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

It is not uncommon for clients to miss a Chapter 13 payment for one reason or another. Just because you’re in a bankruptcy doesn’t mean life stops throwing you curve balls. Clients often have vehicle repairs that need to be done, or emergency visits to the doctor—any numerous financial surprises can get in the way of making a payment on time.

Modifying The Plan

Fortunately, the Chapter 13 bankruptcy court is interested in seeing people succeed. If you miss a payment, quite often the easy answer is to make the payment as soon as you can. If you miss multiple payments, typically the trustee will file a motion to dismiss or modify the plan. If this happens, you and your attorney will attend a short hearing where the trustee will propose a plan amendment.

Post-Modification

Once your plan is modified, quite often your plan payment amount stays the same. The trustee may extend your plan, or grant a moratorium on your missed payments, or adjust the base plan to accommodate the missed payments.

Call An Attorney

A Chapter 13 bankruptcy can provide powerful relief in a way that treats creditors fairly while allowing flexibility for the individual filing bankruptcy. If you have questions about Chapter 13 bankruptcy or bankruptcy in general, please call 704.749.7747 to speak with an attorney today.

One critical part of qualifying for bankruptcy in Charlotte, North Carolina is disclosing to the court your average income over the past six months, as well as your Current Monthly Income. Many individuals filing for Chapter 7 or Chapter 13 are using regular retirement withdrawals, to meet monthly debt obligations. Generally speaking, those withdrawals need to be disclosed but are not counted as income.

Stop Using Retirement To Pay Debt

Retirement funds are excluded from your bankruptcy estate. Simply put, that means the bankruptcy court can not get to your retirement funds. They are protected. So, using those funds to pay debt which would go away in bankruptcy doesn’t make sense. You’ve worked your entire life to build up retirement funds. Save your protected funds, and prepare to file bankruptcy.

Retirement Not Counted as Income

Generally, withdrawals from retirement accounts are not included in the income calculation. These withdrawals are more akin to a withdrawal from a savings account. Additionally, your Charlotte bankruptcy attorney can argue to the court that the retirement account(s) are a limited resource and would not continue indefinitely, thus further distinguishing them from income.

Taxable Income Distinguished

The bankruptcy court defines income differently than the Internal Revenue Service. Just because a withdrawal from your IRA or Pension Plan may qualify as taxable income for IRS purposes, does not mean it’s counted as income in a bankruptcy.

If you have any questions about retirement funds, IRAs or bankruptcy, call 704.749.7747 today to get your questions answered. The call is free and we’re here to help.

As a Charlotte bankruptcy attorney, that’s a question I get asked quite often. Charlotte, North Carolina has a divisional federal bankruptcy as part of the Western District of North Carolina. In order to file bankruptcy in the Charlotte, North Carolina division, you must meet the domicile requirements set forth by the federal bankruptcy rules.

Determining Domicile for Bankruptcy in Charlotte, North Carolina

If you have lived or maintained a permanent residence in Charlotte (or the surrounding counties) for the last 180 days prior to filing bankruptcy, then you’ll file your bankruptcy in Charlotte, North Carolina. You can also file bankruptcy in Charlotte, North Carolina if your personal place of business or your assets (house, etc) are located in or near Charlotte, North Carolina.

Determining Exemptions for Bankruptcy in Charlotte, North Carolina

Regardless of where you file, your attorney will still need to determine which exemptions you use to protect your property. There are federal bankruptcy exemptions, and each state also has its own set of exemptions. If you’ve continuously lived for 2 years in a state, you use that state’s exemptions or the federal exemptions, if that state allows federal exemptions as an option.

If you have not lived in the same state the last two years, you use the exemptions for the state you lived most of the 180 days prior to the 2 year mark from filing. For example, if you were going to file June of 2015 and had not lived in the same state the last 2 years, then you use exemptions for the state you lived in the greater of the 180 period from January 2013 to June 2013. Confused yet? Fortunately your bankruptcy attorney will figure all of this out and most state exemptions are nearly identical to one another.

If you have any questions about filing bankruptcy in Charlotte, North Carolina, please call 704.749.7747 to speak with an attorney today.

