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

sears bankruptcy

Sears Filed Bankruptcy – Should You?

News today made it very clear that Sears filed bankruptcy. As a bankruptcy law firm, any time we see a corporation filing bankruptcy, we know it’s a business decision. When it comes to your personal bankruptcy filing, we encourage you to think of it as a business decision as well. This means it’s time to set aside your emotions and do what makes financial sense for you and your family.

Taking The Emotion Out Of Bankruptcy

When we say you should set aside your emotions, we simply mean that your family’s financial health should come before any guilt you feel for not paying back creditors. It also means your family’s health is more important than any guilt you feel in general over filing bankruptcy. Filing bankruptcy can be the smartest financial decision you’ll make for you and your family. It provides a fresh start and you can build on that fresh start.

Picture The Future For Your Family

After years of living paycheck to paycheck, we know it’s hard to imagine a future for you and your family that does not involve scraping by. The truth is, that future does exist. Getting out from credit card debt and other types of debt is a huge step in the right direction. Imagine being able to pay all of your bills each month and have some left over for savings, retirement, or family outings. The federal bankruptcy code offers powerful relief from debt, while letting you keep your home and car by using the Bankruptcy Exemptions.

Learning From The Sears Bankruptcy

The Sears bankruptcy filing reminds us that bankruptcy can be a business decision. In fact, many businesses bounce back after bankruptcy, to be healthier than ever. We’ve seen the same from the clients we work with. Quite often, a few years after filing bankruptcy, we speak with clients who are purchasing a new home and who report their financial lives are incredibly healthy. We can hear it in their voices that they are still happy they chose to end the suffering and file bankruptcy. That makes it all worthwhile for us.

Speak With A Bankruptcy Attorney Today

If you have questions about bankruptcy, call us at 704.749.7747. Or click for a FREE BANKRUPTCY CONSULTATION and we’ll reach out to you. We look forward to helping you get answers to questions. We also 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.

does bankruptcy clear taxes

Does Bankruptcy Clear Taxes?

If you’re wondering does bankruptcy clear taxes, you’ll need to know a few things before you can decide. This article helps to answer the question “Does bankruptcy clear taxes”, and we hope it’s helpful. We’re available to discuss this issue with you at no charge—simply call us at 704.749.7747 or click to request a FREE BANKRUPTCY CONSULTATION.

Taxes In Chapter 7 Bankruptcy

The desired result in a Chapter 7 is a Discharge. The discharge means the debt goes away in bankruptcy. In order to receive a discharge of taxes in Chapter 7, a few things need to be true:

  • Your taxes must be at least 3 years old. This is usually the main obstacle. The age of the taxes depends upon the first date they were due. For instance, taxes for 2017 were first due April 15th, 2018. As of April 15th, 2021, those taxes turned 3 years old. If you received an extension on filing until October 15th of 2017, that would be your date to use as the starting date.
  • Only Income Taxes are covered. Some clients owe Sales and Use tax to the federal government. That type of tax is not discharged in bankruptcy. Only income tax is eligible to be discharged.
  • Tax returns must be filed. The date for filing the tax return related to the tax debt is 2 years before filing the bankruptcy. In the example above, even though the taxes are 3 years old, if you had not filed a tax return for those taxes until 1 year before filing bankruptcy, you would not receive a discharge of those taxes.
  • 240 Day Rule. There is a 240 day rule. Simply put, if the IRS assessed the tax, they must have done so at least 240 days before you file bankruptcy.

So, does bankruptcy clear taxes? Well, if all of the conditions above are met, the answer should be YES. One exception relates to an IRS LIEN FOR TAXES. Chapter 7 will not extinguish an IRS lien. So, even if the taxes are cleared by bankruptcy, you’ll still be left with a tax lien which attaches to real estate you own. When that real estate is sold, the tax lien will still need to be paid.

