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

Clients considering filing a Chapter 13 bankruptcy are often confused when the discussion with their attorney turns to a comparison between a Chapter 13 and a Chapter 7. The debtor has already decided to file a Chapter 13, so why does the attorney keep talking about Chapter 7, and specifically, the Bests Interests Of The Creditors? There’s a reason.

A Necessary Comparison

When filing a Chapter 13 bankruptcy, your plan will only be confirmed if it meets the Best Interests Test. This test is designed to insure that creditors receive treatment in the Chapter 13 bankruptcy equal to or better than the treatment they would have received if the debtor had filed a Chapter 7 bankruptcy. This comparison is also a great way to confirm the debtor understands the clear differences between the two types of filings.

A Hypothetical

Assume a debtor has assets valued at $3000. Further assume a debtor filed a Chapter 7 and $1000 of those assets would be treated as unprotected (non-exempt) assets. In a Chapter 13, if the debtor wants to keep the assets, the unprotected  value of those assets—the $1000—must be paid into the Chapter 13 in order to meet the Best Interests Test. These payments would go to unsecured creditors, as directed by the Trustee.

Best Case Outcome

This does not mean that every Chapter 13 filing requires a similar payment to creditors. If the hypothetical Chapter 7 calculations result in 0 unproteced (non-exempt) assets, then the debtor’s plan will be approved in Chapter 13 without a payment to unsecured creditors. This is often referred to as a “0% Plan” and it is acceptable under these circumstances.

Talk to an attorney today. Bankruptcy is not meant to be overwhelming. It can be a critical part of your solution and financial stability. An attorney can assist in working through these concerns and providing clear, concise options to help you move forward. Email me HERE or call 704.749.7747 today to talk to me.

I spoke with a law firm in Charlotte today the specializes in representing banks in foreclosure proceedings. I was calling about the property of a client. I was told that my client’s foreclosure had been postponed from January until April. I was also told that Wells Fargo had already postponed over 200 foreclosures today. This is obviously a relief for my client, as it gives her time to plan. If you are given unexpected time like this, there are numerous way to use it.

Prepare For The Worst

While you may attempt to pay your mortgage arrears over the coming months, you should also provide a bankruptcy attorney with all necessary documents in the event you need to file a bankruptcy urgently as the new sale date approaches. It’s much easier to insure a proper filing when the law office has time to review documents thoroughly with you, and a proper filing is what you need.

Take A Step Back

This is a great time to take a step back. If you were previously considering filing a bankruptcy to stop a foreclosure, perhaps you were making an emotional decision. There are times when it makes sense to walk away from a home rather than do everything possible to save it. The market may have turned and now the home is worth less. Or perhaps your payments went up and you can’t refinance. Take a breath and ask yourself whether the home is still a good investment for you. And don’t forget there are other ways to invest your money outside of a mortgage payment.

Take Action Today

With this new breathing room, the temptation is to put of the inevitable decision-making that a deadline forces on us. Instead, take out a pad of paper and strategize about ways to significantly reduce your monthly burdens over the coming months prior to the foreclosure and/or bankruptcy filing. For example, if you can lower your car payment by getting into a different vehicle, doing it before the bankruptcy is much easier than during or after.

Listen To Your Attorney

Let your Charlotte Bankruptcy lawyer help you make a smart decision that will work for you not only this month or the next few months, but for years to come. This may involve keeping the home, it may involve a strategy that utilizes income and credit in a way you had not anticipated. The point is, the attorney is in a unique place to give guidance. An attorney who cares about your needs over his own will walk you through options that may not involve bankruptcy, so make sure to ask about those.

If you’d like to speak with an attorney please call me at 704.749.7747. You can also email me HERE. I’d be happy to discuss your situation and offer guidance.

If you’ve received a Notice of Hearing Prior to Foreclosure in the mail, your rights are about to be affected. This notice means that the bank holding a mortgage on your home is moving forward with the foreclosure process and forgiveness of debt bills that come along with it. There is still time.

Your Hearing

The notice tells you when the hearing is and that you have a right to appear before the court to show cause as to why the foreclosure should not take place. Unless you can show the bank does not have a valid deed of trust, or that they have not followed the required process for foreclosure, there is little chance of success in putting off the foreclosure. But you do have options.

