My Charlotte bankruptcy clients impress me every day with their desire to be responsible and to keep promises they have made. Usually, that includes a desire to pay credit card bills up to the day of filing for a Chapter 7 or Chapter 13 bankruptcy. For this reason, once we know they have decided to file bankruptcy, they are reluctant when I give them the advice to stop paying on credit cards. But that’s exactly the advice I give them, because we are about to eliminate credit card debt from their life.

Once you decide to file a bankruptcy, it’s important to take every step possible to protect your money and begin creating positive cash flow for yourself. Your focus needs to be on having enough money for your family. To provide for them and keep them healthy. The debt to the credit card is going to be discharged as part of the bankruptcy, so there is no longer a reason to pay it. And there’s no reason to feel guilty about it—you’re only exercising your rights under the bankruptcy code.

This is debt forgiveness. You are not doing anything wrong. It’s OK to walk away from these debts with your attorney’s guidance.

By the time they have decided to file, most clients have stopped using their credit cards or have maxed them out. While this may be true, sometimes clients have one credit card they would like to keep paying on in hopes of keeping it after the bankruptcy. The fact is most creditors—even if you have not been late and are up to date—will close your credit account the day they find out your are filing bankruptcy. So paying on one card in hopes the creditor will allow you to keep it is not advisable. Not to worry, you will be offered credit shortly after filing, and there are options you can pursue for getting a secured credit card as well.

Additionally, while you can choose to keep your home in a Chapter 7 or Chapter 13 bankruptcy, if you know you are going to walk away from your home, you should stop making mortgage payments when you know you are going to file bankruptcy. Speak with your attorney about the amount of time you will typically have to remain in the home after you stop making payments but again, the goal is to create positive cash flow and also have money available to move to another home.

These decisions are challenging. It is your Charlotte bankruptcy attorney’s job to help you understand what your options are and help you to make a decision. If you’d like more information, use the contact us form, complete our online bankruptcy evaluation, or call me at 704.749.7747. You can make a change today.

I get excited for bankruptcy clients who are eager to rebuild their credit after filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, and so we are sure to discuss secured credit cards. After bankruptcy, clients want to avoid credit traps and living beyond their means. They are placing a high value on their peace of mind and living within their budget, and they know all too well the anxiety associated with being over-extended.

In order to rebuild credit, we need to demonstrate our ability to successfully play the “credit game.” This means we show banks that we are only going to use credit when we reasonably think we will be able to pay off an item in the next month, or consistently make payments on an item over time. So rebuilding credit does require getting back into the credit game. Secured credit cards are a key part of that.

Secured Credit Cards

Secured credit cards are the place to start. A secured credit card requires the borrower to place an initial deposit  of $300 to $500 with the bank. That deposit then becomes the credit line. If it sounds like you’re borrowing from yourself, that’s ok. Remember, the point of this is to demonstrate to banks that you are going to use credit responsibly.

Typically, after a bank sees that you’ve used the card consistently and made payments consistently they will extend you an unsecured credit card. This takes about a year. It’s also a great year for you because on the heels of filing bankruptcy, you are demonstrating to yourself that you are operating within your budget.

What To Look Out For

Mainly, when it comes to secured credit cards, you want to examine the fees. Some cards have application fees. All cards have annual fees. The cards can be fee heavy, so it’s worth it to seek out the lowest fee card and do some research. Make sure you are asking not only about fees to get started, but what fees you will see over the course of the year—some cards make it a requirement that you purchase insurance through them but you might not know that until it shows up on your bill a few months into the agreement. Again, find out the fees before committing.

Bankrate.com has a list of secured credit card options. If you are a member of a Credit Union, check with them because some Credit Unions offer secured credit cards to their members.

Rebuilding Your Credit

Buy a few things on the card each month and pay them off each month. Remember that you’re using the card to rebuild credit, not to enable the purchase of items you can’t afford in the moment. So it’s best to already have money set aside for the item you are purchasing, but to choose to pay for it with the credit card. Then, when the bill comes, you pay it back down to zero.

If you have questions about a secured credit card or would like to discuss your options in bankruptcy, email me at chris@thelaytonlawfirm.com or call 704.749.7747 today. I’m a Charlotte bankruptcy attorney and I’m here to help.