A recent New York Times article regarding elderly bankruptcy makes some important points for those entering their ‘twilight years’ while facing financial difficulty.

While there are no special considerations given to the elderly or senior citizens considering bankruptcy, the primary focus on the article is retirement funds. When individuals reach the age of retirement, outside of other income coming in, retirement funds serve as the only available funds for paying bills. What most people fail to consider is that all retirement funds are exempt in bankruptcy—so it doesn’t make sense to spend your retirement paying bills that would be discharged in a bankruptcy.

If you have questions about filing bankruptcy, please call 704.749.7747 to talk to an attorney today. There are options, whether you’re single, married, young or old. Bankruptcy can provide tremendous relief.

Yes. In fact, while you can most often keep a home in a Chapter 7 bankruptcy, a Chapter 13 bankruptcy has as one of its best qualities, the ability to get ‘caught up’ on your mortgage over time.

My Home In Chapter 7

In a Chapter 7 bankruptcy, you can keep your home provided you are current on your mortgage and the equity in your home does not exceed $35,000 for an individual, or $70,000 for a married couple. The equity is quite simply the fair market value of your home minus the balance of all mortgages on the home.

If the equity in your home does exceed the figures above, you can either ‘purchase’ that equity from the trustee by writing him or her a check for the amount you exceed the limits, or you can consider filing a Chapter 13, which would require that your payments in a Chapter 13 result in creditors getting at least the same amount of the excess, over the course of your re-payment plan.

My Home In Chapter 13

If you have too much equity in your home, or if you are behind on mortgage payments, HOA dues, or property taxes, a Chapter 13 will set up a repayment schedule for the arrearages, over the course of the plan. For example, if you were behind on your mortgage payments by $6,000.00 and filed a Chapter 13 to prevent foreclosure, the Chapter 13 plan would include paying off the $6,000 debt over the course of the 36 or 60 month plan—whichever you were approved for.

If excess equity is the concern driving you to choose Chapter 13, the Chapter 13 plan requires the debtor to pay creditors as much over the course of the plan as the creditors would get in a theoretical Chapter 7. Your Charlotte bankruptcy attorney will run all of those numbers for you and submit them to the court, but essentially if you have $8,000 of excess equity in your home, then as long as the plan calls for $8,000 or more to go to creditors over the life of the plan, your creditors can’t complain.

When you complete your Chapter 13 plan, you have completely paid off the amount of the arrearages, and your mortgage is current. When the plan ends, you go back to your normal agreement with you mortgage lender. None of the terms of your mortgage change as a result.

Call An Attorney

If your home is in foreclosure, there is still time to file a Chapter 13 to stop the foreclosure and force a repayment plan on your lender. Chapter 13 is a great way to do it. If you have any questions about Chapter 13, foreclosure, or Chapter 7, call 704.749.7747 today. We’re here to help.

It’s that time of year again. My office receives numerous emails and phone calls each week specifically asking about tax returns and bankruptcy. Mainly, clients want to know whether they can file bankruptcy prior to getting a tax refund, and whether they will lose their tax refund if they file bankruptcy.

Filing Bankruptcy Before You File Your Return

If you file bankruptcy prior to filing your return, you must estimate your tax refund and use bankruptcy exemptions to protect it. Ideally, you can consult with an accountant to get an estimated return amount and use those figures on the bankruptcy filing. The trustee will ultimately want to see your filed return. If the refund does not exceed your allowable exemptions, you can keep the refund.

Filing Bankruptcy After You File Your Return

When you file bankruptcy after you file your tax returns, you’re no longer estimating potential refunds. Your bankruptcy attorney simply discloses the refund amount and uses bankruptcy exemptions to protect it.

If you are filing bankruptcy after filing your return, AND after the refund has hit your personal account, not much changes. You’ll want to make sure with your bankruptcy attorney on the day of filing that any funds in your bank accounts are disclosed and exempted.

If You Owe Money

If you owe money to the IRS or state, that will not prevent you from filing bankruptcy. That tax debt will survive a Chapter 7 filing, but will not interfere with the discharge of other debt. If you’re filing a Chapter 13, the tax debt will be paid over the course of the Chapter 13 plan.

