A bankruptcy blog containing useful information for anyone considering a Charlotte bankruptcy attorney.

Once you file a Chapter 7 or Chapter 13 bankruptcy, all creditor calls and attempts to collect on debt will stop. After receiving your discharge in bankruptcy, the creditors have no legal rights against you. But what if you missed a creditor and didn’t list them in your filing?

Missed Creditors

Quite often, a bankruptcy client may have a debt where the creditor has given up on collection attempts. When it comes time to list all unsecured debts (credit cards, medical bills, etc), the client may forget that creditor exists and therefore the creditor is not listed in the bankruptcy. In most cases, this is not a problem.

No Assets Case

So long as your bankruptcy case was a “No Assets” case—meaning the trustee did not sell any of your property as part of the bankruptcy—then all unsecured debt, whether listed or not, is included and that debt is discharged as part of the bankruptcy. Most Chapter 7 cases that I file are no assets cases.

Honesty and Disclosure

The bankruptcy court requires honesty and disclosure from the client filing the petition. Where the client inadvertently forgets to list a creditor in a no assets case, this will not be held against the client. If a creditor insists that they have a valid claim against a client because they were not listed in the filing, a simple phone call or letter from my office reminding them of the client’s rights solves the problem.

Talk To An Attorney

The bankruptcy code is written in a way which is meant to support clients who have a legitimate need for relief. As you get more comfortable with your options in bankruptcy you’ll find many of the myths around bankruptcy are just not true. Unintentional omissions and errors in filing are easily correctable and typically have no negative impact on you.

Call me today if you’d like to discuss the reality of filing a bankruptcy, and the many ways it can change your life dramatically for the better.

Call me today at 704.49.7747 for a free phone consultation. I’m here to help.

Clients about to file bankruptcy understandably are interested in retaining a credit card or excluding certain debts from the bankruptcy. Usually this stems from a sense of responsibility to the creditor, or the desire to have available credit after filing. While these are admirable reasons, generally speaking all debt needs to be included in the bankruptcy.

At its core, the bankruptcy code is written in a way that all creditors are treated equally in a bankruptcy. In many instances, Chapter 13 bankruptcy clients will be paying back some percentage of unsecured debt and each creditor takes a pro rata share. In a Chapter 7 case, where you may not be paying any creditors, it is still vital that all creditors receive the notice of your filing that they are entitled to receive.

Debt To A Family Member

Often a bankruptcy client will have a loan from a family member. The bankruptcy filing will need to include that debt. Usually, a quick conversation with clients about this puts them at ease. While the bankruptcy filing eliminates the legal obligation to repay that debt, the client can choose to pay back the family member after the case is closed or a dismissal is reached. A phone call from the client to the family member is almost always well received. The family member gets written notice of the bankruptcy and nothing else happens.

When Can I Pay Back Friends And Family?

It’s important that you treat all creditors equally as you approach filing for bankruptcy. The trustee will typically ask you if you have made any payments to creditors, including friends and family, in the past year. If you paid one creditor and not another, the trustee may have an obligation to try to recover that payment so that all creditors can take a pro rata share. Again, payments to friends and family need to wait until after the case is closed.

Your Concerns Are Admirable And Legitimate

You’re asking all the right questions. You are trying to meet your obligations. Call me today to discuss a strategy for re-establishing your financial footing, while maintaining healthy relationships with friends and family at the same time. You can reach me directly at 704.749.7747.

 

Many clients are concerned that the collective income in their household will bar them from filing a Chapter 7 bankruptcy. While there are income thresholds whereby you automatically qualify for a Chapter 7, there are also adjustments that can be made when your income exceeds those thresholds. Married couples have options when it comes to filing, and sometimes leaving a non-filing spouse makes the most sense.

Both Incomes Are Considered

Take an example where the husband makes $50,000 and the wife makes $60,000. If the husband were to file for Chapter 7 without the wife, the husband’s income would count at $50,000. The wife’s income, however, would not count dollar for dollar. The adjustment is made when completing the Means Test, which has two parts where you get to deduct expenses from your income. So, even with significant income, if your allowable expenses are high enough, you can still qualify.

