re depositing unemployment benefits into a joint account—an account with your name and another individual’s name on it—you may have trouble clearly identifying your unemployment benefits when someone attempts to garnish them. Additionally, if other funds are being deposited into that account, those additional funds, because the account is in your name, may also be subject to garnishment.

The simplest way to insure your unemployment benefits retain their protection from garnishment is to have them deposited into an account in your name only, and to not mix other funds in with that account.  If those funds are somehow garnished, you’ll stand a much better chance at recovering them by arguing they were protected and identifiable as unemployment benefits.

How Will I Know If My Funds Are Being Garnished?

A creditor has to go through the court system to garnish your funds. You will receive notice of this process if it is happening. It’s important to act quickly and speak with an attorney if you receive a notice from the court with a hearing date regarding the garnishment of funds. The hearing is your chance to defend against the garnishment and your attorney can advise you the best way to do that.

Should I Consider Bankruptcy?

If you are looking for a permanent solution to garnishment issues, we can help you decide if a Chapter 7 or Chapter 13 bankruptcy filing is the right move for you. A recent blog post discusses how unemployment affects bankruptcy and includes a short discussion about stimulus funds — we hope it helps.

If you have any questions about garnishment, bankruptcy or any other legal matter affecting you financially, please feel free to call us at 704.749.7747. If you’re interested in meeting Chris Layton, you can watch a one minute introduction video. You can also request a consultation HERE. We know you have choices. We hope you choose Layton Law.