Clients often ask “Can I keep one credit card?” We have been taught that credit cards are “good.” That it is a wise choice to have one in case of an emergency. Or, even if you don’t plan to use it for emergencies, it’s a great way to build credit. Credit cards also admittedly create comfort for us—they help us deal with the ebbs and flows of our financial life. We can take up some of those theories at a later date. In the meantime, let’s talk about credit cards after you file bankruptcy.

Most of my Charlotte bankruptcy clients want to know if they can keep an existing credit card through a bankruptcy, or if they will be able to get a credit card after filing a Chapter 7 or Chapter 13 bankruptcy. The simple answer is no. Read more to find out why.

Keeping A Credit Card During Bankruptcy

In today’s financial world, when creditors are informed that their client (that’s you) is filing a bankruptcy, they freeze the account. An exception would be a credit card company which has you sign a new agreement with them allowing the card to remain open in exchange for your agreement to NOT include it in the bankruptcy. While that may be an option, it is the exception, not the norm.

The creditors first receive notice of the bankruptcy from the bankruptcy court, a few days after your file your bankruptcy petition. Your credit report will also reflect the filing of the bankruptcy and many credit card companies keep close tabs on credit reports of their customers. We can make an attempt to keep a card in bankruptcy, but the likelihood is that the account will be terminated at the discretion of the credit card company upon filing the bankruptcy petition.

The Ability To Obtain New Credit Cards

First, you don’t absolutely need credit cards. So, even if you can’t get a credit card right after filing, you will be ok. I’m confident of this because my clients and I have discussions about how they are going to manage their finances going forward, and very rarely does this involve the use of a credit card. And this is pleasing to most clients. It’s the freedom they have been looking for.

You will probably be pleasantly surprised to find out that you will typically get credit card offers after filing bankruptcy. The rates will not be favorable, but the offers will come. Over time, the rates will get better, as your credit builds. In the alternative, you can obtain a secured credit card. A secured credit card requires a down payment by you, but then offers or extends credit up to that amount. This can actually be a great product for someone who is looking to stay in the credit game while also practicing effective management of a line of credit. Look for an upcoming post on secured credit cards to get the inside scoop on how they help you rebuild your credit.

In the meantime, email me at chris@thelaytonlawfirm.com or call me at 704.749.7747 to discuss your options in bankruptcy. I’m here to help.

People often put off filing bankruptcy because of the fear of what it will do to their credit score. We have been taught that a high credit score is a requirement for a happy life. In fact, it is not. You can be perfectly happy and make healthy financial decisions with a low or recovering credit score. But you can’t do it if you’re overwhelmed with debt. A bankruptcy fixes that.

The fact is, a Chapter 13 bankruptcy will remain on your credit history for seven years from the day you file. Because a Chapter 13 repayment plan lasts 3 or 5 years, by the time you make your last payment, you’ve already gone through a few years of credit recovery. Alternatively, a Chapter 7 remains on your credit report for up to ten years. This seems like a lifetime. It isn’t.

Having a bankruptcy on your credit report will take you out of the home purchase market for a few years, it’s true. However, most clients start getting credit card offers a month after they file bankruptcy. My hope is my clients have a new clarity around managing their money and make smart decisions about credit after filing bankruptcy. Here are a few thoughts to consider.

I Need To Own A Home, Right?

There are millions of Americans who don’t own their home. This has always been true. It doesn’t mean you’re not spending your money wisely. If you are renting you are missing out on interest deductions on taxes and on appreciation on the value of the home over time. One look at today’s market will tell you that experts are unsure as to whether prices will continue to drop. In fact, if you bought a home three years ago, you’ve most likely lost money on it.

There Are Other Ways To Invest

If you’re concerned about missing out on the appreciation of a home because of the investment quality of it, keep in mind you can set aside the same amount of money each month into an IRA or other investment vehicle—stocks, bonds, etc. Even when recovering from bankruptcy, you can be responsibly planning for the financial future. Your credit score won’t keep you from doing this.