Two Deductions

First, you are given deductions for your living expenses and debt payments. These are items you, the filing spouse, are contributing to, and they include your mortgage payment, your groceries, cell phone, etc.

Second, you look at any non-household expenses thaourt y non-filing spouse is regularly paying. These might include credit cards in her name only, medical bills, etc. These expenses being paid for by the non-filing spouse are then subtracted from her income. This serves to lower the total income counted for the Means Test and assists greatly in getting you qualified under the test.

Why Are There Deductions For The Non-filing Spouse?

The reasoning behind this is that those separately paid non-household expenses are not contributing to the household expenses. In this way, the bankruptcy code is not counting that income ‘against you.’ An attorney can assist you in a close examination of your total household expenses and help categorize them as household related or otherwise. Once the adjustments have been made, the attorney will let you know your options.

If you’d like to speak to a Charlotte Bankruptcy attorney today, call me at 704.749.7747. You can also email me HERE or take a few minutes to fill in our bankruptcy evaluation HERE. I will contact you immediately to discuss your situation and help you take next steps.

Clients are smart to ask about timing issues with filing a bankruptcy. I get a lot of questions about income, as some clients expect income to increase in the near future, but have struggled recently with insufficient income.

When you file a Chapter 7 bankruptcy, the income the bankruptcy trustee is most interested in is your earned income from the six months prior to filing. Specifically, the six month period ending the last day of the month preceding your filing date.

Current Monthly Income is an expansive term, so my clients and I always discuss full disclosure. For instance, money receive on a regular basis for your dependents is included in your CMI. If you are filing a joint bankruptcy case, then income for both spouses is included.

What Else Is Included?

In addition to regular income, payments received under the Social Security Act, tips, bonuses, overtime and commissions are included. If you’re a business owner, the net income from a business or profession is included. If you rent property, the net income from that rental property is included. Pension and retirement income is also included. Unemployment and disability benefits are also included.

Essentially, this is reflective of the goal in bankruptcy—to analyze your complete financial picture to determine whether you are entitled to relief.

Sometimes It’s Tricky

There are instances of course where income is not regular. Your bankruptcy attorney goes to bat for you in these situations where an argument can be made that the income should not be included as CMI, or should only be partially included. If you receive a one-time bonus for example, or have a business with irregular activity during the year. Often, the attorney can argue for you that you received income during the last six months that was attributable to employment over a longer period of time, including bonuses and commissions.

It’s A Phone Call Away

The answers are easily discoverable. My job as a bankruptcy attorney is to educate people about their choices. Call me to discuss your situation and I will do my best to help you get clarity. You can reach me at 704.749.7747 and the call is free.

While it may make sense for both spouses to file in a bankruptcy, a qualified Charlotte bankruptcy attorney will walk you through the options that suit your particular situation best. Typically, married couples hold debt in many different ways, so it makes sense to analyze the specifics of your situation before making a choice. Filing jointly may provide more debt relief, but there are other concerns to consider.

My Spouse’s Credit

One reason to file individually is to preserve the credit of one spouse. In cases where spouses do not hold debt jointly, this is typically a clear option. The filing spouse receives a discharge for the debt in his name, and the non-filing spouse retains her good credit, along with her debts.

North Carolina is not a Community Property state, so even where a married couple holds joint debt, if the non-filing spouse keeps payments current on her debt, her credit score will not be affected.

Collections Attempts

In a Chapter 13 filing, the automatic stay is effective for the co-debtor on consumer debt. This means that if one spouse files and another does not, and they hold joint debt, even if they are not paying on that joint debt, creditors cannot pursue collections against either spouse. So the calls stop, and you get to preserve your credit at the same time. Not only that, but for joint debt, creditors cannot repossess property or foreclose on your spouse just because she didn’t file.

This automatic stay remains in effect until the bankruptcy is over. However, once the bankruptcy concludes, the creditor can resume attempts to collect against the non-filing spouse for those joint debts. At that time, the hope is that you’re able to make payments on that debt because of the relief the bankruptcy provides.

