The North Carolina Bankruptcy Information Blog

In the annals of bankruptcy law, special rules have come to dictate how certain property—from homes to cars to household items—is categorized and dispensed post-filing. Specifically, most states have some sort of homestead exemption that protects some or all of the equity in the debtor’s home from the clutches of creditor claims.  The Bankruptcy Code provides debtors with a homestead exemption—an exemption that is doubled for joint owners.

But issues can arise in a bankruptcy’s homestead protections when a non-resident co-owns the home, such as when a parent co-signs with an adult child to help subsidize the child’s first home.

In this situation, where parents purchase a house for a child (not uncommon in these tough financial times) and are also on the deed as co-owners of their child’s home, and the child or even the child and parents then later face credit problems and are considering bankruptcy, questions can arise as to whether a Chapter 7 filing by one party would affect the other’s interest in the home.…

If you are considering bankruptcy or are already bankruptcy bound, you likely understand some of what there is to know about the benefits of a bankruptcy filing, including the ability to discharge certain types of debt. What may be lesser well-known in the bankruptcy process is the need (or not) for reaffirmation agreements and their relationship with your debt, collateral and holding on to (or restoring) much-needed property.

In essence, a reaffirmation agreement is a voluntary contract between you and your creditor that promises you will pay all or a part of a debt that would otherwise be discharged in your bankruptcy.…

This unrelenting economic downturn has been tough on all Americans—whether they be single, dating, engaged, married or widowed. But, as anyone who has ever been married already knows: money (or lack thereof) can be the main cause of many couple’s marital strife. As a result, in this especially difficult economic climate—full of job insecurity, foreclosures, and slow economic gains—many have been pushed to the brink of bankruptcy, and, along with them, the people who love and wanted to marry them.

So what should you do if you are preparing to marry someone drowning in debt?

While as a general rule, you are not liable for your spouse’s debt, in some cases the debt follows the “I Do’s” and you may end up paying that debt anyway.…

Chapter 13 bankruptcy involves the facilitation of a financial reorganization plan that allows you to pay back your expenses over the course of three to five years. As a result, a Chapter 13 bankruptcy also requires that you look ahead three to five years in order to construct a realistic and sensible plan that can work for you.

Unfortunately for many people who are bankruptcy bound, the future is far from unclear. And, just as many circumstances can occur that exacerbate your financial present and force you into bankruptcy, the same unexpected scenarios—from a job loss to a medical emergency—can cause your Chapter 13 reorganization place to fail.…

Given the popularity of channels like HGTV and all of those televised extreme home makeovers , it’s more than apparent that America is a nation full of  “do-it-yourselfers:” people drawn to the idea of going it alone in order to get it done right—their way, the first time.

As a result, it’s not surprising that in this self-supported culture there are so many services available online and offline that, for a fee, offer any DIY inclined consumer the opportunity to file their own bankruptcy. In fact, in these tough financial times, DIY bankruptcy petition “farms” are becoming increasingly popular for cash-strapped debtors who know that they need bankruptcy protections but don’t believe that they can afford an actual bankruptcy attorney.  Using these services could spell trouble for your self-perpetuated petition and your already beleaguered budget.  Here’s why:

Lack of Adequate Information
When you begin a DIY project for the first time like installing a light or fixing a leaky faucet or even building a home addition, it’s often helpful to have someone there to do more than just sell you the materials.…

Life after bankruptcy can be a challenge. It will take commitment, a new mindset and an entirely fresh set of budgeting habits.

People are surprised to find that when they look around, there really are countless ways for you to save, establish credit and rebuild the economic life you once had.

For a some filers, bankruptcy meant giving up a car payment you could no longer afford. With the new change, getting around town to run errands or schedule job interviews can be pretty frustrating. However, alternative modes of transportation are becoming more abundant. One example is the WeCar program, an idea already popular in larger cities and on college campuses.…

For many people, divorce can cause a huge financial strain in already tough economic times. In others cases, it’s the crushing weight of debt that leads to the dissolution of a marriage.  Whatever the ultimate cause, and effects, when considering bankruptcy amid a divorce it’s important to know a few basics.