Consider Your Needs Today

A choice to file bankruptcy is both a long-term plan for financial stability and a short-term plan. While there are costs associated with credit extensions, the bigger picture is that you will reap the immediate reward of financial freedom. You will once again have disposable income. That is the foundation for building wealth. If you manage that disposable income wisely—by investing it and saving it rather than spending it on monthly credit card bills—you will start to accumulate wealth. And you do it under peaceful financial conditions. Less stress and more clarity.

Make a Call

Make a quick phone call today to talk to me about bankruptcy. I am genuinely excited to help people see the path before them and quickly achieve financial freedom from financial stress. You deserve the quality of life that comes with it.

Email me at chris@thelaytonlawfirm.com or call 704.749.7747 today for a free consultation about bankruptcy and an honest discussion about your best options.

Whether you qualify for bankruptcy certainly involves an examination of your income. Your income alone though, is not typically what determines whether you have the ability to file a Chapter 7 or a Chapter 13 bankruptcy. Instead of looking at just income, your attorney—and later the bankruptcy court—are looking for the balance that exists between your income and your monthly expenses.

Qualifying Automatically

There are minimum thresholds for income, which may automatically qualify you for bankruptcy. This is referred to as The Means Test in bankruptcy. In other words, if you make less than a certain amount per year, it doesn’t matter what your monthly debts are, you qualify and have the option to file. If you make more than that threshold income amount, this is where your Charlotte bankruptcy lawyer helps you determine if you’re still eligible.

I talk to people every day who don’t pass The Means Test. But the debt they are paying on each month makes them eligible to file! By the way, it’s that same debt that will ultimately be discharged in bankruptcy and give you the ability to once again live a healthy financial life.

Below are the income thresholds in North Carolina which are used for The Means Test. Find the number of people in the household that applies to you, and look at the income figures on the right. If you make less than that amount, you automatically qualify under The Means Test. If you make more than that amount, you and your attorney will compare your income to your expenses to see if you can still qualify.

The number of household members includes children, parents, or anyone else who lives in the home.

Household Annual Income Monthly Income
1 Person $37,892 $3,157
2 People $48,710 $4,059
3 People $54,310 $4,525
4 People $65,036 $5,419
Additional Persons $7,500 each $625 each

 

I Don’t Pass The Means Test. How Much Monthly Debt Do I Need?

When the amount of money going out each month exceeds the amount coming in, you are usually able to qualify for a Chapter 7. Chapter 7 is an expedited bankruptcy process that ends calls from creditors within one week after filing the bankruptcy petition with your attorney. If you do not qualify for a Chapter 7, a Chapter 13 is an option. This option involves making a (MUCH smaller) monthly payment to the bankruptcy court, and that payment is divided among your creditors. Once you make all of your payments, the debts are discharged.

Any competent bankruptcy attorney in Charlotte, NC can help you over the phone or in person, in quickly figuring out whether you qualify for a bankruptcy. Then, with your attorney’s help, you can decide if it’s the right option for you.

Email me at chris@thelaytonlawfirm.com or call me today at 704.749.7747 to discuss your options. One call is all it takes to begin the path to financial freedom.

Strategizing Together

Choosing the right lawyer to assist you in filing a bankruptcy is important. Together with your Charlotte bankruptcy lawyer, you will examine your options and choose a path of recovery that will dramatically improve your life. That may involve filing a Chapter 7 bankruptcy or Chapter 13 bankruptcy. In the alternative, it may mean your lawyer reaching out to negotiate with a mortgage company or other creditors on your behalf. A lawyer who places your best interests ahead of their own will gather information from you, ensure you understand your options, and help you make a choice.

Listening

I have been practicing law for thirteen years and I’ve found that the most important thing I can do for my clients is listen to them. It sounds simple enough, but every client has a unique history and individual goals and objectives. My job is to talk to them until I understand their situation and we create clarity around their objectives. Then I strategize with them about how to get those objectives met. Typically that involves filing a personal bankruptcy, but sometimes there are other options.

Forming a Working Relationship

Together with your attorney, you will have an ongoing working relationship. It’s important that you and all clients are regularly kept abreast of the progress being made for them, so my clients and I never get off the phone without deciding when we will talk next. We also talk about what is going to happen between this phone call and the next. It helps set expectations and provides us the focus we need to move forward quickly.