A Backup Plan

Another reason to have one spouse file is to provide a backup plan if you get into a spot where you cannot make your Chapter 13 payments. If the first filing is dismissed for non-payment, the non-filing spouse could consider filing a new Chapter 13 to get relief from creditors.

Talk To A Lawyer

Debt can be all-consuming. It’s not your job to know the law. But do know that you have options. Call me if you’d like more information or have a question. Answering questions is part of my job. 704.749.7747. You can also email me HERE

Generally, 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.

If you have any questions about garnishment, bankruptcy or any other legal matter affecting you financially, please feel free to call me at 704.749.7747. I’m here to help.

I spoke with client this morning who is moving forward with filing a Chapter 13, but is wondering whether she can convert to a Chapter 7 filing at some time during the Chapter 13. The answer is yes. In fact, converting from a Chapter 13 to a Chapter 7 is commonly done by bankruptcy clients.

Why Not Just Start With A Chapter 7?

There are numerous reasons for choosing a Chapter 13 bankruptcy filing at the outset. The most common is that the client is facing a foreclosure and wants to save their home. A Chapter 13 filing allows you to go into a bankruptcy even if you are behind on your mortgage. This freezes the foreclosure process and creates monthly payments that allow the client to make up the deficiency over time.

Additionally, clients may have equity in a home or in other property they are not willing to turn over to the bankruptcy trustee. While it’s rare that a client has to give up property in a Chapter 7, the Chapter 13 allows clients to keep the property and make all creditors ‘whole’ over the course of the Chapter 13 payment plan.

Why Would I Convert?

Circumstances change. Sometimes, after a few months in a Chapter 13, a client reconsiders their objectives and decides they want to surrender the home. Because that was the primary reason for entering into a 13, a Chapter 7 now makes sense. As a result, the client converts, and the Chapter 7 is concluded in a much shorter time period. This allows the client to begin rebuilding credit more quickly. It also means there’s not a monthly Chapter 13 payment obligation to keep up with.

Another reason for converting might be that the client’s income increases some time during the repayment period and they are able to make up the deficiency on the mortgage. At that time, if they submit the remaining deficiency they are typically eligible for a Chapter 7. The client keeps their home, the monthly payment obligation goes away, and they focus on rebuilding their savings and their credit.

What Do I Lose When I Convert?

You don’t lose anything when you convert. You’ll receive credit for any attorney’s fees you’ve paid, and you’ll receive credit for any deficiency on a mortgage that you’ve paid. You should speak with your attorney about the conversion and whether it makes sense for you, but in all, the ability to convert is representative of the flexibility extended to us under bankruptcy law.

Call Today!

If you’d like to speak with me about your options, please call 704.749.7747 today. I’m happy to have a free phone consultation to help you move forward. Getting educated about your choices feels good and it’s the smart thing to do.

While you may be eligible to file a Chapter 13 or Chapter 7 bankruptcy, the first question is determining in which state you are entitled to file. In legal terms, this is a question of “Venue.” The bankruptcy statute related to venue is 28 USC 1408. Below is a summary of the statute and an easy test for determining your eligibility.

The Statute

28 USC 1408 establishes the proper venue (location) for filing your bankruptcy case. In the case of individuals, your residency and the location of your assets are used to make this determination. The statute dictates that the proper venue is any place where the debtor has resided more than any other place in the 180 day period prior to filing.

An Easy Test

There are two ways to ask the residency question. If you can answer yes to either question, more than likely you can file in North Carolina.

#1: “Have you lived only in NC for all of the last 180 days?”

#2: “If you believe you have lived in 2 or more places during the last 180 days, then out of the last 180 days, have you lived in NC at least 91 of those days?”

Remember that it takes some time to prepare a filing. If you are coming up on the 180 day or the 91 day mark, you can begin preparing to file. Your attorney will assist in filing at a time when proper venue is established and you can take advantage of the local rules and local venue.

If you have questions about residency, location of property, or anything else related to bankruptcy, please feel free to call me at 704.749.7747. My job is to answer questions.