Divorce Decrees and Bankruptcies
Because your bankruptcy only includes debts in existence at the time of your bankruptcy filing, a subsequent divorce decree (i.e., a divorce decree following the date of your bankruptcy petition) remains intact and won’t be included in the debt dispensed by your bankruptcy. While few attorneys would urge you to continue in a bad relationship for money, some good advice might be to time your bankruptcy filing so that it follows (and includes) the divorce decree or separation agreement.  Keep in mind that only Chapter 13 bankruptcy discharges debts and equitable distribution obligations, as long as they are not considered alimony or child support or in lieu of either kind of domestic support.  Sometimes, obligations to pay the other spouse’s attorney fees related to the separation or divorce might sometimes be considered domestic support obligations and therefore non-dischargeable. 

All obligations under a separation agreement remain intact and enforceable after a Chapter 7 bankruptcy, as Chapter 7 does not afford the debtor a discharge of any separation or divorce-related obligations.…

One thing you may already know about most court proceedings, is that parties usually have the option to represent themselves without the aid of an attorney. This is called appearing ‘Pro Se’, which, in Latin means “for oneself”. In a bankruptcy proceeding, when money is tight, the thought of saving money by cutting out attorneys and their fees can be pretty tempting. But there are many reasons this is a bad idea.

Bankruptcy can be complicated and bankruptcy judges are a picky bunch. They expect that the preparation of the voluntary petition, schedules, or other documents will be done accurately and on time.…

No one likes surprise expenses, especially when we’re already struggling to get by.

Countless bankruptcies can be attributed to the use of credit to handle an emergency, especially when they involve our homes. Sure, emergencies involving the home are why we have home insurance but you still have to pay a deductible and more than likely, there are always extra costs you won’t expect.

Plus, there is a ripple effect to having to take care of major home repairs. What if you have to stay home from work one day to meet contractors but your boss just doesn’t want to hear about another one your personal issues impacting your monthly quotas?…

If you’re considering bankruptcy, you may be wondering about the nuts and bolts of the bankruptcy process. One part of this process is the 341 meeting.  After filing your Chapter 13 or Chapter 7 bankruptcy, you are REQUIRED to attend a meeting of your creditors, otherwise known as a “341 meeting.” Named for section 341 of the bankruptcy code that mandates a meeting between a bankruptcy bound debtor and creditors, it normally occurs three to six weeks after your bankruptcy filing. If you fail to attend the 341, it may result in the dismissal of your case.

Purpose of the 341

Despite the fact that the 341 meeting is not attended by a judge, nor conducted in a courtroom, it is part of the bankruptcy legal process, meant to ensure that you openly and honestly represented your assets, debts, and disposable income in your bankruptcy petition.…

Despite the rumors, stigmas and innuendo, there are a number of things you can keep after filing bankruptcy. Your car, for example, is something that you may be able to keep, provided your debt issues running up to your bankruptcy did not result in a repossession and the equity in your car can be protected with available exemptions.

If you were financing (purchasing) a car when you filed Chapter 7 but did not plan to surrender the vehicle in your bankruptcy, and you continued to keep current on the debt through filing your case and afterwards, you will need to fill out and sign something called a “reaffirmation agreement.” This legal document certifies that you will agree to repay all or a portion of that particular auto loan debt since it would otherwise be discharged along with your other debt.…

A typical tax time stressor is the idea of an IRS audit, during which the IRS reviews your previous year’s tax return for discrepancies. Similarly, the IRS can do the same in the case of bankruptcy, assessing the information offered during your bankruptcy case.

While many bankruptcy bound individuals might recoil at the idea of setting themselves up for a second potential audit, it is important not to panic or consider this possible evaluation as a deterrent to heading down the road of removing or reducing your debts through bankruptcy.

In actuality, the chances of an audit are extremely low; and, if you are audited, your liability is easily minimized (or rendered non-existent) by maintaining as much transparency as possible during the bankruptcy process; and by not willfully withholding important details about your particular bankruptcy case.…

The main thrust of 2005’s Bankruptcy Reform Act (unceremoniously known as “BARF”), is a bankruptcy deterrent called the “Means Test”—a formula for determining your ability to pay back your debts. Your inability to pass this test limits your options to filing a Chapter 13 bankruptcy plan, which still discharges your unsecured debt, but takes longer to complete.