Filing Taxes Before Bankruptcy

While filing your taxes before bankruptcy is often necessary, you can easily see that the 2 year rule will be in violation and would keep some taxes from being cleared in bankruptcy. In order to file Chapter 7, you must have filed taxes for the 2 prior years before filing bankruptcy. That requirement has to be met whether those taxes will be discharged or not by bankruptcy.

Does Bankruptcy Clear Taxes In Chapter 13

One solution for taxes which won’t be cleared in Chapter 7 is to file Chapter 13. In Chapter 13, your existing tax debt which does not meet the requirements above, will be paid back to the IRS on a 5 year plan, with very low or no interest, and without penalties. Your Chapter 13 plan will also discharge taxes which do qualify above, together with other unsecured (credit cards, medical bills) debt. Chapter 13 is also routinely used to catch upon on missed mortgage or car payments. We’re happy to discuss Chapter 13 with you if you like.

Does Bankruptcy Clear Taxes On The Day I File?

No. The taxes are not cleared until you receive your discharge. In a Chapter 7, this means the trustee must close the case after reviewing it, and the court must enter your discharge. Typically, you receive your discharge about 120 days after filing your bankruptcy. Soon after filing, you will attend your 341 meeting with our attorney.

Speak With A Lawyer About Taxes In Bankruptcy

If you’d like to get clarity about anything in this article, or speak with an attorney about your bankruptcy options, simply call us at 704.749.7747 or click to request a FREE BANKRUPTCY CONSULTATION. We know you have options. We hope you choose to Recover With Us.

Can I File Bankruptcy

Can I File Bankruptcy?

If the question is “Can I file bankruptcy?” the answer is always the same…. “It depends!”

Whether you can file a successful bankruptcy depends on a few factors. If you’re a consumer considering filing bankruptcy, this article will help you decide if you can file bankruptcy. Generally, the choices are between Chapter 7 and Chapter 13. Chapter 7 is a faster process and offers a complete discharge of most debt. Chapter 13 is an option for those of us who have more income or assets than are allowed in a Chapter 7, or for those of us who are behind on a car or mortgage and wish to use Chapter 13 to ‘catch up’ on those loan payments.

The Means Test

Sometimes the more appropriate question is “When can I file bankruptcy?” The reason for that is The Means Test. In order to qualify for Chapter 7, you need to pass The Means Test. For the most part, The Means Test takes a look at the 6 months of income prior to filing. As a result, some individuals choose to wait until a few recent months of higher income drop off, in order to qualify. This is especially true if your income fluctuates from month to month, or is seasonal. For instance, if you make more money in the summer than in the winter, you may not qualify for The Means Test in September. The reason would be that The Means Test would consider the 6 months from September backward. However, if you file in April, The Means Test would consider the 6 months from April backward—the months where you did not have much income. So, timing can help answer the question “Can I file bankruptcy?”

Chapter 13

If you don’t qualify for a Chapter 7 because you have too much income, or because you have too many assets to protect in a Chapter 7, then you can consider filing a Chapter 13. There are a few articles on our site which discuss Chapter 13. Generally speaking, a Chapter 13 lasts for 36 or 60 months, and requires you to pay a small percentage of your debt over that period. When you make your final payment, the remainder of the debt is discharged, or forgiven. Your Chapter 13 payment will be based in part on your ability to pay. This means the court will ask your attorney to submit a budget showing monthly income and expenses. The budget will reflect something called Net Disposable Income. Your Net Disposable Income will typically be the proposed payment in Chapter 13, representing the amount to go to your creditors.

Most Chapter 13 plans pay back a very small percentage of your unsecured debt. For example, if you have $100,000 in credit card debt, and you have a 5% plan, this means that over the course of 60 months, you would pay back $5,000.00. While there are other considerations, this means that roughly $85 a month from your Chapter 13 payment will be going to your credit card debt. Once you complete your final payment, the remaining $95,000 in credit card debt will be discharged.