Structured Repayment

You are behind in your mortgage payments, so a Chapter 7 bankruptcy is not available if you desire to keep the house. However, a Chapter 13 bankruptcy is an option. In a Chapter 13 bankruptcy, you repay the arrears on the mortgage over the course of the next five years. Additionally, you will pay back some debt to other creditors. Lastly, you’ll be forgiven the remainder of your unsecured debt (Credit cards, medical bills, etc).

Monthly Payments

The exact amount of your monthly payment in a Chapter 13 depends upon your income, your debt, and how your creditors would theoretically fare in a Chapter 7. The monthly payment will also include an amount to the bankruptcy trustee and the bankruptcy attorney if you have not already paid the attorney in full. It may sound complicated, but the bankruptcy attorney can help you make sense of it.

Automatic Stay

By filing a Chapter 13 bankruptcy petition, you put a ‘freeze’ or an automatic stay on the foreclosure process. Your Charlotte bankruptcy lawyer can assist you with this process. The stay will take affect so long as the petition is filed 10 days after the sale date or before. During the automatic stay, you and your attorney will propose a repayment plan in Chapter 13 which will provide you significant relief from credit card and other unsecured debt, and will allow you to get current with your mortgage and preserve home ownership.

If you’d like to speak to an attorney about filing a Chapter 7 or a Chapter 13, please call me at 704.749.7747 to discuss your situation. A call today could lead to a positive change tomorrow.

Family loans, pending lawsuits, recent payments, and transfers of ownership… the list goes on. All of these and more need to be disclosed to your bankruptcy attorney. My first job as a Charlotte bankruptcy attorney is to convince my clients that disclosure is in their best interest. I often tell them that in exchange for their honesty and full disclosure, the bankruptcy court offers very powerful relief from financial burdens and the stress they produce.

What’s So Important About Disclosure?

The bankruptcy court is a court of equity. While there are rules, there is also discretion to be exercised by the trustee. The bankruptcy petition gives the client every opportunity to disclose any items which could be construed as assets or income. Together with her bankruptcy attorney, hopefully the client can manage the disclosed income and assets in such a way that the client still qualifies. However, if an issue is not disclosed and the trustee discovers it at the face to face meeting with the client, the client will most likely pay a price for the failure to disclose.

What Happens Next?

If the trustee discovers during the 341 Meeting that there was a failure to disclose, you can count on the trustee heavily scrutinizing all other assets and information on the petition and schedules. This may trigger a request for information related to the client’s financial affairs that goes back further than the typical inquiry the court makes.

Additionally, the client may lose the right to include an item in their bankruptcy estate if it’s not disclosed. For example, if a client has the right to file a lawsuit but fails to disclose that right as a potential asset during the bankruptcy, the client may lose some or all funds they recover in the lawsuit if they are successful, even if the lawsuit is filed after the bankruptcy has concluded (after discharge of debts).

How Will I Know What To Disclose?

My job as a bankruptcy attorney is to educate my clients, and to ask the right questions. I will help you think about ‘income’ in ways which include money given by family to help you through a tough time. I’ll help you to generate a complete list of all items the bankruptcy court may consider to be assets, even though you and I may not traditionally think of them that way: potential money from a lawsuit, a pending tax refund, recent debt forgiveness, etc.

Bankruptcy Rules Are Reasonable

Bankruptcy is about giving individuals a fresh start. You’ll find the process is smooth and the rules are reasonable. Your job is to disclose, disclose, disclose. My job is to make sure I have all the relevant information and then assist you in successfully filing and leaving the burden of financial stress behind.

Financial stress can be overwhelming. I’m here to help. Call 704.749.7747 to discuss your options. The call is free and confidential. If you’re wondering if you qualify, take a few minutes to submit an online Bankruptcy Evaluation and we will call you with the results.

The things you do today affect a future bankruptcy filing. The right time to talk to an attorney about bankruptcy is now, even if you think you may not file for a few months. Here are a few great reasons to talk to a bankruptcy lawyer today, instead of waiting until the eve of filing.