With March 2010 figures yielding the highest number of reported Chapter 7 bankruptcies since 2005 (the year the “Means Test,” caused a dramatic reduction in bankruptcy cases), the efficacy of this apparent obstacle to Chapter 7 protections may be of particular interest to many considering personal bankruptcy.…

Developed to slow the rate of Chapter 7 bankruptcy filings, the Means Test helps determine whether or not someone qualifies to file Chapter 7, and in a Chapter 13 bankruptcy, to what extent you might be able to pay back some of your creditors. It’s become a very frustrating part of the bankruptcy process because it implies, “Hey, you just don’t want to pay your bills.”  Not only that, it also subjects filers to additional frustration, confusion and widens the gap between citizens and the law in place to protect them.

However, there are ways to overcome the restrictions and complications of the Means Test.  Of course, this is where the insight of an experienced bankruptcy attorney is especially beneficial, as it can take some time and expert handling.…

Bankruptcy is one of the most important decisions you may ever have to make. It’s not a decision to take lightly, and our office understands that you and your family have a lot of questions. While many of the same laws apply to many cases, rarely is your financial situation the same as another person’s. We all have different reasons for needing to rely on the bankruptcy code and just about every reason is as justifiable as the next.

To assist you in the most direct and non-invasive method possible, we have created three communication vehicles by which you can begin to explore why bankruptcy may be your best way out from under an impending financial crisis.…

For most bankruptcy bound individuals, a discharge of all individual debts is considered the Holy Grail of any bankruptcy filing, yielding a permanent injunction that prevents creditors from collecting on debts. However, any good discussion of debt dischargeability also tackles the primary exceptions to look out for when considering any bankruptcy filing.

Exceptions to the power of a bankruptcy discharge, include:

Certain Tax Obligations
Withholding taxes are not dischargeable in bankruptcy, although you may be able to use a Chapter 13 case to pay these over time (notwithstanding any accrued penalties and interest).  Similarly, sales taxes are not dischargeable, but again, Chapter 13 can establish a payment plan for lessening the load and paying this out over the long haul.…

In an era of extreme economic downturns and rising unemployment, having a car at your disposal has never been more necessary for work, job interviews and providing other basic fiscal needs…even as you consider a personal bankruptcy.

Yet, if you’re on the road to bankruptcy, these same economic issues and employment woes can mean you may have fallen behind on your most recent car payments, leaving your precious vehicle as a prime target for repossession by your car’s creditors. And while your bankruptcy filing’s “automatic stay” suspends a creditor’s ability to repossess most assets, you may be wondering what happens when your car is taken prior to your filing.…

Many of our clients automatically assume they will lose their rental property if they file for bankruptcy. Isn’t that the whole idea of bankruptcy? That you give up everything you have, with a few exceptions, in exchange for getting the debt collectors off your back?

Well, no. Many factors come in to play in determining whether or not you will be forced to sell your rental property, including whether you file chapter 7 or chapter 13, how much money you owe on the property and how much income you receive from it.

Let’s start with chapter 7. If you file chapter 7, you get an exemption for the equity in your primary residence – how much depends on the state you live in – but rental property doesn’t qualify for the standard residence exemption.…

You may have read on the blog, or elsewhere, that many are calling our current economy a “middle class recession.” This is because the numbers are way up on bankruptcies filed by those who make more than $60,000 per year, up 6.9 percent from 2008. Bankruptcies on the whole are up 36.5 percent from this time last year.

So why does it matter how much money a person makes when filing bankruptcy? Well, because bankruptcy is often considered an escape route for the financially unreliable or worse yet, “something poor people do.” It’s just not true.

Today, bankruptcies are increasing among people in the real estate profession, namely developers and agents.…

One thing you may already know about most court proceedings, is that parties usually have the option to represent themselves without the aid of an attorney. This is called appearing ‘Pro Se’, which, in Latin means “for oneself”. In a bankruptcy proceeding, when money is tight, the thought of saving money by cutting out attorneys and their fees can be pretty tempting. But there are many reasons this is a bad idea.

Bankruptcy can be complicated and bankruptcy judges are a picky bunch. They expect that the preparation of the voluntary petition, schedules, or other documents will be done accurately and on time.…