If you have any questions about tax returns and bankruptcy, please call my office at 704.749.7747. I’m here to answer questions.

There are two concerns regarding tax refunds in bankruptcy. Depending upon whether you are in a Chapter 7 or a Chapter 13, those concerns are slightly different.

Chapter 7

Tax Refund Already Received—A tax refund you have already received prior to filing, but have not yet spent, is part of the bankruptcy estate and treated like cash. You may be able to use exemptions to protect the money.

Tax Refund Expected—A tax refund expected but not yet received is also part of the bankruptcy estate to the extent it relates to income earned prior to the date you filed your Chapter 7 bankruptcy. As a worst case scenario you will be required to turn over the return to the trustee. However, your bankruptcy attorney can also use exemptions to protect the expected tax refunds in bankruptcy, the same way you can protect money that is in a savings account. The important thing is to disclose the expected return and exempt it in the bankruptcy filing.

Tax Refund For Years After The Filing—A tax refund received for income earned during a tax year after the year you filed bankruptcy (and all future returns) are yours to keep. They are not part of the bankruptcy estate.

Chapter 13

Tax Refund Already Received—A tax refund you have already received will be treated as an asset. While the trustee may not take the tax refunds in bankruptcy, any assets you own play a role in determining the amount you will ultimately pay to creditors in the Chapter 13. The refund, if it can not be exempted, may bump up your Chapter 13 payment.

Tax Refund Expected—The safe assumption regarding tax refunds in an ongoing Chapter 13 is that they will become property of the trustee. While you may use exemptions to protect an expected return, the typical Chapter 13 plan is 36 to 60 months.

Tax Refund For Years After The Filing—The same answer as directly above applies here.

What Can I Do To Plan Around This?

In a Chapter 7, you can spend your tax refund or make sure to put your attorney on notice that you expect to receive a return and be sure to exempt it or postpone filing until the asset has been spent on allowable items.

In a Chapter 13, tax refunds in bankruptcy represent an ongoing issue and the easiest way to manage it is to reduce your withholdings so that you’re receiving more in your paycheck on an ongoing basis rather than ‘storing’ up money with the IRS which will result in a large return.

If you do receive a refund in a Chapter 13, disclose the return each year to the trustee. Each trustee’s policies (in different districts) differ. If you can show that you need some or all of the return for necessary expenses like home repairs or vehicle repairs, you may be able to keep some or all of the return. Your bankruptcy attorney should assist you in making this disclosure to the court, together with the argument that you have a need to use the return vs. it going to the trustee.

Get Answers

Call a Charlotte bankruptcy attorney today and get your questions answered. You can begin planning today for a successful bankruptcy in the future. 704.749.7747. The call is free and I’m here to help.

Exemptions in bankruptcy are used to protect property that the client owns or recently sold or transferred. Planning to use exemptions in bankruptcy may dictate waiting a little bit to file, depending upon the value of the asset or the type of transfer that was made.

Exemption planning is perfectly legal and is akin to tax planning—arranging your financial life to take advantage of the laws available to protect your property.

Homestead Exemption

The homestead exemption gives you up to $35,000 in exempt equity (Fair Market Value minus Mortgages). If the client acquired the property within 1215 days of filing for bankruptcy, the bankruptcy attorney may recommend waiting out the remainder of that period.

Spending Excess Cash

For the few bankruptcy clients who have cash in excess of what is allowed in bankruptcy, your bankruptcy attorney may recommend spending down some of the cash prior to filing. So long as the cash is spent on non-luxury items, this is perfectly fine and converts cash to usable items like food, household goods, clothing, etc. Cash that has been converted to household goods can use the household goods exemption in the bankruptcy filing.

Recent Transfers

Transfers made within the last two years to non-family members and non-friends, are subject to review by the bankruptcy trustee. The same is true of transfers to family members and friends (Commonly known as “insiders”) and requires a four year wait period to be outside the reach of the trustee. Exemptions in bankruptcy can be used to exempt these transfers but waiting out the period may be the client’s best bet.