Staying Updated

You should be getting updates from your bankruptcy lawyer on a regular basis and you deserve to speak to the lawyer handling your case. I answer my own phone. I enjoy talking to my clients. They’re good people. It’s also the only way to fully understand what is important to them and help them achieve it.

Regular communication is also a way for me to make sure that my clients haven’t gotten stuck while trying to gather information. Third parties like the IRS and creditors can be slow to respond, and it’s not uncommon for me to assist clients in gathering information. It’s part of the job. The goal is to get to the finish line together, as quickly as possible.

Celebrating

Choose your Charlotte bankruptcy attorney carefully. You will get to know one another. You will overcome hurdles together. In the end, together you will celebrate the accomplishment you’ve achieved, and the bright future that lies ahead for you.

Call today. I’ll answer my phone personally, and we can talk about your options. 704.749.7747.

Do I have to go to the courthouse?

Yes. You will typically have to go to the courthouse one time, for what is called a 341 meeting. This meeting takes place about 40 days after you file your Chapter 7 or Chapter 13 bankruptcy. If you file Bankruptcy in Charlotte, NC, your meeting will be at the Federal Courthouse which is located uptown. It’s remarkably easy to get to and we will provide you with easy directions to it.

What is the meeting for?

The 341 meeting is a meeting of creditors. Despite that, your creditors do not often attend. Typically the individuals at the meeting will be you, your Charlotte bankruptcy attorney, and the bankruptcy trustee who is overseeing your case.

Will I be put on the stand and questioned?

You will answer some questions under oath, yes. The meeting takes place in a small conference room. You don’t have to take the stand. Either way, being under oath is nothing to fear. Your obligation is simple: be honest with the trustee in the same way you were honest with me and my firm leading up to the filing of your bankruptcy petition341 .  And, we will prepare together for the types of questions you will be asked that day. Your bankruptcy attorney will be there to support you as well.

What types of questions will I be asked?

The trustee will ask you to confirm your address, your marital status and whether you’ve filed before. They will ask if you listed all your debts and if anyone owes you money. They will ask you about potential inheritance, and whether you stand to have a reward from a lawsuit if you have filed one. They are generally attempting to make sure the petition that was filed is an accurate portrayal of your financial situation. It’s my job to help ensure the answer is yes. That makes the 341 meeting easier for you, and shorter as well.

The trustee may also ask the bankruptcy attorney some questions. That is not uncommon. All parties are being asked to confirm that they are familiar with the contents of the petition and to tell the trustee if anything has changed since filing.

How long will it last?

The meeting will generally last about 10 minutes. Sometimes shorter, sometimes a little longer. Remember, weeks prior to this meeting when you filed your bankruptcy petition, your creditors stopped calling. After attending the 341—a very important step—you will receive your discharge in about 60 days. That means that in addition to the creditors no longer calling you, your obligation to repay the debt included in the bankruptcy is completely extinguished. Your fresh financial start has officially begun.

The process of going through a Bankruptcy can feel daunting. I can assure you that you are currently handling much more stress and anxiety than that involved with preparing for an attending a 341 meeting. You’re ready for this. Email me at chris@thelaytonlawfirm.com or call 704.749.7747 to talk about your options today.

Much like any substantial undertaking, it may never feel like the right time to file a bankruptcy in Charlotte, NCI know that you already value the health and welfare of your family over avoiding any negatives you’ve imagined will flow from filing a bankruptcy. In my opinion, when you are ready to act on that value with the help of an attorney, that is the day you take the first step and make a phone call to move forward with achieving the goal of financial recovery.

That is my goal. But what about living expenses leading up to filing? Can I continue to use my credit cards until the day I file?

Your long-term financial health will be restored by the filing of bankruptcy. You are right to insist on a plan for managing your short-term financial health. My clients and I always discuss how they are making ends meet today. We then talk about what changes they should or can make leading up to the bankruptcy filing, and the impact of those changes.

In addition to helping you successfully achieve a discharge of your debts, I consider it my job to help you figure out how to survive as we approach the bankruptcy filing. You can continue using your credit cards until the day you file. Ideally, clients wait to file until they have not used the cards for several months. We are not living in an ideal world. I can’t tell you the last time I reviewed a case like that.