Further Reading

Can I Keep Credit Cards In Bankruptcy

The Costs of Bankruptcy

Speak With An Attorney Today

If you’d like to determine an answer to the question “Can I file bankruptcy?” speaking with a Charlotte bankruptcy attorney is the next step. The call is free and we’re here to help. You can reach us at 704.749.7747 or click here to request a FREE BANKRUPTCY CONSULTATION. We know you have choices. We hope you choose to Recover With Us.

benefits of chapter 7

Downside Of Filing Bankruptcy

Clients routinely ask “What is the downside of filing bankruptcy?” While there certainly is a downside to filing bankruptcy, a thorough review of most clients’ financial situation reveals that a bankruptcy is the right financial move for them. This article will the downside of filing bankruptcy, but also help to put it in context. As a Charlotte bankruptcy attorney, my goal is to help you decide what’s best for you and your family.

Effect of Bankruptcy On Your Credit Score

Bankruptcy will no doubt affect your credit score. However, this is usually only a concern for those with perfect a perfect credit score coming into a bankruptcy. That situation is rare. More often, a client’s credit score is already low due to late payments, missed payments, repossessions, foreclosures, or other financial issues.

The good news is that for most individuals, your credit score one year after filing bankruptcy will be as good as it was on the day you filed. In other words, one year after filing, your credit score has already recovered and you no longer have the debt issues you had prior to filing. From there, it’s easy to re-build your credit if you’re intentional about it. Our firm always offers tips on rebuilding credit after bankruptcy, and they do make a difference.

Effect of Bankruptcy On Credit Cards

When you file bankruptcy, you can’t keep “a few credit cards”. All of your credit cards will be cancelled upon filing. The good news is you’re no longer living on credit cards. A common question arises regarding having a credit card for emergency purposes. Most clients report to us that credit card companies offer them credit soon after they receive their discharge in bankruptcy. The reason is the bankruptcy filing improved your Debt To Income ratio and made you a great candidate for credit cards. Additionally, creditors like extending credit to individuals who recently filed bankruptcy because they know you’re more likely to repay the debt. After all, you can’t file bankruptcy again for a long time.

Effect of Bankruptcy On Getting A Mortgage

It’s true, you won’t be able to obtain a mortgage for two to four years after bankruptcy. However, you have to ask yourself if you could obtain a mortgage with your current credit score and debt situation. Most clients can’t. So while the intention to purchase a home is a good one, filing the bankruptcy is actually the first step in the right direction. During the two year waiting period, you can save for a down payment or pay down student loans, or contribute to your 401k. You won’t fall behind by filing bankruptcy.

Not All Debt

Bankruptcy does not discharge all debt. Some debt takes priority and survives a Chapter 7 or needs to be paid in full in a Chapter 13. For instance, Child Support, Recent Taxes (less than 3 years old), Mortgage Arrears, and Student Loans. Clients report that by filing bankruptcy and eliminating credit card debt and medical debt, as well as other types of debt, it enables them to focus on re-paying the types of debt which do not go away with a bankruptcy filing.

Speak With An Attorney Today

We know deciding to file bankruptcy is an important choice. We tell some clients it’s not a good choice for them. We’re happy to hear your story and help you decide. We know you have choices. We hope you choose to Recover With Us. If you’d like to speak with an attorney today, call 704.749.7747 or click for a FREE BANKRUPTCY CONSULTATION and we’ll give you a call or reply to your email.

bankruptcy how long discharge

How Long Does Bankruptcy Take?