Recent Credit Card Use

If you’ve used your credit cards within 90 days of filing to purchase goods of $550 or more with one creditor, under 523(a)(2)(C), there is a presumption that the purchase was fraudulent—in other words, you knew you were going to file bankruptcy when you made the purchase. The same is true of cash advances in excess of $825 if made within 70 days of filing.

These presumptions are rebuttable, meaning the attorney can argue that the specific facts dictate that the debt should be discharged, but waiting a few more weeks to file is usually a much safer bet.

Tax Refunds

If you expect a tax refund, that money is already part of your bankruptcy estate. It’s an asset that you have to protect. However, if you wait to file until you’ve received the refund and spent it on non-luxury items, you can file bankruptcy without worrying whether the court will try to take your refund.

Call An Attorney

If you have any questions about exemptions in bankruptcy, the timing of filing, or anything else related to debt and bankruptcy, please call me at 704.749.7747. I’m here to help and the call is free.

Keeping your car in bankruptcy is important, especially if it’s a reliable car and you’re looking forward to the day you pay it off. Fortunately, the rules of bankruptcy typically allow for you to keep your vehicle and successfully file a bankruptcy.

Valuing The Car

Your bankruptcy attorney may ask you to take your car to get it appraised at Carmax or another qualified dealer. This will help establish value for the purpose of disclosing information about your car when you file bankruptcy.

You’re trying to determine the equity in the car, which is quite simply the Retail Value minus Existing Loans/Liens. So, if your car has a retail value of $12,000 and you owe $10,000, you have equity of $2,000. This equity is an asset that you own.

Exempting Your Equity

The next step is to use your bankruptcy exemptions to assist you in keeping your car in bankruptcy. The federal rules of bankruptcy give each individual filing a bankruptcy a $3,500 automobile exemption to be used against one vehicle titled in their name. In the case above, there is only $2,000 of equity, so the exemption would more than cover the equity in the asset (vehicle) and the bankruptcy court cannot touch your car in bankruptcy.

Equity Exceeding The Automobile Exemption

If you have equity above and beyond the $3,500 allowed for automobiles, you can use some of your Wild Card Exemption ($5,000 per person) to cover the additional equity in any asset.

Purchasing A New Car Prior To Bankruptcy

Generally speaking, while keeping your car in bankruptcy is an option, you can also trade in your vehicle on another vehicle shortly prior to filing. This may be one way to deal with excess equity and address a vehicle that needs to be replaced. This transaction is considered a transaction you make in the normal course of living and with the proper guidance of a bankruptcy attorney, will not cause you any problem if you file shortly after.

Call A Charlotte Bankruptcy Attorney

If you have any questions I can answer about bankruptcy, assets or bills collectors, please feel free to call me at 704.749.7747. The call is free and I’m here to help.

While a withdrawal from a pension plan or IRA may be taxable income, they typically do not cause a problem in filing a bankruptcy. Regarding whether continued withdrawals should be included in income in a Chapter 13, clients can argue that the remaining retirement funds are needed for retirement.

Disclosure Is Key

The balance of an IRA or pension plan should be treated as an asset and disclosed as such in the bankruptcy petition. The federal bankruptcy rules provide an exemption for IRA funds and pension funds however, so those funds are a protected asset outside of abnormal activity.

IRA Disbursements In A Chapter 7

When you change the character of IRA funds or pension funds by making a withdrawal from the fund and placing the funds into your personal checking or savings account, those funds enter the bankruptcy estate. Like all other funds that enter the bankruptcy estate, you and your attorney will work to protect them by either using the wild card exemption, showing the funds were used for normal living expenses, or exempting the asset you purchased with the funds (Household furniture, etc).

You Deserve To Protect Your Retirement

The fact that the bankruptcy rules allow for exempting retirement funds goes toward a showing that the goal of bankruptcy is not to take everything the client owns, in exchange for forgiving their debt. Instead, the goal is to position the client in such a way that after the bankruptcy they have a reasonable chance at financial success.

Call A Bankruptcy Attorney

If you have any questions, please call me at 704.749.7747 I’m happy to answer questions and the call is free.