Often, a specific event in your life leads to the filing of a bankruptcy. If the event gives rise to loss of work, you’re unable to pay our bills. If the event gives rise to insurmountable bills, you may be unable to maintain your monthly debts no matter how hard you work. In the case of a personal injury, quite often both are true: you are faced with medical bills and you’re unable to work. A pending personal injury claim doesn’t mean you can’t file bankruptcy, or that you will necessarily lose the award if you win your claim.

When you file bankruptcy, a ‘bankruptcy estate’ is created. It consists of all the property you own. At the time of filing, the potential award from a personal injury claim—whether filed or not—is considered property for the purpose of the bankruptcy estate.

Will The Bankruptcy Court Take My Award?

In a bankruptcy, federal and state laws allow for certain types and amounts of property to be exempt from claims by the trustee and creditors. Once the debtor has filed for bankruptcy, the debtor no longer owns that cause of action: the claim has become property of the bankruptcy estate. Sometimes, the trustee in effect steps into the shoes of the debtor and will hire an attorney to handle claim. The relationship that the trustee has with the personal injury attorney is a standard attorney-client relationship, including the customary contingency fee arrangement in a personal injury case. Other times, the bankruptcy trustee abandons the claim if he decides there is nothing in it for your creditors. At that time, you can pursue your own claim with your chosen attorney.

Regardless, the award must be disclosed to the bankruptcy court. Once damages have been awarded, they get apportioned in the following order: the personal injury attorney subtracts his fees, the exempted amount goes to the debtor, the trustee (potentially) takes his percentage of the award, and the creditors who have submitted proofs of claims get their portion. Any remaining money goes back to the debtor.
Different Damages Are Treated Differently

The amount of money from the settlement that you’re able to keep depends on the character of the award. Pain and suffering, disability and mental anguish are treated differently from financial losses suffered due to the injury, like medical expenses, damaged property, or lost wages. Your attorney will choose federal or state exemptions for you depending upon which choice is going to result in you retaining more of the award.

In Conclusion

If you’re facing overwhelming financial stress and you’re putting off bankruptcy because you fear you will lose your personal injury award, speak to an attorney today. The bankruptcy court is a court of equity and the goal is not to take all of your assets. You attorney can assist in proper disclosure of the claim and further assist in choosing the exemptions which are most suited to helping you retain more of your award due to the injury.

Call 704.749.7749 today or email me HERE , to speak to me about bankruptcy, personal injury, or any other financial concerns you may have. There are options. I’m here to assist you in determining those options, and to help you move forward productively.

It’s Tax Time

It’s tax time. You know you’re going to owe, and you also know you don’t have the money to pay the IRS what you’ll owe them. It may seem like a necessary and even strategic move to not file your return. The bankruptcy court requires you file your tax returns, and excludes the discharge of tax debt associated with unfiled returns.

Today’s Decisions…

Like almost every other financial decision we make, a future bankruptcy filing may be affected negatively by a failure to file. A failure to file on time generally will not preclude the discharge of this tax liability provided all other requirements are met. However, if the IRS takes an aggressive approach in response to your non-filing and assesses you a tax burden by a process commonly known as “substitute for return,” the tax burden is considered exempt from future discharge.

While it’s always smart to file your return when it’s due, it’s also understandable when we’re unable to do what’s best. The key in terms of preserving the ability to later discharge the tax debt in bankruptcy is to file a voluntary return prior to the IRS instituting the substitute for return on the debt. If the IRS beats you to it, even a later voluntary filing of a return by you will not undo the exempt nature of the tax debt.

Find Out Your Options

Talk to your tax preparer today about your upcoming tax filing. You can receive an extension for the April filing until October. As you approach October, you can decide whether you can pay the amount owed, or whether you want to apply for monthly installment payments– or a combination of both.

If you have back taxes which are currently unpaid, call the IRS at 800.829.1040 today, to ask for updated information on the account and to find out what your payment options are.

Talk To An Attorney

The relief provided by the bankruptcy code is strong. By educating ourselves, we are enabled to utilize that relief to its fullest extent. If you have questions, call me today at 704.749.7747 and I’ll be happy to give you guidance around taxes or any other financial issue you’re facing. It’s what I’m here for.