This article helps answer the question how long does bankruptcy take. The answer depends upon a few factors. Primarily, they are:

  • How quickly you can deliver documentation to your bankruptcy attorney
  • Whether you are choosing a Chapter 7 or a Chapter 13
  • Reasons which may exist to delay your filing

Delivering Documentation For Bankruptcy

Your ability to deliver documents can change the answer to the question “How long does bankruptcy take?” Most bankruptcy attorneys will accept documentation in electronic or paper format. Clients are usually pleasantly surprised at how easy it is to meet the documentation requirements, which shortens how long it takes to prepare to file for bankruptcy. While there may be more documentation required, generally you will need to provide:

  • Drivers License
  • Social Security Card
  • Vehicle Registration
  • Two years of tax returns
  • Six months of bank statements
  • Six months of pay stubs or proof of income

Once your bankruptcy attorney has this information, they can review it to be sure the bankruptcy petition they are drafting matches the activity on your accounts and tax returns.

Chapter 7 or Chapter 13

Chapter 7 bankruptcy results in a discharge roughly 120 days after the filing of the bankruptcy. Chapter 13 bankruptcy is a years-long bankruptcy where you make a monthly payment for 36 or 60 months. You receive a discharge after making your last payment. Your bankruptcy attorney will be able to help you decide between Chapter 7 and Chapter 13. Generally speaking, you must pass the Means Test to qualify for Chapter 7. Most clients who choose Chapter 13 do so because of one of the following:

  • Too much income
  • Too many assets
  • A desire to ‘catch up’ on a mortgage or car loan

After a free phone consultation, our office can typically predict for you whether you will need to file Chapter 7 or Chapter 13. From there, you can decide which route is best for you. If neither of the two options is appealing, we can always discuss the option of pursuing debt settlement instead of bankruptcy.

Reasons To Wait To File Bankruptcy

While the bankruptcy rules are very powerful in favor of the debtor, sometimes it makes sense to wait to file your bankruptcy. Usually, these waiting times are well worth it, and relatively easy to spot if you’ve been honest with your bankruptcy attorney. Because the bankruptcy rules look at a specific window of time regarding your financial activity, waiting an extra month or two to file can sometimes make the difference between a smooth and easy bankruptcy, or a rocky road. Here are a few reasons your bankruptcy attorney may recommend you wait to file:

  • Too much income in the past 6 months
  • A transfer to a friend or family member in the past year
  • A large payment to a creditor in the past 90 days
  • A new loan taken out in the past 90 days
  • Credit card use in the last 90 days beyond day to day purchases (Luxury items, etc.)

Hearing that you need to wait to file your bankruptcy may be frustrating. It certainly changes the answer to the question “How long does bankruptcy take?” if your attorney is recommending waiting, for the sole purpose of letting a financial item ‘drop off’ of your timeline. However, taking the advice of your bankruptcy attorney prior to filing will pay off for you in the end.

Speak With A Bankruptcy Attorney Today

We would love to help you get an answer to the question “How long does bankruptcy take?” A quick phone call with a bankruptcy attorney can put your mind at ease and help you understand the options. The path to financial recovery is usually very smooth. You’ll find most of your fears about bankruptcy are unfounded. We’d love to help you make a decision. You can reach us at 704-749-7747 or click for a FREE CONSULTATION and we’ll reach out quickly to make contact. We know you have choices. We hope you choose to Recover With Us.

Further Reading

How Does Bankruptcy Affect My Spouse?

Will The Bank Freeze My Bank Accounts In Bankruptcy?

can i use my credit card

Generally, speaking you cannot use your credit card to pay for bankruptcy. The reason behind this is if you use your credit cards too close to filing bankruptcy, there is a presumption of abuse that arises. This presumption of abuse means it is assumed that you incurred debt you knew would be forgiven or discharged by Chapter 7 bankruptcy. By using your credit card to pay for bankruptcy, then filing bankruptcy, it is hard to argue you did not plan to have the cost of bankruptcy discharged. Keep in mind, you cannot keep your credit cards when you file bankruptcy.

Incurring Debt Prior To Bankruptcy

Your lawyer can’t advise you to incur debt prior to filing bankruptcy. If your lawyer accepted a credit card payment for your bankruptcy, this would be the equivalent of advising you or assisting you in incurring debt prior to filing bankruptcy. This violates federal bankruptcy law and your lawyer would experience repercussions as a result. There are a few exceptions, like accepting a credit card payment from a relative for your bankruptcy; however, attorneys have to be very careful when accepting credit card payments in any situation.