So I can use the cards if I have to, but I need to be careful as to how I use them?

Yes. The Bankruptcy Code states that consumer debt totaling more than $500 for luxury goods and services owed to any one creditor incurred within 90 days of filing, or cash advances totaling $750 or more owed to any one creditor made within 70 days of the filing are non-dischargeable. This doesn’t mean you can’t file. It does mean those particular charges would not be included in the bankruptcy. Additionally, charges owed to a creditor that were incurred by false pretenses or fraud are not dischargeable.

What does this mean, practically speaking?

If you have charged more than $500 to one particular card within 90 days of filing, the “presumption of abuse” will arise and creditors will most likely object. The same $500 spread out over several cards may not trigger an objection. Regardless, if you have spent over $500 within 90 days on a card for non-luxury items (reasonable living expenses: food, electric bills, etc), I will argue against the presumption of abuse and most likely be able to achieve a discharge of those charges in a Chapter 7 or a Chapter 13, even though they occurred within the last 90 days.

I want to recover. What do I do next?

It’s easy. You call my office. I will personally answer the phone, and we will have a brief conversation about your situation. My hope is that after that conversation you feel more hopeful, more empowered, and more educated about your options. If filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy is in your best interest, I will be here to help you with that. The phone call is free. More importantly, it can change your life.

Please take the next step toward your true financial health. Email me at chris@thelaytonlawfirm.com or call me at 704.749.7747. My job is to help, if you’ll give me the chance to do it.

There are circumstances where it is permissible to include tax debts in a bankruptcy filing. This often makes a significant difference in the amount of relief to the client and the timing of the filing should be closely monitored.

Generally, there are three conditions that must be met in order to discharge tax liabilities in a bankruptcy.

First: The liability in question must be at least three years old prior to the filing. To determine this we look to the year the debt was due PLUS any applicable extensions and their deadlines. From the most recent extension deadline you count three years. If you file after that date, you can include the debt in the filing provided the next two conditions are met as well.

Second: The tax return for the tax year in question must have been filed at least two years prior to the bankruptcy filing. In other words, you cannot file a tax return for 1996 today, and then file bankruptcy tomorrow—the filing itself must be at least 2 years old, in addition to the requirements above. If however, you waited to file a 1996 tax return until 2010, you would be able to include the debt in a bankruptcy filing in 2012 or later provided the other 2 conditions are met.

Third: The taxes related to the debt in question must have been assessed at least 240 days prior to the filing. For example, if the filing is old and the taxes are old, yet you were just recently audited and as a result of the audit a tax was assessed, you would have to wait the 240 days after the assessment to file.

Taxes are confusing enough when we are not in debt to the IRS. The addition of tax debt to a bankruptcy filing can often make a meaningful difference for the client. Please email chris@thelaytonlawfirm.com or call 704.749.7747 today for a free phone consultation to find out your options.

Creditors are relentless in their pursuit of money. Remember, they are doing whatever the law will allow them, and they will continue to do so until the debt is paid. With late fees, high interest and penalties. You can stop collections calls today.

Suffering doesn’t make sense. With the banks’ unwillingness to be flexible or give you some additional time, what does make sense is for YOU to bring stability back into your life by taking whatever steps the law allows. Knowing your rights can change your life quickly and dramatically. A bankruptcy attorney can help.

Did you know: Filing a bankruptcy with the court puts an automatic stay on collection calls and other collections activities including foreclosure. This means the day you file your Chapter 7 or Chapter 13 bankruptcy, you get instant relief—no more threatening phone calls.

Did you know: After the bankruptcy is filed, creditors who contact you in an attempt to collect on a debt are breaking the law. If you do get phone calls after filing, you should immediately let your bankruptcy lawyer know: you may now have a case against the creditor for violating the rules associated with the automatic stay!

Did you know: You don’t have to notify the creditors yourself. Your attorney can notify your creditors on your behalf, and in the alternative, the court provides notice to creditors upon the filing of the bankruptcy.

After a brief phone consultation with your Charlotte bankruptcy attorney you will be well on your way to relief. Call 704.749.7747 today to get free information quickly. The future can be different and one call can make that difference.