The Conversation Is Free

Most bankruptcy lawyers are willing to have a conversation about bankruptcy for free. This includes a discussion about the specifics of filing, but you’re also allowed to ask questions about your finances and how to manage them today, in case you do file in the future. Don’t feel obligated to commit to filing. The lawyer’s office is there to help you make a decision, but the decision is yours.

Today’s Transfers Affect Your Future Filing

Transferring property affects a bankruptcy filing for a minimum of six months and sometimes up to two years. This includes title to vehicles, money in bank accounts, interests in life insurance and title to property conveyed by deed. If you talk to an attorney today, the lawyer can assist you in achieving your goals with the transfer, without upsetting your ability to file a bankruptcy if you need to down the road.

Knowing Your Options Brings Peace Of Mind

In my experience, understanding my options is a big part of feeling comfortable about what the future holds. While you may find a way out of this financial bind, at least you know what to do if things get too much to bear. And, you’ve established a relationship with an attorney which is always much better to do when you’re not rushed to make a decision.

Filing Bankruptcy Costs Money

As much as I wish it weren’t true, it costs money to file a bankruptcy. When you’re considering a situation that involves inability to pay existing bills, it makes sense that some planning may be required to have the money available when it’s time to file. A bankruptcy attorney will be glad to help you strategize about how to obtain the money needed to file. This may include budgeting for the use of a tax return in the coming months. Again, this is an example of where knowing your options helps you prepare. While you can borrow money from friends and family or from a 401k to file, you can’t put the fees on your credit cards.

There May Be Another Way Out

Some of my best conversations with clients end with the client deciding on a plan of action that doesn’t involve bankruptcy. If the client can accomplish her goals without filing, and if I can assist in helping the client discover this, I consider it a great conversation. My job as an attorney is not to convince you to file. Instead, my job is to assist you in getting your goals met.

Bankruptcy attorneys are easy to talk to and they are generous with their time. Call me today with any questions you may have about a foreclosure notice, a Writ of Execution, or questions about whether your family will find out if you file. They are all valid questions, and there are answers. You can reach me at 704.749.7747 or email me here.

We know you have a lot to manage right now. Providing paperwork for bankruptcy can seem tedious. That’s why we offer an easy electronic option for completing a bankruptcy questionnaire, and also accept and deliver documents electronically if that is your preference. The goal is to obtain the required information from you, while making the process as easy as possible for you.

Most Charlotte bankruptcy clients of mine are relieved to find out that once they have completed the bankruptcy questionnaire they are done with 80% of the work. All that remains is turning over monthly statements for accounts and attending the short meeting with the bankruptcy trustee. Here is a list of paperwork required for bankruptcy.

Last Six Months of Statements

Whether you’re filing a Chapter 7 or a Chapter 13, you’ll need to provide your attorney with copies of the last six months of statements for all credit cards and bank statements. You’ll also need to provide up to date statements for medical bills, vehicles and other loans.

Last Two Years of Taxes

You’ll need to provide your bankruptcy attorney with copies of the last two years of tax returns. These are used to verify income. If you’re expecting a tax refund on a return that has been filed, these documents will also show that, and be used by your attorney and the bankruptcy trustee to determine if you can keep your return. Most of my clients expecting a return are allowed to keep it.

Retirement Account Statements

You’ll need to provide the last six months of statements for retirement accounts. Usually this means two quarterly statements. These are typically available online and easily saved as PDF for delivery to the law office.

Other Account Info

If you have other accounts, whether they are loans, debts or assets, you’ll need to provide an updated statement of these accounts. Remember, bankruptcy is about disclosure. In exchange for your honesty and openness with the bankruptcy court, you get tremendous and powerful relief from the burden of your debts.

Our goal is to make this process seamless and easy. From the day you decide to file with us you should feel relief. Reach out to us today to talk about your options and get started. Call 704.749.7747 for a free phone consultation with a bankruptcy attorney today. Or, while you’re online, take a few moments to fill out our online Bankruptcy Evaluation and we will get back to you ASAP.

Question: Can I transfer my assets right before a bankruptcy and still file?
Short Answer: No. But you can keep your property.