Allowable Debt Prior To Filing Bankruptcy

This does not mean you can’t incur any debt prior to bankruptcy. An example would be the purchase of a car before filing bankruptcy. If you take out a loan to buy a car just before bankruptcy, this is allowable. First, a vehicle loan is a secured debt. This means that the lender is secured in the event you file bankruptcy—if you want the debt discharged you would have to give them the vehicle. However, in most cases, when you buy a car before filing bankruptcy, it’s to avoid trying to buy one after bankruptcy hits your credit score and credit report. In that case, after you file the bankruptcy, you simply file a reaffirmation agreement with your attorney’s help. This way, you file bankruptcy, keep the car, and keep the debt associated with the car. The loan terms do not change.

Cash Advances And Bankruptcy Filing Fees

You can potentially take out a cash advance on a credit card to pay your attorney. However, in our opinion, this still qualifies as using your credit card to pay for bankruptcy. Additionally, if you take out more than $925 in the 70 days prior to filing bankruptcy, for any reason, the credit card company can file a lawsuit demanding that those particular funds should not be discharged in bankruptcy.

How Can I Pay My Bankruptcy Fees

Stop Paying Credit Cards — Once you know you’re going to file bankruptcy; you can stop making payments on credit cards which will be discharged in bankruptcy. This may free up some immediate cash flow to pay for your bankruptcy.

Borrow Money From A Friend Or Family Member – It’s ok to borrow money from a friend or family member to file bankruptcy.

Ask About A Payment Plan With Your Attorney – Our firm allows payment plans for filing bankruptcy. Your final payment does need to be made prior to filing the bankruptcy. This allows you to make a small payment up front to hire us, and have us work on your case. Together we will spend as much time as needed preparing for the filing. When you’re ready with your final payment, we will also be ready to file the bankruptcy. This works great for most clients.

Talk To A Charlotte Bankruptcy Attorney Today

If you’re having trouble with finances, and considering bankruptcy, give us a call. You can reach us at 704.749.7747. Or you can click for a FREE BANKRUPTCY CONSULTATION and we’ll call you shortly. A brief phone conversation can change your life and get things going in the right direction. We know you have options. We hope you choose to Recover With Us.

Is Bankruptcy Right For Me

If you’re asking yourself “Is bankruptcy right for me?” most likely, the answer is yes. We work every day with hard working individuals who simply can’t keep up with growing medical debt, credit card debt, or mortgage problems. Bankruptcy offers a powerful solution which is life-changing.

When a potential client is wondering “Is bankruptcy right for me?” we encourage them to look more specifically at a few areas of their finance life, in hopes of helping them find an answer. Typically, our bankruptcy clients have spent years trying to pay off credit card debt. Unfortunately, the interest rates, late fees and penalties make it all but impossible. The banks will survive if you file bankruptcy. Our biggest concern is the health of you and your family.

How Expensive Is Bankruptcy

We are very much aware that when you’re having trouble making ends meet, the idea of paying a law firm for a bankruptcy can be overwhelming. Fortunately, most clients find the fee for bankruptcy is reasonable. Additionally, once you know you’re going to file bankruptcy, you can stop making payments on debt which will be discharged in bankruptcy. This includes medical bills, credit card debt, and often tax debt. If you’d like to request a free quote for bankruptcy, click here: FREE BANKRUPTCY QUOTE.

How Immediate Is The Relief

The day you file your bankruptcy papers with the federal court, your creditors will be sent notice of the filing. This means they can no longer contact you in an attempt to collect a debt. It also means any legal actions including foreclosure and writs of execution, are automatically frozen by the Automatic Stay in bankruptcy. Your phone stops ringing, threatening letters stop arriving by mail, and peace is immediately restored to your life.