Most of my posts come on the heels of conversations with clients. The reason for this is that when I speak with someone on the phone I am reminded of the common questions clients have.

A recent phone conversation with a client centered around two transfers she had made. First, about six months ago she transferred $10,000 from an account in both her and her husband’s name, into an account in just his name. Second, a creditor obtained a judgment against her recently and she transferred her vehicle from her name only, to her husband’s name only.

Married, Filing Solely

This particular client was inquiring about filing bankruptcy just in her name. Her husband has income, she has very little. They share expenses. He has good credit, she does not. She has a lot of credit card debt in her name only. Filing a Chapter 7 just in her name makes sense to discharge debt which is just in her name and to protect his credit.

Look-Back Period For Transfers

Generally, the rules of bankruptcy have a one year look-back period for transfers. While the trustee has some discretion as to the nature or purpose of the transfer, the trustee is looking for a ‘fraudulent conveyance,’ or one which was done specifically to protect money or assets from creditors.

Consequences of Fraudulent Transfers

If the trustee determines the transfer was done to protect assets from creditors, he can bring the asset or funds back into the estate of the debtor, and make it available to creditors. In the case described above, part or all of the $10,000 could be pulled into the estate and the vehicle as well. Additionally, the exemptions available to debtors in bankruptcy will be lost in this scenario.

For a vehicle, North Carolina allows a $3,500 exemption per individual. There is also a wild card exemption of $5,000. That allows a total of $8,500 of equity in a vehicle which can be protected from creditors seeking to collect on a judgment, or creditors in bankruptcy. If the client had not transferred the vehicle, she could have used those exemptions to protect her car. Essentially, the transfer was unnecessary and limited her options.

What Do You Advise?

Call an attorney before you make a transfer. The attorney may advise the transfer given the larger picture, but what feels like the right thing to do in the moment may trigger some long-term consequences or may limit your options as to the timing of a filing for bankruptcy. A Charlotte bankruptcy attorney can quickly help you decide.

I’m available to help. Call me at 704.749.7747 to discuss your situation. I am honestly eager to hear from you.

Make a phone call. It’s that simple. Call a Charlotte bankruptcy attorney today. Bankruptcy attorneys — good ones — are eager to answer questions. They will not pressure you into filing a bankruptcy. You won’t feel like you’re listening to a sales pitch. When you call a bankruptcy attorney and ask questions, you’re getting information and the lawyer is getting a chance to do their job, which is helping people.

I received a phone call today from a gentleman who went through a foreclosure last year. He had two mortgages on the home and the bank holding the 2nd mortgage was not satisfied as a result of the foreclosure. Currently, he is getting calls from a collection agency representing that lender. These calls are coming as a surprise to him because he felt the foreclosure process put an end to his relationship with the property and both lenders.

In this case, the collection agency is claiming the bank is owed approximately $21,000. They made a verbal offer over the phone to settle with him for $5,000. While there’s nothing preventing the collection agency from attempting to collect on this deficiency, and nothing preventing this gentleman from agreeing to settle this debt, this is tricky territory.

What’s Next?

If he refuses to settle, he may face further action from the  lender by way of a judgment and attempts to collect on that judgment. Depending upon how effectively he responds to further attempts at collection, this could threaten personal property that he owns including savings accounts and other property not exempt under law.

If he settles with the bank in an attempt to eliminate this debt from his life, he needs to be sure he understands his obligations, the bank’s obligations, and the long-term effects of the settlement. Most of those will be detailed in the agreement which of course will be drafted by the bank’s attorneys.

If he is going to spend money settling with this creditor, he should also know what results he could achieve by spending that same money (or less) on a Chapter 7 or Chapter 13 bankruptcy. All of this information, together, will help him confidently decide his next step.

When In Doubt, Make A Call

He did the right thing. He picked up the phone and called a bankruptcy attorney in his area, which is Charlotte, NC. We had a brief but informative conversation about his current rights against this bank. We talked through a few scenarios which are likely, and some which are unlikely. We assessed his overall financial situation and talked briefly about bankruptcy. And he is faxing over the latest communication from the collection agency so that I can make sure there’s nothing we missed on our phone call.