How Quickly Will I Recover

This is a question which certainly is on everyone’s mind. Bankruptcy clients are often surprised at how quickly they begin to recover from bankruptcy. While the bankruptcy will show on your credit for up to 10 years, you will begin to receive offers for vehicle financing, credit cards, and other extensions of credit, within one year of filing. Most clients report that their credit score one year after filing bankruptcy is better than it was on the day they filed bankruptcy. If you’re wondering “Is bankruptcy right for me?” these are great answers when it comes to credit scores!

Can I Buy A House If I File Bankruptcy

We love that clients think ahead about the dream of home ownership. For most clients considering bankruptcy, there’s no way to buy a house due to the amount of debt they have, and the fact their credit score has usually been lowered by aggressive banks reporting late and non-payments. There’s good news. Two years after you complete your bankruptcy, you’ll become eligible for some federal home lending programs. Four years after you complete your bankruptcy, you’ll become eligible for the same loan products everyone in the private market is eligible for. In the meantime, you’ll be able to save for a down payment because you won’t be sending money to credit card companies every month.

Speak With A Charlotte Bankruptcy Attorney

If you’d like more information about filing bankruptcy, speak with a Charlotte bankruptcy attorney today. You can call us at 704.749.7747 or click here for a FREE CONSULTATION. 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 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 re-build 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 re-pay 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.

benefits of chapter 7

Can I Keep My Bonus In Bankruptcy?

If you are paid a commission or bonus through your employer, a key question when filing bankruptcy is whether you can keep your bonus when you file a bankruptcy. If certain factors are met, the answer is yes, you can keep your bonus in bankruptcy. Our firm litigated a case in the Western District of North Carolina in 2017 which addressed that exact issue. You can find a link to the story about the case published here on Bloomberg Law.

Is My Bonus Part Of The Bankruptcy Estate?

Whether a bonus is part of the bankruptcy estate, and potentially at risk of being paid over to the Trustee, depends. If the bonus has already been received and is sitting in your account, then yes, it will need to be addressed as an asset of the estate. If the bonus is earned, but not yet received, the answer is the same. However, if a bonus is earned but the payment of the bonus and the amount of the bonus remain in the discretion of the employer, your bonus may not be an asset of the bankruptcy estate.

The Timing Of Your Bonus Is Important

The snapshot for determining the answer to numerous questions regarding your bonus is the day of filing. If, on the day of filing, your employer still retains discretion as to whether to pay the bonus, then you have no vested rights in the bonus. For the purpose of bankruptcy, this is merely an expectation of a bonus. Case law supports the conclusion that a mere expectancy or hope of a bonus is not an asset. Therefore, the bonus would not be part of the bankruptcy estate. While your employer may in fact end up paying the bonus, if at the time of filing you had no legal right to it, then it should not be included in the bankruptcy estate.

What Would Change This Answer?

If prior to the day of filing, your employer communicated to you that you have earned a bonus and the bonus will in fact be paid at a later date, this would most likely dictate the bonus is an asset of the estate. If the bonus was small enough, you could use one of your bankruptcy exemptions to protect the bonus. Depending upon whether you could prove when the bonus was earned, you may also be able to protect some or all of the bonus under the earned income exemption.

How Is A Bonus Different From A Commission?

In this context, the imagined bonus is one which is at the employer’s discretion. A commission is typically calculated and generated upon a mathematical equation, and upon a certain event—conclusion of a sale, signing of a contract, etc. Presumably, the same questions would arise concerning a commission. If the commission was earned at the time of filing your bankruptcy, it would be an asset of the bankruptcy estate, whether you had been paid the commission yet or not.

Speak With A Charlotte Bankruptcy Attorney

If you are considering filing a bankruptcy, speak with a Charlotte bankruptcy attorney today. You can call us at 704.749.7747 or click HERE to request a call. We know you have choices. We hope you choose to Recover With Us.