The call is free. Attorneys take pride in providing information to people in need. Don’t hesitate. Call me at 704.749.7747. Information is powerful and it’s free. Get help. Get guidance. You’ll be much better equipped to make the decision that’s best for you and your family.

Short Answer: Yes.

Income from unemployment is counted as income to the individual when determining whether you qualify for the bankruptcy. Typically, for a Chapter 7 bankruptcy, unemployment income will not be enough income to cause a problem for an individual getting ready to file. For a Chapter 13 bankruptcy, the court wants to see that you will be able to make your monthly payment under the repayment plan. Sometimes, income from unemployment is not enough to establish this.

The Means Test

Individuals filing bankruptcy need to pass the Means test. The Means test compares your annual income to the median annual income in your geographic area. If the filing individual’s total annual income (including unemployment income) is lower than the median annual income, you should qualify for a Chapter 7 filing. This will of course enable you to eliminate credit card debt, medical bills and other debts you’re currently obligated to repay.

If your total annual income exceeds the median annual income, you may still qualify. Your attorney will run a comparison of your monthly income to the monthly service on your debts as well as other monthly living expenses. Again, most unemployment income qualifies an individual under the Means test. In the alternative, your normal monthly expenses will typically still allow you to file—you’re demonstrating to the court that with your current income, you’re unable to comfortably pay your monthly living expenses.

Unemployment Income And Chapter 13

The bankruptcy court wants to see that you’ll be able to make your monthly payment in a Chapter 13. This requires a showing that you have sufficient income. Your unemployment will count as income, together with any other monthly sources of money which are counted as income in this analysis: social security payments, rental income, etc.

What If I Get A Job During Bankruptcy?

If you find a job during bankruptcy, congratulations are in order. Beyond that, we will notify the court of your changed circumstances, because we have an obligation to do that. In most cases, finding a job can only help you, especially if you’re filing a Chapter 13.

Speak With An Attorney

The easiest way to get a quick analysis of your situation is to speak with an attorney. Call me at 704.749.7747 for a free consultation by phone, or in my office. Or, if you’re more comfortable, email me HERE. I’ll get back to you quickly and help you understand your options.

If you’d like to provide some detailed information I can use to inform our discussion, take 5 minutes to complete a short, online evaluation HERE.

Things have been tough. You’ve extended your lines of credit. When you exhausted available credit card debt, you borrowed from family members to get by. This is absolutely normal. And when you do have extra money to repay some of your creditors, it’s natural to want to put family first. Your attorney for bankruptcy will caution against this.

If you are considering filing for bankruptcy, it’s important to recognize that there is a look-back period which will be examined by the Trustee. One of the things the Trustee is attempting to discover is whether you have treated all creditors the same. If one creditor has been treated better than another, the payment or payments giving rise to that determination may be treated by the Trustee as a Preferential Payment.

Preferential Payments

One goal of bankruptcy is to treat all creditors equally. As part of achieving this goal, if the Trustee determines that in the year prior to filing bankruptcy you’ve re-paid a family member while ignoring some or all of your other debts, it may give rise to the Trustee ‘avoiding’ the preferential payment. Essentially this means the Trustee will attempt to recover the money you paid to your family member—from your family member—and re-distribute it to creditors, equally.

Treat All Creditors Equally

Don’t be confused by this. All you have to do is make a conscious choice to treat all creditors the same. If you are going to ignore your credit card bills as you approach filing for bankruptcy, avoid all of them. Include loans from family members in this group.

After Bankruptcy

Oddly enough, per the rules of bankruptcy, after the bankruptcy is filed and you have received your discharge of debts, you can voluntarily repay any debt that was dismissed as part of the bankruptcy. While this comes as a surprise to many of my Charlotte bankruptcy clients, it’s a pleasant one. It means that as you approach your filing, you (or your lawyer) can explain to the family member(s) that they may receive a letter about the bankruptcy filing. You can also tell them during this call, that you have the right to repay them after the bankruptcy is over.

Get The Facts

Reach out today to talk to an attorney in Charlotte, NC about bankruptcy. Email me HERE or call me at 704.749.7747 to discuss your situation—including loans to family members, rights against collection agencies, or any other debt-related matter.